ASX Small Caps Lunch Wrap: Does anyone need yet another reason to fear Taylor Swift this morning?

It’s been a pleasant enough start to the week for local markets, after the ASX 200 benchmark wandered into work around 10am in an obviously jovial mood, dropped a +0.3% box of donuts in the break room and promptly wandered off in search of lunch.

By the time the rest of us went in search of nutrition in the middle of the day, the benchmark had hit +0.1% and was trending ever-lower, as investors’ enthusiasm over the probability of keeping interest rates on hold tomorrow was outweighed by our collective loathing of large supermarkets.

But before I get into the market data, and all of the thrills and spills that entails, I’ve got news from the US that has seismologists very excited, after “small earthquakes” were detected in central Seattle at the end of last week.

It’s been about 1,100 years (apparently) since Seattle last had a major earthquake, which is why reports of seismic activity 22 and 23 July, measuring 2.3 on the Richter scale, caused alarm within the scientific community.

Searching for a cause – if only to quell fears (or feed long-held desires) that Seattle was about to slide into nearby Elliott Bay – revealed that the tremors were nothing to be too concerned about.

The rumblings were emanating from Lumen Field, where bafflingly popular popstar Taylor Swift was entertaining tens of thousands of tween-aged fans, along with several thousand older fans who really should know better.

The quakes from Swift’s concert were reportedly twice as strong as the largest-ever recorded seismic activity from the site, a 2.0 magnitude tremor in 2011, caused by Seattle Seahawks fans losing their minds when Seattle Seahawks running back Marshawn Lynch scored a touchdown.

Prior to that, the record was held by that time Courtney Love 100% didn’t murder her husband Kurt Cobain.

While it’s not quite up there with Beyonce Knowles’ efforts to tank the Swedish economy in May, by causing a +0.3% spike in inflation just by having a concert in Stockholm, it’s still enough to have Australian authorities nervous about Swift’s upcoming appearances in February 2024.

There are several terrible puns to be made about Swift’s fans “shaking it off”, but I refuse to indulge that sort of nonsense, in the same way that I steadfastly refuse to acknowledge that Swift has a couple of half-decent songs that sometimes I catch myself humming along to on the radio.

TO MARKETS

Energy and Materials – with some help from the InfoTech sector – are leading the ASX 200 into positive territory this morning, with the benchmark landing at +0.1% at lunchtime after hitting an early-morning high of +0.4%

Weighing heavily, however, was the Consumer Staples sector, which has plunged more than 1.2% so far today, after Woolworths (ASX:WOW) and Coles (ASX:COL) shanked their mornings into the rough by posting -2.2% and -1.5% losses respectively.

The broader market, however, appears to be betting heavily on a rate pause tomorrow when the RBA’s monthly luncheon gala wraps up and the board belches out its decision on whether inflation still running twice as hot as the 2-3% target is enough of a reason to move mortgagee goal posts again.

According to the ASX’s RBA Rate Indicator, there’s only an 8% likelihood that the board will be twisting the nation’s debt nipples again tomorrow.

NOT THE ASX

US stocks finished their week in pretty good shape as well, with Wall Street closing the books on Friday evening with the S&P 500 index up 1%, the Dow Jones +0.5%, and tech-heavy Nasdaq higher by almost 2%.

Earlybird Eddy reported this morning that US market positivity was driven by personal income and consumption (PCE) data release came in at its lowest level in nearly two years, bolstering the case of a peak in inflation. The PCE is a measure of inflation closely watched by the Fed Reserve.

EArnings season continued in New York as well, with highlights including a 6% climb by Intel as it returned to profitability, while Procter & Gamble rose 3% on quarterly earnings beat.

However, US automaker Ford slid 3% after saying that it expects to see losses from electric vehicles of US$4.5 billion this year, and on news that the company is currently trying to figure out if it is marketing its current model Ford Mustang to an accident-prone demographic, or if the car is actually just an undriveable POS.

In Japan, the Nikkei is up 1.84% this morning, on news that the streets of Hyogo Ward in Kobe are safe once more, after a 55-year-old man was arrested for throwing his dog at police.

According to local reports, the animal was found wandering the streets, and – after it was recognised as an animal that was ‘known to police’, the animal’s owner was contacted to come and collect it.

That didn’t quite go according to plan, however, and during an epic rant about his wayward Shiba Inu, the owner allegedly picked up the 6kg animal and – shouting “I ain’t got no need for a dog like this!” – hurled it at the officer.

The dog’s owner has been charged with “obstruction of official duties”, as – apparently – dog-throwing remains legal in Japan.

Meanwhile in China, former foreign minister Qin Gang is still missing and Shanghai markets clearly don’t give a toss (+0.87%), while in Hong Kong the Hang Seng is up 1.60% on Friday’s news that a High Court judge has rejected the government’s legal action seeking an injunction against the broadcasting protest song “Glory to Hong Kong”.

The court’s decision was labelled “a sensible decision, making some important broader points” by the South China Morning Post.

In a statement, Beijing said it was “deeply saddened” to hear the news that the headquarters of the South China Morning Post will be burnt to the ground sometime in the next two weeks.

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for July 31 [intraday]:

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Leading the Small Caps charge this morning is Ecofibre (ASX:EOF), rising sharply by 55.9% on news that its specialty manufacturing division, Hemp Black, has signed a Memorandum of Understanding (MOU) with Under Armour.

The three-year deal is expected to bring in $9 million per annum, per machine, with a second machine on order to meet demand, financed by Under Armour for $4.5 million. Commissioning of the machinery is expected to take place by Q1 2024.

Additionally, Hemp Black has also announced an agreement with Cruz Foam to manufacture a sustainable, biodegradable packaging material for its customers, expected to provide $3 million in annual revenue.

Beleaguered med-tech small cap Exopharm (ASX:EX1) is up a little over 36% this morning, after delivering a confidence-boosting quarterly report focussed on steps the company has been taking to rebuild after it shed nearly 72% of its value between 7-13 February this year.

Investors appear to have taken note of the appointment of Mark Davies as chair and independent non-executive director, as well as Exopharm’s successful issue of 125m shares to redeem all of the Convertible Notes issued under a mandate announced on 13 February that raised $1m.

And lastly, Kairos Minerals (ASX:KAI) is up 20% this morning after its quarterly report, which covered off the company’s immediate plans for its lithium and gold interests.

On the lithium side of the business, Kairos says it’s got a 7,000m RC drilling program planned for the Black Cat lithium, Crystal Palace lithium and Blue Jay REE prospects at Roe Hills, with plans to have the drills spinning in early August.

While that’s underway, Kairos is also exploring ways to unlock the value of its increased 1.6Moz gold Resource at Mt York in the Pilbara, while continuing to grow the inventory.

ASX SMALL CAP LOSERS

Here are the most-worst performing ASX small cap stocks for July 31 [intraday]:

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