• S&P/ASX 200 closes 0.45% to the good, on back of the RBA interest rate-hiking pause
  • This surprised three of four big banks and a gaggle of sodden uni students who dispersed shortly thereafter
  • Standout sectors: Financials, Real Estate, Energy

 

Only one of the “Big Four” Aussie banks was in Paul the Octopus-like prediction form yesterday.

Not waving the black and yellow flag for them or anything (more like shaking our old CBA piggy bank to see if there’s anything in it), but it turns out the Commonwealth Bank made the right call regarding the Reserve Banks’ July interest rates move/non-move.

The ASX 200 got a boost then levelled out after some shaky moments today (see below) on the back of the RBA’s July rates pause, leaving the cash rate at 4.1% and Aussie homeowners everywhere 4.1% less likely to kick another hole in the wall of the spare room that needs a reno.

But wait, it’s not all sunshine and rainbows, naturally. Here’s the hawkish bit you knew was coming:

RBA Governor Lowe cited “economic uncertainty” as the reason for the pause, adding:

“The Board remains alert to the risk that expectations of ongoing high inflation will contribute to larger increases in both prices and wages, especially given the limited spare capacity in the economy and the still very low rate of unemployment,” having cut and pasted that exact same section from his previous speech on this stuff.

“Accordingly, it will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms,” he continued.

Righto, expect more holes in walls in coming months, then. And just quickly, before we drill into a few specifics, what else grabbed the spotlight today?

• An “intimidating crowd of negatively geared property investors” standing outside the RBA HQ in Martin Place in the rain, apparently. Accompanied by… angry uni students doing their best (although poor-looking and sodden) impression of sooky Lord’s toffs ahead of Philip Lowe’s announcement this arvo.

Something about cost of living, rising rents and lack of employment. And the need for clarity around certain cricketing by-laws, which, to be fair on Lowe, he probably can’t do very much about, either.

“We’ve got a housing fix – tax the rich!” shouted Rick, Neil and Mike, while Vyvyan smashed a VCR somewhere over someone’s head.

• Meanwhile, elsewhere on the planet, Saudi and Russian oil cuts have been putting upward pressure on crude prices, with Brent Crude topping $75 a barrel.

 

TO MARKETS

The local bourse is feeling a bit better after a dodgy lunch today, with a +0.45% rise to see out proceedings. Here’s the worm that turned. Thanks, Phil.

Sector-wise, here’s the deal, with Financials, Real Estate and Energy all getting a nice RBA reprieve, while Health Care and Industrials were feeling a little indifferent altogether.

Source: marketindex.com.au

Before we move on to the BIG winners of the day in small caps, in the slightly larger end of market cap town, we’re seeing…

• Costa Group Holdings (ASX:CGC) : +12.67% on news of a non-binding indicative proposal from Paine Schwartz Partners. It’s a $3.50 a share takeover bid, that Wilsons’ analyst James Ferrier expects to be supported but “arguably undervalues Costa”, according to a report from The Australian‘s David Rogers.

• Austal (ASX:ASB) : +11% > Shares for the WA-based defence and commercial shipbuilder are up based on a report about a potential takeover, with US private equity giant JF Lehman & Company apparently scoping out the Aussie firm.

Head over to Large Caps, for more.

 

TODAY’S ASX SMALL CAP LEADERS

Here are the best performing ASX small cap stocks:

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

Wordpress Table Plugin

Some standouts:

• Mount Burgess Mining (ASX:MTB) +350% > on no particular news we’re seeing, although we’re looking…

• RightCrowd (ASX:RCW) : +175% > on the proposal from the firm of a divestment of its physical security businesses for $13.5 million and “repositions into the identity and cyber security markets”. Guess the internets and internetty crime really is the future.

• Atomo Diagnostics (ASX:AT1) : +122% > on a price movement clarification, that, er, isn’t exactly clear. “Atomo advises that it is not aware of any information that has not been announced to the market which, if by known by some in the market, could explain the recent trading in its securities.”

That said… Atomo’s share price is likely up because of the stonking rise so far this week of Lumos Diagnostics (ASX:LDX) (see yesterday):

“Atomo’s partner, Lumos Diagnostics announced to the market that it has received US FDA approval for its FebriDx test, which utilises Atomo’s user friendly integrated Pascal test platform, making Atomo a critical supplier to Lumos for this approved product,” the Atomo announcement today later continued.

Why didn’t they just say that in the first place?

 

TODAY’S ASX SMALL CAP LOSERS

Here are the worst performing ASX small cap stocks:

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

Wordpress Table Plugin

 

LAST ORDERS

Gregor, you’re a beaut. And we say that, because he kindly passed me the words below. It’s not style, but I’ll bung a quote mark at the front of this, and the end, because it would be forgetful of me not to and “against the spirit of cricket Closing Bell” or something if I did otherwise…

“

Rex (ASX:REX), the budget airline that everyone seems to forget about until it reports that it’s losing tons of money and/or going out of business again, has responded to a query from the ASX over the unfortunate $35 million operational loss the company forecast towards the end of last month.

In particular, the ASX apparently wanted to know the details of the timing around when the company knew things were looking dire, and compare that to the date when it made its announcement to the market, which landed on Tuesday 20th June – around a week after the ASX thought that maybe it definitely probably should have.

The discrepancy, apparently, was something of a concern… but Rex has replied with a calm and measured response that made it pretty clear that the reason for the delay in getting the info out to the market was down to the ASX itself. Apparently.

According to Rex, the company only had rough, unaudited ballpark numbers to work with as of 13 June, but off the back of that “draft revenue data” over the following three days, the Exec Chair reviewed everything at their disposal and formed the opinion that “it was highly probable that the company would report an operational loss”.

As is best practice for clearly terrible news, the release was sent to the ASX minutes before the market closed on Friday 16 June – this is called in political circles “putting a story out with the trash”, in the hope that people don’t read the news on the weekend and the story will magically get overlooked.

However, Rex says, it was the ASX that held the release, because “additional clarification was required” – but, because by that time it was the weekend and everyone had gone home, it sat until Monday 19th before the calls back and forth between Rex and the ASX got underway.

“After numerous calls and discussion with the ASX on Monday 19th June, Rex immediately conducted a forecast to quantify the expected operational loss at the request of ASX, which was provided as part of the profit guidance released on Tuesday 20th June,” Rex’s explanation reads.

And even then, it was further delayed because of the need to discuss it all with the ASX again thanks to rampant media speculation over the trading halt that was called on the Monday.

So… for the tl;dr crowd, the answer to the ASX query “Why Was This So Late?”, was a simple “It’s Actually Your Fault, So Don’t Blame Me” from Rex.

“

 

TRADING HALTS

While you’re at it, Gregor, could you also round up the trading hal… oh, thanks…

Ardea Resources (ASX:ARL) – Pre-Feasibility Study from the Kalgoorlie nickel project Goongarrie Hub.

Godolphin Resources (ASX:GRL) – Capital raising.

Hexagon Energy Materials (ASX:HXG) – Response to ASX queries about the WAH2 Project Preliminary Feasibility Study.

 

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