Latest / ausbiz a.m / 11.09.26 with Nick Feil , Prenzler Group
Transcript
- Andrew: Good morning and welcome to your morning wrap from Ospiz. It is Friday, September the 11th, and we're expecting another day of heavy selling on the ASX. Futures down there some point nine of a percent. In a moment, we'll preview the day ahead with Nick Phil. But first, though, a quick wrap of where global markets finished overnight, and oil prices surging to a four-month high amid Middle East tensions, and global bond yields also. Soaring. That's off the back of the firmer U.S. producer prices, inflation there, adding to those moves in Treasury markets and the ECB hiking rates as expected and signalling more to come. Now on Wall Street, the SP down around 0.6%. Similar moves for the Nasdaq and the Dow around half percent lower. And the yield on the 10-year note was up some 12 basis points to 4.96%. Now, security for oil infrastructure and tankers continues to deteriorate in the Middle East. Brent crude jumping seven percent from one hundred dollars to one hundred and eight. That is a four-month high. Copper futures down more than five percent, iron ore off one percent, gold down around one and a half percent, and Bitcoin that's at seventy-seven thousand US. The Aussie dollar also taking a hit at seventy-one point six US cents. Well, joining us to get across the market moves. Is Nick Phil from Princetler Group. Nick, good morning. Nick: Morning Andrew, thanks for having me. Andrew: Well, maybe not so good. ⁓ gee whiz, that was a rough night. How would you sum it up? Nick: Mm-hmm. Yeah, I think as you said, it's just sustained risk off. I mean, as you mentioned, we've had ⁓ a significant rally in oil overnight. I think ⁓ both benchmarks above a hundred. ⁓ Brank Rate obviously well above that now. I it's trading about a hundred and eight. ⁓ so yeah, it's obviously weighing on risk sentiment and ⁓ equities, just adding to those sort of inflation fears and ⁓ rate hike calls across across the US and Australia. Andrew: So how how cautious are you then at the moment? Obviously we've seen the market reaction over the past couple of days has been a very negative week essentially. ⁓ what should we be looking forward to ⁓ as we push further into the end of the year and I and I guess maybe even you take into account seasonality too, where September, October do tend to be weaker. Nick: Yeah, obviously we've got the ⁓ just this pressures from oil. I mean that's the main focus in these bond yields, and that's basically what everyone's looking at at the moment, just what how that plays into I guess risk appetite. I think the next things in focus are obviously gonna be the the Fed rate decision. That's on the seventeenth of September. I think markets are pricing about a probably a 70% chance of a twenty-five basis point hike there. ⁓ also Australia, we've we've got our own. ⁓ I think it's also similar pricing, about a eighty percent chance for twenty-five basis point hike in September and potentially another one in November. So this is basically causing the issues, especially on the the long end of the interest rate curve. ⁓ Andrew: Do you do you want to take a more defensive stance then as a result? Nick: Yeah, I think y ⁓ at the moment, obviously, sort of oil and gas, energy sectors, that's kind of where the money flow is is going. You're getting a bit of ⁓ money being taken off the table on sort of the tech consumer discretionary side of the market, just as you're seeing sort of ⁓ margin compression and things like that and costs increasing. So naturally money will flow. to ⁓ these ⁓ oil and gas names ⁓ as the underlying commodity price continues to push up. Andrew: All right, so you sa you're seeing that continued opportunity obviously in energy. Specifically, what are you looking at at the moment? Nick: ⁓ I mean within Australia, obviously the major names have seen some ⁓ strong performance. ⁓ for myself and as well at Prensler Group, we look more at sort of the smaller cap end of the market where you might get a few overlooked opportunities. ⁓ within Australia, I'm actually looking at a company called Buru Energy closely, which is a ⁓ basically a micro cap oil and gas playout. ⁓ ticket code is BRU. Andrew: What what's the what's the ticket card on that one? Nick: ⁓ so they're based in the WA, they're looking to supply domestic energy to the Kimberley region, particularly via its ⁓ Raphael gas project. so given s I guess soaring prices and and the big sort of supply issues we're seeing, I think we're gonna see a greater focus on how Australia can strengthen and onshore its own sovereign supply of energy. So Buru, basically at the moment, it's it's aiming to replace the current high-cost, insecure legacy system of trucked LNG and diesel with basically a local onshore option there in the Kimberley. It's actually halted at the moment, just pending the release of an independent reserves and resources report for its ⁓ Raphael gas project. So this could be a really interesting catalyst for the company and might bring some more market attention to it. Andrew: All right, what ⁓ this we're seeing in energy, more broadly, how are you approaching