Local markets opened lower this morning, by a bit more than the market was expecting after a decent enough effort on Wall Street overnight that should have put a bit more lead in the ASX pencil on Monday.

However, the Energy sector and the Banks were the only ones putting in a positive performance in the lead-up to lunch, against the backdrop of the ASX wielding the suspension stick on a handful of companies that haven’t turned in their homework for FY24.

Among those is Star Entertainment Group, which was in all sorts of bother this morning after regulators delivered some powerfully bad news late last week and the ASX whacked it with a suspension.

There’s a bit to unpack, so let’s dive in.

 

TO MARKETS

We were expecting a drop for the market this morning, but what arrived at 10:00am was a bit larger than most market-watchers were banking on, after Tech stocks and the Goldies went into a profound dive and dragged the rest of the market down with them.

That’s not to say there weren’t any bright spots, but it’s mostly down to the big banks and a smattering of Energy stocks outperforming in the opening hours of Monday – the rest of the market’s got a case of the Monday morning blues, and it’s left the ASX 200 benchmark 0.27% behind the 8 ball at lunch time.

It’s the first day back since the end of reporting season, and analysis from around the market is all largely similar – investors are feeling a little let down, as the frantic filing of paperwork ended on Friday with a whimper, rather than a bang.

At midday, the market sectors looked like this:

 

Chart via Marketindex

 

Leading the losses in terms of bulk in the Telco sector was REA Group (ASX:REA), which paused trading this morning to confirm that the company is considering a play for London Stock Exchange-listed Rightmove.

REA hasn’t made any official overtures as yet, but the cat’s out of the bag on the company exploring options for a possible cash and share offer sometime in the near future – but that doesn’t seem to be a cheery option for investors.

Before triggering the trade suspension, REA was down just over 7.0% in morning trade – and that caused the entire sector to contract, leaving it languishing, down around 1.5% by lunchtime.

The headline news, however, is coming out of Star Entertainment Group (ASX:SGR), which has been suspended by the ASX for not filing its end-of-year financials, on top of being handed some sour news last week by the regulators investigating whether the company was fit to hold a casino licence in NSW.

Spoiler alert: the regulator said “nope”, after the recently departed management team undertook a baffling approach to the first round of regulator-enforced remedial action.

The ABC’s Ian Verrender said it best this morning, calling strategy from former chairman David Foster and former chief executive Robbie Cooke “a breathtaking display of arrogance” when the pair, rather than implementing fixes, dug in and went to war with the regulators.

It’s unclear what’s happening inside SGR HQ at the moment, but the market is waiting on the company to deliver its report card for FY24 – and trading its shares will remain suspended until that happens.

However, between that kerfuffle, reports of an expected $1.4 billion write-down on the company’s NSW assets, and the fact that it just opened a refreshed operation in Brisbane – where the development cost close to $5 billion – things are not looking good.

Zooming out, the question is whether investors are prepared to chase their losses on SGR. The company has gone to investors for capital injections twice in the past 12 months, first at $1.20 per share, then again at $0.60 per share – but when you’re in the casino business, you’d know thing or two about how to get the punters to keep on punting.

When it was suspended, SGR was at $0.45 per share, and rapidly approaching its all-time low of $0.405 – the double-whammy of late paperwork and more grief from the regulators is not going to help things any.

In broader outlook terms, there’s a slew of data due to hit the newsstands this week for local investors to digest, and not a lot of it is likely to be super-happy news.

This morning we learned that housing approvals in Australia have risen sharply by 10.4% in July – but that’s against a bunch of data from last week and stuff coming up this week that paints a picture of the Aussie economy getting slower and more bloated as the weeks roll on.

The next couple of days will see the release of two key indicators – Balance of Payments tomorrow and GDP on Wednesday – which most economists are expecting will show modest (but slowing) growth.

The ANZ-Indeed job advertisement data for August arrived today, showing a 2.1% fall in August, indicative of an economy that is labouring with the handbrake stuck on, despite being in better shape than pre-pandemic levels of job vacancies.

It’s worth noting that another sector of the market is flailing wildly today, with the Goldies down more than 3.0% by lunchtime as the market takes in this week’s data and figures out which bit of the crisis needs fixing first.

 

NOT THE ASX

On Friday, US stocks wrapped up a shaky week and a tumultuous month with a strong finish, thanks to the latest data on the Federal Reserve’s favoured inflation measure.

The benchmark S&P 500 was up by 1%, the blue chips Dow Jones lifted by 0.55% , and the tech-heavy Nasdaq rose by 1.13%, Earlybird Eddy Sunarto reported this morning.

To US stocks, and investors are shifting their attention away from the Nvidia earnings, which had captivated the markets last week.

Intel surged almost 10% after news emerged that the chipmaker is contemplating spinning off its foundry and exploring other strategies to address challenges, particularly in competition with Nvidia.

This comes after a disappointing earnings report earlier this month that unsettled investors. Despite recent gains, the stock is still down more than 50% year-to-date.

