• Local markets are holding ground despite a rough sell-off on Wall Street
  • Banks and Consumer Discretionary are leading the gains, but Energy and goldies are lagging
  • Small Caps winners include Javelin, Grand Gulf and Amplia

 

Local markets are showing some serious resilience today, after a brutal sell-off yesterday and a similar bloodletting on Wall Street overnight.

After a somewhat wobbly start to the session, a snapshot of the market at midday has the benchmark up 0.17%, with our banks leading the way with a 0.91% rally – and while it’s not enough to undo the damage of the previous two sessions, it’s a whole lot better than a lot of people were expecting for the ASX today.

 

TO MARKETS

I’ll admit that I didn’t have very high hopes for how things were going to pan out this morning, following yesterday’s 3.7% shanking that shook investor confidence harder than a $30 poolside cocktail.

When US markets fell sharply last night, there was plenty of chatter about why it was happening, and an almost indecent level of concern that the rot would continue to wash across global markets.

However, there was a post-session bounce in the US, and that provided enough of a toehold for Aussie investors to swing back into action, with some solid bargain hunting on the cards for those brave enough to charge back in today.

In short, it means that the sudden lurch on Friday and Monday can be chalked up to high levels of volatility, and that (touch wood) talk of a correction, or a crash, are premature and probably wide of the mark.

That’s not to say that things are perfect this morning – far from it, in fact – but it’s a lot less gruesome than it could have been.

At midday, the ASX sectors looked like this:

 

Via Marketindex.

 

Consumer Discretionary has been the best performer, with a few of the bigger players making decent gains this morning, including a 4.3% jump for wagering services provider Tabcorp Holdings (ASX:TAH), and a decent 3.85% boost for international jewellery seller Lovisa Holdings (ASX:LOV).

Languishing, however, is the local Energy sector, which was off by close to 2.0% through the morning session, with sector giant Woodside Energy Group (ASX:WDS) falling 4.87% after the company revealed it’s undertaking another big acquisition, 100% of OCI Clean Ammonia Holding and its lower carbon ammonia project in Beaumont, Texas, for a wallet-busting $2.35 billion.

A look at the ASX indices shows an interesting story, with the banks out in front of the pack, and the goldies still struggling for traction, shedding more than 2.1%.

 

Via Marketindex.

 

NOT THE ASX

There’s a lot to unpack here, but it’s important because the rout we experienced over the previous two sessions is almost entirely because of what’s been happening in the US.

And the best explanation I have for that is a simple one: US investors are having a strop because the US Fed won’t cut interest rates fast enough to keep them happy.

So, it was not a good night in New York. The S&P 500 plunged by 3%, losing US$3.5 trillion worth of market cap. The blue chips Dow Jones index tumbled by 2.6%, and the tech-heavy Nasdaq crashed another 3.43%.

The CBOE Volatility Index (VIX), often referred to as Wall Street’s fear gauge, surged by 65% to 38.57, its highest closing level since October 2020.

In the commodities market, copper, gold, and crude oil prices also dropped as global economic uncertainty dampened prospects for demand, with safe haven gold facing selling pressure as investors took profits.

But… once the session ended, there was a swift turnaround in after-hours trading, and that’s been enough to turn the US Futures indices back towards positive territory, with the needles there pointing to a 1.0% (or thereabouts) recovery when the market opens there tonight.

A huge chunk of the downward pressure on Wall Street came from the big guns, the so-called Magnificent Seven, which saw steep losses. Apple fell around 5% amid reports that Berkshire Hathaway had halved its investment in the company.

While we’re on the topic of Berkshire Hathaway, I noted yesterday that Buffett’s investment company has been not-so-quietly amassing an enormous cash war chest, totalling around US$277 billion.

I wrote about that at this time yesterday, and it was late last night while I was frantically murdering aliens and losing my mind playing Destiny 2 that I realised that there’s a pretty good chance that the volatility we’re seeing is why Buffett’s hoarding cash like a dragon.

A sharp downturn like the one we’ve seen presents a solid opportunity for bargain hunters – and if there’s anyone on Wall Street who’s going to be best placed to take advantage of that, it’s the guy with $277 billion under his mattress for a rainy day.

Nvidia dropped over 6%, while Tesla tumbled more than 4%. Collectively, the Magnificent Seven stocks lost roughly US$650 billion in market cap.

In Asian markets, Japan just about lost its shirt yesterday, when the Nikkei went into freefall to finish the session down 12.4%, amid fears that the slide would continue today and prove to be even more troublesome for the region.