resources? Nick: ⁓ I think I mean obviously we have seen some strong commodity performance. I mean overnight silver and particularly ⁓ particularly silver and copper quite heavy, but ⁓ I think as we see these yields continue to push up inflation pressures, ⁓ commodities tend to perform reasonably well. So particularly those that are involved in I guess the data center Supply side of things, so your copper. we have seen, which is quite topical this morning, obviously, Oracle reporting earnings, and that that's been taken quite positively by the market. I think it's up about six and a half percent. ⁓ post-market. So I guess at the moment the market is having a look at the capex. of these sort of names across the AI sort of semiconductor data center plays, seeing if this capex can be justified by by cash flow. So the forward earnings there for Oracle look strong. And I guess this has a flow-on effect into the commodities which I guess make up a big part of the data center buildup. Andrew: I mean that's certainly been a way to play the AI trade here in Australia is ⁓ data centre of the build out, obviously with a focus mostly on copper. ⁓ and as you've sort of alluded to there, I mean copper having taken a tumble overnight, but obviously it has strengthened considerably. So ⁓ i are you looking there or perhaps elsewhere for other ⁓ particular elements? Nick: I'm interested there. I mean, in terms of other elements, I'm sort of playing the energy space quite broadly. I'm also looking at ⁓ issues like ⁓ I guess fertilizer and also the ag space in Australia, because we have seen some strong performance across ags. You've sort of got wheat and ⁓ even soybeans, things like that that have enjoyed a rally and basically fertilizer prices spiking on the back of some of these golf supply issues as well, like oil and gas. ⁓ so with it. Andrew: So the the smaller the smaller names there, ⁓ 'cause well, I we've sort of more recently heard from the likes of Grain Corp and Elders. So w where are you looking? Nick: Yeah. Yeah, so once again on the smaller names, I like a company called ⁓ RLF Ag Tech, which has got an R the ticker is RLF. it's ⁓ about a 50 million market cap Australian company that just raised money recently. their focus is on, I guess, fertilizer, liquid fertilizers, which is sort of a traditional fertilizer replacement. So trying to reduce that reliance on ⁓ urea, which is ⁓ a key component, which has seen a big price rise recently. And we have seen sort of farmers taking more of a cropped optimization approach, how they can basically boost their yields without relying on traditional methods which are which are quite diesel intensive and ⁓ fertilizer intensive. So I think that theme continues to play out and they're they're well positioned for that with their recent raise and their they've made three key appointments to the board as well, who are very experienced players in the egg space. ⁓ yeah. Andrew: And I I know you're also taking a look at lithium. ⁓ what what are you seeing there at the moment? Nick: ⁓ I think you're getting a lot of opportunities. I mean, once again, I've got to focus on a company called Greenwing Resources. The tick is GW1. ⁓ they actually have assets across ⁓ Argentina with their sand jorge lithium brine project. ⁓ but their operations also span across Madagascar and ⁓ Tasmania. So they've got a ⁓ the Key River project in Tasmania, which is Basically looking to assist the data center build out there. So quite a few moving parts, but I think as we sort of touched on before, this ⁓ data center build out it's gonna have a big requirement for key inputs like your battery minerals with nithium, copper, things like that. ⁓ Grimwing also. Do graphites. So ⁓ yeah, basically looking at these components that are going to sort of help to sustain the data center buildup. Andrew: ⁓ it all comes back around to ⁓ AI and ⁓ data centers, doesn't it? Nick: Yeah, exactly. It does. It's it's ⁓ prominent. For good for good reason. Andrew: Yeah, absolutely. ⁓ so ⁓ are you sort of if you have elevated levels of cash at the moment, are sort of got some on the sideline, I guess, particularly given this market volatility we're seeing, ⁓ potentially with looking for some buying opportunities? Nick: Yeah, I d I do. ⁓ I do have obviously some investments in energy, ⁓ which I think have more room to play out. But I think the market will be looking at upcoming data as maybe ⁓ if we get some soft data, especially in Australia and the US, maybe this can provide some relief on the the rate side of things and get some of that risk capital back into the market. So ⁓ closely watching do have some cash on the sidelines and we'll be ready to jump at opportunities that ⁓ present themselves. Andrew: Well, Nick, great to get across ⁓ the opportunities you're seeing. ⁓ thanks for joining us from Princeton Group. Have a have a great day. Nick: Thanks very much, Andrew. You too. Andrew: Well, I say have a great day. ⁓ it is gonna be a bit of a tough day, as I mentioned, ⁓ looking to ⁓ number some heavy falls on the local market. But I look I hope you make the most of your day. Thanks for joining us. I'm Andrew Gage. Nick: Thank you.