Is Albemarle's expansion closure the canary in the globall lithium mine? Pic via Getty Images.
ASX Small Caps Lunch Wrap: ASX hits another new high, but the lithium squeeze is starting to hurt
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- The ASX 200 has hit a new all-time high this morning, after a positive start to the day
- Albemarle has scuttled expansion plans in WA, because lithium’s too cheap
- Small Caps winners include Besra Gold and Buxton Resources
It’s been a modestly happy morning on the ASX for Thursday, with the benchmark rising nicely to add to yesterday’s record high.
We’re tracking Wall Street’s overnight gains, interest rates are once again the talk of the town, and they’re sifting through the debris from Rex’s gruesome implosion to try to figure out what went wrong.
Interest rate talk here and in the US is once again boring the pants off everyone, and a shock call by mining company Albemarle to shut down expansion plans at a Western Australian lithium site has put even more jobs on the line.
Just another Thursday on the bourse.
TO MARKETS
Wall Street rallied overnight, especially in the tech stock department, and that’s set the scene for a gentle rise on the market this morning.
Before open, the ASX 200 Futures index was pointing higher by 0.2%, but that proved to be something of an underestimate, and the ASX 200 benchmark roared off to a peak at 8,148 points to set a new all-time high, before retreating slightly on the way towards lunch.
Speaking of which, this is how the sectors looked at lunchtime today:
As you can see, Financials and Industrials were a little off this morning, the former because our two biggest banks are losing a little bit of ground – Commonwealth Bank (ASX:CBA) falling 0.3% and National Australia Bank (ASX:NAB) down 0.99%.
Industrials is lagging because one of its big players took a hit this morning, and… it’s Qantas (ASX:QAN).
The Flying Kangaroo is copping all sorts of blowback in the wake of the collapse of Regional Express (ASX:REX) , with more than a few people pointing the finger at Qantas as bearing at least some of the responsibility, thanks to its outsize position in the local aviation industry.
A lot of people have had something to say about the issue, and I’ve read through tons of it over the past couple of days, but the cherry on top of it all came from straight-talkin’ TWU National Secretary Michael Kaine (not that one… he spells Kaine with a C) who said the “vicious, hyper-competitive and unregulated market” has allowed “an immoral Qantas to dominate at the expense of workers and the community”.
“This is a cut throat industry,” Kaine said. “We know the perpetrator of that cutthroat competition in large measure is Qantas. If any company tries to do the right thing by the Australian community, and enter in to any of these more profitable lines in our community … we know what happens.
“Qantas exerts commercial pressure, deploys commercial pressure on these companies to get their heads pulled in. We saw that with Bonza and we have seen it again here with Rex.”
And before I go on, I would like you to tacitly acknowledge that you read that in English actor Michael Caine’s voice in your head.
A look at the ASX indices shows nothing out of the ordinary – it’s pretty much just a happy day on the ASX, as we enjoy the tail end of yesterday’s stellar 1.8% jump for the benchmark.
Around the nation, news that mining company Albemarle has decided to pull the pin on its expansion plans at its Kemerton lithium hydroxide conversion site in Western Australia, in order to preserve the company’s “long-term competitiveness” – which is a polite way of saying they were about to lose a metric tonne of money.
Albemarle says the slump in lithium prices has led to the decision, which will directly affect the jobs of 40% of the company’s workforce at the site, as the company shuts down work on its planned expansion activities at Train 3.
Instead, Albemarle says it will focus on optimising work on Train 1, keeping some skin in the game with Train 2 on stand-by, should the lithium market reheat again and everyone loses their minds again.
The flow-on effect is already being felt, with Industrials big gun Monadelphous Group (ASX:MND) shedding 5.0% in the morning in the wake of Albemarle’s announcement.
Monadelphous was contracted for a lot of the work on the Train 3 expansion project at Kemerton, as well as other parts of the plant, and the mothballing of the project is going to blow a major hole in the construction company’s bottom line.
NOT THE ASX
Time to look at what happened in the US last night, and there was a bit of a party in New York while you were getting your beauty sleep.
The S&P 500 closed the day up by 1.58%, the blue chips Dow Jones index lifted by 0.24%, and the tech heavy Nasdaq surged by 2.64%.
And US investors have one man to thank for that – Jerome “Pow Pow” Powell.
The US Fed Chair started making noises – like, actual identifiable noises – about a timeline for rate cuts in the US, with September looming large as when it’s all going to kick off.
But that’s on the basis that inflation in the US continues to decline through August – so it’s not a done deal.
However, the fact that Powell was being uncharacteristically positive – he is well known for being the wet blanket on America’s financial party over the past couple of years – has spurred US investors into action again.
By comparison, here in Australia, the talk of rate cuts isn’t anywhere near as advanced, or positive.
Yesterday’s inflation data offered a ray of hope, thanks to trimmed mean inflation falling slightly – and after reading through more crystal ball gazing by economics experts than I care to admit, the consensus seems to be that the RBA is most likely not going to move rates downward until early 2025.
In US stock news, it was mostly tech stocks that lit up the NYSE overnight – Nvidia surged by 12%, recovering from a sharp decline the previous day in the wake of soft results from other megacaps.
Meta Platforms climbed over 2.5% and a further 7% post-market following the release of its second-quarter earnings, which exceeded forecasts for both revenue and earnings per share.
Global chipmaker Advanced Micro Devices rose 4.5% as its data centre revenue more than doubled year-over-year to reach a record high, driven by a surge in AI demand.