The good news is that the Nikkei has bounced back emphatically, and by lunchtime was showing a 9.05% rebound.

Hong Kong seems to have wandered through yesterday’s maelstrom oblivious to the chaos, and is up 0.16% today, while Shanghai markets are similarly off in their own little world, up 0.24% in early trade.

Even Bitcoin has bounced this morning, adding about 3.0% today, with local investors throwing their weight behind Betashares CRYP this morning to push it 17% higher by lunchtime.

 

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for 06 August [intraday]:

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

Wordpress Table Plugin

 

Javelin Minerals (ASX:JAV) was climbing on news that it has appointed highly experienced mining engineer and operations manager Andrew Rich to its board as non-executive director. Rich has been brought on as the company looks to update the resource and kick off a new exploration campaign at its Coogee gold mine in WA, which currently holds a 1.4Mt at 1.07 g/t indicated and inferred resource for a contained 49,000oz of gold.

Merchant House (ASX:MHI) was also up Tuesday morning after delivering a note to investors which is actually a bit of a bummer. The company has decided to jettison its American Merchant Inc textile factory in the US, because it’s currently losing around $3.7 million every year. Once the land and assets have been sold, Merchant House says it will explore options to delist from the ASX altogether.

Amplia Therapeutics (ASX: ATX) was up on some positive news, announcing that another patient in its Phase 2a ACCENT trial for advanced pancreatic cancer has shown a confirmed partial response. This brings the total number of responders in the first patient group to four. The ACCENT trial is investigating the effectiveness of narmafotinib, used in combination with standard chemotherapy, for treating advanced pancreatic cancer.

St George Mining (ASX:SGQ) was up on news that it is set to acquire the world-class Araxá niobium-REE-phosphate project in Brazil. Historical drilling at Araxá has already defined extensive high-grade niobium, REE and phosphate mineralisation with more than 500 intercepts of high-grade niobium, >1% Nb2O5, along with ultra-high grades up to 8% Nb2O5, 33% TREO and 32% P2O5; and mineralisation commencing from surface and open in all directions.

Grand Gulf Energy (ASX:GGE) was up on news that it has secured all necessary permits and paperwork from the Utah Division of Oil, Gas and Mining for its Jesse-3 well, which the company says will test deeper pay below the Leadville primary target by casing and perforating the entire basinal stratigraphic section.

HighCom (ASX:HCL) was climbing on Tuesday, off the back of a double dose of good news for the company. Tuesday saw the announcement of a $2.5 million order for the company’s ballistic armour from an undisclosed military customer, which followed a similar announcement yesterday of an $8.9 million order from a similarly undisclosed buyer.

 

ASX SMALL CAP LOSERS

Here are the most-worst performing ASX small cap stocks for 06 August [intraday]:

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

Wordpress Table Plugin

 

ICYMI – AM EDITION

LTR Pharma (ASX:LTP) 

The company has dosed the first patients with its novel proprietary PDE5 nasal spray treatment for erectile dysfunction (ED) Spontan under Australia’s Therapeutic Goods Administration’s (TGA) Special Access Scheme (SAS).

Sun Silver (ASX:SS1)

Sun Silver has engaged Wood to execute a comprehensive Silver Paste technology assessment in support of its strategy to develop a Silver Paste production facility in the United States. Silver accounts for up to 23% of the material cost of a photovoltaic cell (solar panel) in the form of Silver paste.

The company is hopeful assessment will support its USA Section 48C application for a USD$60 million government credit to establish a Silver paste production facility in the United States, after the Biden administration approved an increase in tariffs on Chinese solar imports from 25% to 50% to encourage further onshoring of manufacturing earlier this year.

Lithium Universe (ASX:LU7)

LU7 has been officially quoted on the Frankfurt Stock Exchange (FRA) under FRA: KU00 and US-based OTC Markets Group platform (OTC) under OTC: LUVSF, allowing its securities to be readily accessed by European and North American investors.

The Frankfurt Stock Exchange (FRA), also known as the Börse Frankfurt, is one of the world’s largest and most efficient trading centres for securities playing a critical role in the European and global economy.

OTC Markets Group operates the largest trading platform in North America for over-the-counter (OTC) securities, providing transparent and efficient marketplaces for a diverse range of US and international companies.

 

At Stockhead, we tell it like it is. While LTR Pharma, Lithium Universe and Sun Silver are Stockhead advertisers, they did not sponsor this article.