• ASX and Nikkei rebound, defying the global market crash
  • Woodside Energy drops,  Telix gains 2pc
  • The RBA holds rates at a 12-year high amid ongoing inflation

 

Investors had a bit of a breather as the ASX and other Asian stock markets defied the global crash that have hit Wall Street and European markets.

The ASX200 index climbed almost 0.5% on Tuesday, driven by a rally in interest rates sensitive sectors like Consumer Discretionary and Real Estate.

Japan’s Nikkei 225, which slumped by 12% yesterday, also came roaring back with a 9% rebound.

This was despite the S&P 500 falling 160 points, or 3%, overnight, marking its largest single-day decline in almost two years.

The Nasdaq, which is heavily weighted in tech stocks, also dropped 3% as investors pulled back from the major tech companies that had recently driven the market upward.

Recent signals such as the jobs report indicate that the US economy is losing momentum, leading some experts to suggest that the Fed Reserve should cut its benchmark interest rate sooner than later. 

Despite these calls, the Fed chose to keep rates unchanged after its recent policy meeting.

The decision has sparked concern among investors that the Fed may have waited too long to lower borrowing costs for consumers and businesses, potentially heightening the risk of a recession.

“The real issue here is investors are worried the Fed is behind the curve in cutting interest rates, and that means there could be a bigger risk of a policy error,” Amanda Agati at PNC told CBS MoneyWatch.

 

So how bad was the US jobs report, really?

The July jobs report released on Friday showed a 114,000 increase in payrolls, which is not that bad in the scheme of things.

“Pre-covid, a 150k increase in payrolls would be considered consistent with a very solid economy, a number between 100k and 150k would be consistent with a slowing economy,” said Seema Shah at Principal Asset Management.

“A number between 75k and 100K would be starting to ring alarm bells about the direction of the economy, and a number below 50k would be cause for serious concern,” he added. 

So yes, the market is right to be slightly concerned, but it’s not time to panic just yet.

“Whether labor market weakness tips over into widespread job losses depends on the economy’s underlying strength.

“If household balance sheets are strong and company profit margins remain healthy, mass job layoffs and an income decline spiral should be avoided,” said Shah.

 

RBA keeps rates steady

Meanwhile, at the end of its two-day meeting today, the RBA board chose to keep the official cash rate unchanged at 4.35%, maintaining its position at a 12-year high. 

This decision aligns with market expectations.

The RBA has raised interest rates 13 times since 2022 in an effort to curb persistent inflation, which has remained above the central bank’s target range of 2% to 3%. 

That sticky inflation, combined with a tight job market, continues to steer the RBA’s decisions.

In its Monetary Policy Decision Statement, the RBA board noted that it is closely monitoring global economic trends, including those in the US,

“The economic outlook is uncertain and recent data have demonstrated that the process of returning inflation to target has been slow and bumpy,” the board said.

In contrast, central banks in the UK, Europe, and Canada have already eased their monetary policies, and the US Fed is anticipated to follow suit in September.

RBA Governor Michele Bullock is holding a media conference which started at 3:30 pm AEST.

 

What else happened today?

On the ASX today, most sectors were flashing green, except for the Energy sector, which slumped by almost 2%.

Driving down the sector was Woodside Energy (ASX:WDS), which fell by 5%.

Woodside 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.

Woodside’s decline also follows the recent downward trend in the crude oil market as concerns about a potential US recession outweighed concerns about  rising tensions in the Middle East.

“Although geopolitical tensions in the Middle East initially raised concerns about potential disruptions in oil supplies, these fears have diminished compared to the concerns on the economy, leading to prices settling at multi-week lows,” said Joseph Dahrieh at Tickmill.

Telix (ASX:TLX) was the best large cap performer today, up by 2%.

 

ASX SMALL CAP LEADERS

Today’s best performing small cap stocks:

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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 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.