Dell Technologies rose 4% following stronger-than-expected Q2 results and an upgrade to its full-year forecast.

Chinese e-commerce giant Alibaba climbed 3% on the NYSE after marking the end of a three-year regulatory process. This update follows a 2021 antitrust fine imposed by China’s State Administration for Market Regulation (SAMR) for monopolistic practices.

There won’t be any action on Wall Street tonight, as markets there are going to remain closed for the US of A’s Labor Day. Canada and Vietnam are also on holidays today.

In Asian market news, Japan’s Nikkei is outperforming the rest of the region with a modest 0.17% boost, but Hong Kong’s Hang Seng is down 1.56% and Shanghai markets are 0.63% lower as well.

 

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for 02 September [intraday]:

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

Wordpress Table Plugin

 

Conrad Asia Energy (ASX:CRD) was moving sharply Monday morning on news it has signed a binding Gas Sales Agreement for the sale and purchase of the export portion of natural gas from the Mako gas field with Sembcorp Gas, a wholly owned subsidiary of Singapore-based Sembcorp Industries.

The contract term is until the end of the Duyung PSC in January 2037 and allows for the sale of around 76 billion British thermal units per day (Bbutd) equivalent to 76.9 million standard cubic feet per day (mmscfd), and contains provisions for the sale of up to an additional 35 Bbtud (around 35.4 mmscfd) should a tie-in pipeline not be built to the Indonesian domestic market in Batam.

Elsewhere, Marquee Resources (ASX:MQR) is the latest company with antimony news to announce, telling the market about its Mt Clement (Eastern Hills) project in the area from which Artemis Resources (ASX:ARV) has already revealed a maiden JORC complaint MRE of 13.2kt at 1.7% Sb (plus 18.7kt Pb, 7oz Au and 434 koz Ag) in 2013, building on exploration work in the 1990s by Taipan Resources.

That MRE only covers Artemis’ section of the identified mineralisation, and Marquee says that approximately 220m of known mineralisation from Taipan sits within Marquee Resources tenement E08/3214, and the structural trend extends for a further 800m onto Marquee ground, but the area has had “little to no exploration and thus remains open for the identification of further antimony bearing zones”.

Earlier, RocketDNA (ASX:RKT) was higher on news that the company has signed two significant contracts for its xBot surveillance model (PatrolBot) with SSG Security Solutions, which involve the deployment of PatrolBot units across a number of mining sites for the monitoring and reporting of defined areas using drone or unmanned technology for the purpose of security overwatch and intelligence gathering.

Estrella Resources (ASX:ESR) was up on news that it has entered into a Subscription Agreement with a strategic investor to raise $350,000 at an issue price of $0.006 for each fully paid ordinary share, which represents a premium of 20% to the last closing price of $0.005 on August 28, 2024, with the finds earmarked to advance the company’s Timor-Leste Project.

Raiden Resources (ASX:RDN) was moving on news it has been granted a key E47/4062 tenement on the Andover South project, clearing the way for the company to continue its near-term drilling activity at the site.

Regener8 Resources (ASX:R8R) was moving early on news that it has completed cultural heritage survey has been completed at priority locations of the Grasshopper and Hatlifter prospects by the Upurli Upurli Nguratja Aboriginal Corporation. Exploration planning is now underway including finalisation of drill hole locations and program extents, contractors and logistics, with drilling planned for Q4 2024.

 

ASX SMALL CAP LOSERS

Here are the most-worst performing ASX small cap stocks for 02 September [intraday]:

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

Wordpress Table Plugin

 

ICYMI – AM EDITION

AdAlta (ASX:1AD) continues to advance negotiations of several term sheets in respect of transactions associated with its AdSolis and AdCella strategies and will receive $1m under the previously announced institutional investments by New Life Sciences Capital and Meurs Group.

AdCella is a jointly owned entity to facilitate entry of innovative cellular immunotherapies from Asia into Western regulated markets, leveraging the company’s i-body technology, while AdSolis is looking to progress AD-214 into Phase II clinical trials for Idiopathic Pulmonary Fibrosis (IPF).

“We are pleased with the progress being made towards transactions in both our AdCella and AdSolis business units, enabled by the support of New Life Sciences Capital and the Meurs Group. We look forward to updating shareholders on further progress over coming months that will unambiguously demonstrate the true value of our i-body platform,” managing director Tim Oldham said.

Regener8 Resources (ASX:R8R) has completed a cultural heritage survey at priority locations within the Grasshopper and Hatlifter prospects ahead of planned drilling in Q4 2024.

Applicable Program of Works approvals have also been received by the Department of Energy, Mines, Industry Regulation and Safety (DEMIRS), which is a key step prior to on ground drilling.

Exploration planning is now underway including finalisation of drill hole locations and program extents, contractors and logistics.

 

At Stockhead, we tell it like it is. While AdAlta and Regener8 Resources are Stockhead advertisers, they did not sponsor this article.

 

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