• The ASX opened lower and struggled to make headway this morning despite solid Wall Street lead
  • Earnings at the top end of town have held key market sectors back
  • Small Caps winners include Careteq and a host of junior diggers

 

Local markets opened slightly lower this morning, despite Wall Street banking its seventh win on the trot, and gold breaking through US$2,500 an ounce for the first time – two things that would normally all-but guarantee a positive start to the trading day.

But the ASX opened 0.1% lower and has been struggling for traction for the first few hours, briefly popping its head over break-even and at midday, boasting a 0.02% blip in the right direction.

But it’s hard going on the bourse today, as the market deals with a case of the Mondays… and some less-than-stellar earnings calls… and some downward pressure from big retailers… and yada yada yada.

I’ll explain better in a moment.

 

TO MARKETS

At lunchtime today, the ASX 200 benchmark was just above the waterline at +0.02%, having spent the morning struggling to get moving despite a decent lead in from Wall Street on Friday night.

A snapshot of the market sectors looks like this:

Chart via Marketindex

 

Utilities were performing well, with most of that off the back of a rise for power suppliers like AGL Energy (ASX:AGL), up 1.7% and Origin Energy (ASX:ORG), which is up 1.86% this morning but still smarting from the beating it took last week.

At the opposite end of the spectrum, Consumer Staples is floundering this morning with a big, market-moving dip from A2 Milk (ASX:A2M), which saw out the end of last week with positive news but has kicked off this week by going into freefall this morning.

A2 Milk was down more than 17% this morning, and its story is one that we’ve seen shaking out a few times this earnings season – and it’s got all the hallmarks of a market that’s being dominated by one of those “Magic 8 Ball” toys… albeit one that is permanently stuck on “Outlook Not So Good” every time it is given a shake.

A2 is a great example: It announced this morning that NPAT was a full-cream 7.7% higher at $167.6 million, which is normally music to investors’ ears.

But it’s the outlook that has everyone rattled – hence the heavily-laboured Magic 8 Ball analogy – as A2 says that the coming 12 months is going to be hard work, with the likelihood of single-digit EBITDA growth, which is well below what the market was expecting at around the 15% mark.

Plumbing supplier Reece (ASX:REH) is another company that did well last year but says it’s facing an uphill battle over the coming 12 months – the company’s 8% increase in net profit to $419 million has been overshadowed by its outlook, and it’s trading 4.7% lower this morning as a result.

A quick rundown from around the other big companies delivering earnings today is a real mixed bag.

The big news is building mega-corp Lendlease Group (ASX:LLC) revealing a $1.5 billion loss, which the company has attributed to “strategy related impairments” that cost it $1.3 billion.

Bluescope Steel (ASX:BSL) has recorded a 20% drop in profit to $806 million as well.

On the happier side of the ledger, Westpac (ASX:WBC) has announced its profit climbed 6% to $1.8 billion, and Ampol (ASX:ALD) has confirmed what we already kinda knew – it’s half-year profit has leapt to $235 million, up from $79 million on pcp.

A quick look at the ASX indices reveals this:

 

Chart via Marketindex

 

The goldies are out in front, mostly because gold prices have soared again, breaking through US$2,500/oz for the first time ever, which is shoring up gold’s status as a safe haven asset while the market oscillates between excellent and terrible.

 

NOT THE ASX

US stocks finished higher on Friday as Wall Street regained almost all of the losses from earlier in the month, as the S&P 500 continued to rise for the seventh consecutive day, up by 0.2%.

The blue chips Dow Jones lifted by 0.24%, while the tech-heavy Nasdaq edged higher by 0.21%.

It was the best week of the year for all the major US indexes, and the best week for stocks since November, reported Earlybird Eddy Sunarto this morning.

“This was a dramatic shift from earlier in the month when markets were hit hard by weak US jobs data, and a Japanese interest rate hike. Stocks plummeted as investors who had borrowed in low-yielding yen to invest in rising US tech stocks suddenly faced losses when the yen spiked,” Eddy says.

In US stock news, Nvidia, Apple, and Alphabet all gained on Friday, whereas Meta, Microsoft, and Amazon saw declines.

Shares in Chipotle Mexican Grill keep on falling, dropping another 3% following the earlier announcement that CEO Brian Niccol is leaving the company to become the new CEO of Starbucks.

Meanwhile, Warren Buffett’s Berkshire Hathaway added a few new positions and increased some of its existing ones in Q2, according to recent filings.

Overall, however, the company sold more stocks than it bought, leading to a record-high cash and US Treasury holdings of US$276.9 billion.

In Asian markets this morning, the news is mixed. The Hang Seng is up 1.33%, Shanghai markets are up 0.63%, but Japan’s Nikkei – like our own benchmark – is flat, at -0.03%.

Elsewhere, Costa Rica has the right idea – the market there is closed for Mother’s Day.

 

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for 19 August [intraday]:

Swipe or scroll to reveal full table. Click headings to sort:

Wordpress Table Plugin

 

Careteq (ASX:CTQ) was leading the way on Monday morning after the company announced the acquisition of the remaining 45% of Embedded Health Solutions for $2.4 million. The company says that the buyout is structured as a vendor-financed transaction, with payments spread over eight quarterly instalments, and with the Sofihub business now divested, it expects Careteq to be profitable at the group level.