ASX SMALL CAP WINNERS
Here are the best performing ASX small cap stocks for 01 August [intraday]:
Swipe or scroll to reveal full table. Click headings to sort:
Code Name Price % Change Volume Market Cap EEL Enrg Elements Ltd 0.0035 75.0 51,533,189 $2,019,930 BEZ Besragoldinc 0.094 56.7 5,013,384 $25,086,054 BP8 Bph Global Ltd 0.003 50.0 125,000 $793,283 RIE Riedel Resources Ltd 0.0015 50.0 807,640 $2,223,836 APC Aust Potash Ltd 0.002 33.3 250,000 $6,105,284 EXL Elixinol Wellness 0.004 33.3 133,100 $3,963,547 HCD Hydrocarbon Dynamic 0.004 33.3 150,706 $2,425,747 IVX Invion Ltd 0.004 33.3 4,449,078 $19,813,597 OVT Ovanti Limited 0.004 33.3 2,539,182 $3,720,316 SHO Sportshero Ltd 0.004 33.3 128,681 $1,853,499 SI6 SI6 Metals Limited 0.002 33.3 750,000 $3,553,289 IPB IPB Petroleum Ltd 0.0075 25.0 1,157,402 $4,238,418 ME1 Melodiol Glb Health 0.0025 25.0 3,516,671 $1,215,473 CAZ Cazaly Resources 0.028 21.7 4,791,837 $10,609,969 PPG Pro-Pac Packaging 0.085 21.4 4,506 $12,718,140 NC6 Nanollose Limited 0.023 21.1 168,994 $3,268,121 CPV Clearvue Technologie 0.52 18.2 1,275,909 $106,769,729 BPP Babylon Pump&Power 0.0065 18.2 13,144,927 $13,747,520 BUX Buxton Resources Ltd 0.079 17.9 140,221 $13,959,346 KAI Kairos Minerals Ltd 0.01 17.6 20,423,512 $22,277,754
Besra Gold (ASX:BEZ) was climbing well on Thursday morning, apparently on the news that the company has appointed Mine Development Specialist Matthew Antill as managing director of Besra’s Malaysian operating subsidiary, North Borneo Gold Sdn Bhd where he will head the mining and development team.
“Antill’s career spans over three decades in mining and mine development, with significant senior operational management experience and oversight of studies in both open pit and underground operations. He specialises in gold, including refractory and narrow vein operations,” the company says.
Buxton Resources (ASX:BUX) was on the move after announcing that the 2024 field season has commenced in the West Kimberley, with an extensive program of diamond drilling planned the Dogleg Ni-Cu-Co Prospect and MLEM surveys across the wider Quick Shears Project area.
ENRG Elements (ASX:EEL) was also climbing on Thursday morning, after the company announced that it has acquired the Lamont Lake uranium exploration project in Saskatchewan, Canada.
The company says Historical geological data from the project indicates shallow mineralisation and potential for significant resource development, with historical data showing shallow grade mineralisation occurs from near-surface to 57m and with grades of between 0.02% and 0.5% U3O8.
The smart building materials company ClearVue Technologies (ASX:CPV) says it’s just hit the lucrative Middle East and Indian construction markets by signing an agreement with Alutec, Qatar’s largest glass processor and façade manufacturer and a group company under Aria Holding.
The breakthrough Five-year deal consists of manufacturing and distribution partnership for ClearVuePV unique Solar Glazing and Insulated Glass Units (IGUs) in Alutec’s key markets, and opens access for CPV into the booming construction sector across Qatar, The UAE, and Saudi Arabia – which CPV notes has been projected to clock US$240 billion by 2029. The Indian construction sector is thought to hit $1.4 trillion by next year.
ASX SMALL CAP LOSERS
Here are the most-worst performing ASX small cap stocks for 01 August [intraday]:
Swipe or scroll to reveal full table. Click headings to sort:
Code Company Price % Volume Market Cap MHC Manhattan Corp Ltd 0.001 -40.0 1,155,291 $4,894,770 ERL Empire Resources 0.002 -33.3 150,000 $4,451,740 MTB Mount Burgess Mining 0.001 -33.3 2,495,012 $1,947,220 MCT Metalicity Limited 0.0015 -25.0 1,000,000 $8,971,705 TOR Torque Met 0.1 -23.1 2,410,780 $24,432,060 FGH Foresta Group 0.007 -22.2 11,221,079 $21,198,411 1AI Algorae Pharma 0.008 -20.0 2,316,872 $16,873,947 AVE Avecho Biotech Ltd 0.002 -20.0 158 $7,923,243 BUY Bounty Oil & Gas NL 0.004 -20.0 510,000 $7,492,505 CTO Citigold Corp Ltd 0.004 -20.0 5,700,000 $15,000,000 CR1 Constellation Res 0.13 -18.8 6,992 $9,842,202 ENL Enlitic Inc. 0.11 -18.5 150,455 $10,626,475 MMM Marley Spoon Se 0.022 -18.5 218,870 $3,178,559 SPQ Superior Resources 0.009 -18.2 3,647,410 $22,013,425 PVT Pivotal Metals Ltd 0.015 -16.7 54,014 $12,674,129 GGE Grand Gulf Energy 0.005 -16.7 1,381,600 $12,571,482 MEM Memphasys Ltd 0.01 -16.7 3,654,681 $16,592,978 SHP South Harz Potash 0.01 -16.7 14,084 $9,926,220 1CG One Click Group Ltd 0.011 -15.4 3,692,600 $9,141,325 AZ9 Asianbatterymet PLC 0.022 -15.4 796,008 $7,857,590
ICYMI – AM EDITION
Brightstar Resources (ASX:BTR) is acquiring the gold rights for the Eastern Montague project from Gateway Mining (ASX:GML) for $14m in cash and shares. This includes the Montague Granodiorite Dome which has an existing resource of 526,000oz of gold.
At Stockhead, we tell it like it is. While Brightstar Resources is a Stockhead advertiser, it did not sponsor this article.
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