It looks like no one is willing, nor able, to stop the scramble for niobium (Nb) lately, and St George Mining (ASX:SGQ) has pumped on the back of news it’s just landed a deal to acquire the world-class Araxá niobium-REE-phosphate project for $38m. It’s in the same complex as China-backed CBMM, the world’s largest producer of the material (80%) and Mosaic’s world-class phosphate mine in Brazil’s growing Minas Gerais’ critical minerals mining province.

There’s extensive, ultra-high-grade Nb2O5 intercepts of up to 8%, total rare earth oxides (TREO) of 33% and a 32% splash of phosphate to boot across the carbonatite landholding, in a region where a flurry of deals are being made to unlock its enormous critical minerals potential

Poseidon Nickel (ASX:POS) was up on no news. But with the suspension of BHP (ASX:BHP) nickel assets until 2027, investor movements into stocks with the ore in WA are gaining interest – this time for Poseidon Nickel, which owns two concentrators in the Kambalda region of the Goldfields mining district.

The company has got a ready-to-go setup with its Black Swan project that’s been laying dormant due to price depressions over the past few years. At the helm are co-recipients of AMEC prospector of the year for 2020 for their discovery of the Cassini deposit with Mincor, which was subsequently bought out by Andrew Forrest’s Wyloo Metals.

The 28.9Mt at 0.77% Black Swan surrects a 222,000t nickel deposit and has a 2.2Mtpa mill with associated infrastructure.

The explorer also has the higher grade 3.4Mt @ 1.5% Ni Lake Johnston resource and 9.7Mt Windarra project in the wings.

Aruma Resources (ASX:AAJ) was also up on no specific news.  However, the stock keeps gaining interest after being approved to acquire copper and uranium projects in Queensland and South Australia.

Its Bortala copper-gold project near Mt Isa and exploration licences in the uranium-rich Gawler Craton are both highly prospective for economic mineralisation.

It’s also conducting fieldwork at  Fiery Creek, which has multiple high-grade copper prospects with up to 36% Cu being found in surface sample rock chips.

Another to watch perhaps in the yellowcake sector is Oar Resources (ASX:OAR), which has bought into two exploration licenses in Namibia, home to some of the biggest uranium mines in the world. It’s also acquired REE-uranium projects in Brazil’s burgeoning critical minerals district, pegging 880km2 of prospective tenements across the states of Parana, Paraiba, Rio Grande Do Sul and Goiás.

It recently raised $1m to kick off exploration at its new tenements and is using the funds to hit the ground running across its African and South American prospects.

 

ASX SMALL CAP LAGGARDS

Today’s worst performing small cap stocks:

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IN CASE YOU MISSED IT

Comet Ridge (ASX:COI) has been awarded an Environmental Authority (EA) for its gas development project at Mahalo North in Queensland. This is expected to be followed by the grant of Petroleum Lease 1128 while development can start once EPBC approval is received from the Federal Government

EZZ Life Science (ASX:EZZ) has expanded its product portfolio with the launch of four new functional food products designed to meet the nutritional needs of children and adults. The Asia-Pacific functional food and beverage market is valued at US$130.85Bn.

Strickland Metals’ (ASX:STK) first hole at the Shanac deposit returned a 89.7m intersection grading 4g/t gold from 244.5m, validating the company’s geological model for controls on high-grade mineralisation.

LTR Pharma (ASX:LTP)  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)  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) 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.

 

TRADING HALTS

Summit Minerals (ASX:SUM) – pending an announcement in relation to an expansion of the Equador Project in Brazil.

Greenwing Resources (ASX:GW1) – pending the release of an announcement regarding an equity raising.

 

At Stockhead, we tell it like it is. While Comet Ridge, EZZ Life Science, Javelin Minerals, St George Mining, Strickland Metals. Summit Minerals, LTR Pharma, Sun Silver, and Lithium Universe are Stockhead advertisers, they did not sponsor this article.

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