Larvotto Resources (ASX:LRV) was up after providing the market with an explanation of why its price has been soaring recently. The short version is this: Larvotto acquired Australia’s largest antimony deposit at the Hillgrove project in New South Wales in December 2023. Since then, China has slapped export controls on antimony, which has driven the price up 2x to about US$23,000 – leaving Larvotto in the driver’s seat as a global supplier of the critical mineral.

Dreadnought Resources (ASX:DRE) was climbing on news of high-grade niobium intercepts from its 100% owned Gifford Creek Carbonatite, part of the Mangaroon project located in the Gascoyne Region of Western Australia. Assays from four of the 19 holes drilled have returned intercepts including 50m @ 0.9% Nb2O5 from 49m, including 20m @ 1.3% Nb2O5 from 56m, and 38m @ 0.5% Nb2O5 from 58m, including 6m @ 1.2% Nb2O5 from 60m.

Prodigy Gold (ASX:PRX) was up on news that a 13 hole RC drilling program to commence in the coming weeks at the Hyperion gold deposit, which will will concentrate on targeting areas of Hyperion that have previously returned significant aircore drilling results, which were not included in the latest Mineral Resource estimate, which already boasts 8.64Mt @ 1.5g/t Au for 407,000 ounces at a cut-off grade of 0.6g/t Au.

Global software company Nuix (ASX:NXL) was up after releasing its earnings on Monday, which revealed a 20.9% rise in revenue to $220.6 million, which has contributed to a 60.2% rise in statutory EBITDA to $55.9 million and a complete turnaround in NPAT, from -$5.6 million to +$5 million.

Charger Metals (ASX:CHR) was rising on Monday after releasing a strategic update regarding its Bynoe Lithium Project in the Northern Territory, as well as merger and acquisition discussions at the corporate level. The headline news from the update is an unsolicited non-binding, conditional, indicative offer from Core Lithium for 100% of Charger, for scrip consideration coming in at around 0.9 Core shares per Charger share – which valued Charger at $0.084 per share or $6.5 million.

Australian Critical Minerals (ASX:ACM) was up on news of positive results from a 46 rock-chip sampling program the company has completed across its Cooletha and Shaw Projects in the Pilbara, WA. ACM says its samples from Cooletha averaged 54.9% Fe, with the added bonus that includes a very low phosphorous content, which averages just 0.08% at Cooletha.

Control Bionics (ASX:CBL) was up on news that the US Centers for Medicare & Medicaid Services (CMS) has approved a new Healthcare Common Procedure Coding System (HCPCS) code for its NeuroNode product. This means it now qualifies for a US$4,300 reimbursement that wasn’t previously available.

Nova Minerals (ASX:NVA) is up this morning, but that’s alongside news that CEO Christopher Gerteisen has been invited to present at the Emerging Growth Company Conference on 21 August 2024 – which is fantastic news for Christopher and Nova, but unlikely to be the reason behind Nova’s jump this morning.

Spenda (ASX:SPX) was climbing earlier on Monday morning on news that its acquiree company Limepay has executed an agreement to process Lessn’s entire payments volumes, currently about $50 million per annum, using Limepay’s white-labelled payment widget product, to enable payment services on Lessn’s platform.

 

ASX SMALL CAP LOSERS

Here are the most-worst performing ASX small cap stocks for 19 August [intraday]:

Swipe or scroll to reveal full table. Click headings to sort:

Wordpress Table Plugin

 

ICYMI – AM EDITION

Strategic Energy Resources (ASX:SER) has begun drilling the Achilles 1 polymetallic prospect within its South Cobar project tenements in QLD.  A 3,000m reverse circulation drilling program is looking to test a strong soil anomaly and its relationship to the prospective Achilles Shear, host to the recent Achilles 3 polymetallic discovery by Australian Gold and Copper (ASX:AGC) just 7km to the north.

Venture Minerals (ASX:VMS) has raised $609,000 under a recent share purchase plan (SPP) to focus on its clay hosted rare earth discovery in WA. A diamond drill rig is set to start this week, providing the company with density measurements for a maiden resource estimate that is planned for the end of the year.

Charger Metals (ASX:CHR) has engaged with multiple companies expressing an interest in CHR and its Bynoe lithium project within the Northern Territory Litchfield pegmatite field.

The project is enclosed by Core Lithium (ASX:CXO) and its Finniss lithium project, one of the companies CHR is in discussions with after it received an unsolicited non-binding, conditional offer from CXO to acquire Charger. The view of the CHR board is that the terms currently provided in the offer don’t fully reflect the company’s value and prospects.

Astral Resources (ASX:AAR) has confirmed the potential of its Kamperman prospect with the final three holes from a 26-hole program returning up to 10m at 5.04 g/t gold from 99m and 32m at 2.13 g/t gold from 125m. These infill results continue to support the interpretation of a very continuous, steeply west dipping zone of high-grade gold mineralisation in the southern part of the deposit.

 

At Stockhead we tell it like it is. While Strategic Energy Resources, Venture Minerals, Charger Metals and Astral Resources are Stockhead advertisers, they did not sponsor this article.

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