• ASX gives back early gains on Wednesday
  • Small caps whacked as Fed Hawks get hawky, bonds get toppy, coal prices surge, oil prices plunge… again

And now the market news in briefs.

Unlike the no-frills, straight-shooting ASX Emerging Companies (XEC) index which dropped at the open and hasn’t been seen since (down over 1%), the ASX 200 got off to a promising start before surrendering its early lead.

Another day at the office in April 2022, really.

Bond yields are on the rise which means equities like, er, anything with a formula which equals something like speculative profit over time divided by risk – so one or two small caps for example – are bleeding out.

Looks like the Emerging Companies Index will close down about 1.3% compared to the ASX200 finishing up a few bps.

Looking across the sectors, Luke Winchester – maligned Newcastle Knights supporter and CIO at Merewether Capital – says resources have had a weak day which explains the majority of the gap with the XEC, weighed by its massive 45% composition of materials and energy names.

Not that the 200 lags much there, it has nearly a 30% weighting to the two sectors, but most of that is BHP/RIO which trade a bit steadier than the smaller companies.

“It’s also worth keeping in mind that sector weighting when looking at the smaller indexes on the ASX, they can be very volatile because of exposure to junior miners,” Winchester told Stockhead.

“Growth investors have gotten a bit of a reprieve today given the strong lead from the Nasdaq (up ~2%), but futures are red on the back of another weak Netflix report.

“Some key earnings in the US coming up will guide markets for the short term I think and the strength of the Nasdaq in particular will rely heavily on the mega caps,” Winchester said.

As far as specific names go, backing up from his Money Talks the other day, Luke says he’s still sifting through the scrapyard for beaten down small cap tech stocks.

“Even today, I am looking at stocks like RightCrowd (ASX:RCW) and Keypath Education (ASX:KEY) both off ~12% on no news with horrendous looking charts,” he said.

“For disclosure, Merewether doesn’t own either but they are examples of where I am looking around, especially in the next couple of months as we come into tax loss selling season.”

“It takes intestinal fortitude on a significant scale to buy stocks like that right now, but in the long-term it is where investors will find the greatest returns.”

Punchy overnight leads certainly haven’t set the region on fire – although tech names profited from the more than 2% march of the tech-laden Nasdaq with US investors ignoring – as the rich largely do – the International Monetary Fund’s (IMF) latest depressing numbers on this year’s global growth, now forecast for 3.6%.

This morning China maintained its lending rate (LPR) for commercial banks steady, after China’s central bank lowered its reserve requirement ratio (RRR) to make sure lenders have cash to burn in the Covidly-closed economy.

The price of Brent crude and cousin West Texas were all slumpy overnight – dropping a fairly staid (for these days) 5% while iron ore futures in Dalian are also weaker.

TODAY’S BIGGEST SMALL CAP WINNERS

(Stocks highlighted in yellow rose after making announcements during the trading day).

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Petratherm (ASX:PTR) is at decade highs today, after the explorer revealed a high-value rare earth discovery inside its Comet gold project in the ever-fruitful Gawler Craton in South Australia. PTR shares have more than doubled, and then kept climbing into the close.

According to Stockhead’s rarest egg, Jessica Cummins a bit of shallow RAB drilling of the clay horizon confirmed some “impressive concentrations of high-value REEs”.

All 44 holes returned strong results with 23 holes hitting TREO > 1,000ppm, with PTR comparing them to the ion-absorption rare earth deposits of China – world-king of REEs.

“These are highly encouraging early results and a validation of the company’s long-standing frontier exploration approach, working in under-explored terrains and trialling new exploration methods,” PTR exploration manager Peter Reid said. “This provides evidence that the Northern Grawler Craton is fertile for ionic clay hosted rare earth mineralisation.”

The results are also in for Altech Chemical’s (ASX:ATC) pre-feasibility study… and the numbers are promising, the investors are pumped and Saxony, Germany will be the new home of a 10K tpa silicon/graphite alumina coating plant – with a net present value of more than half-a-billion US dollars (circa $686 million).

The ATC board has decided to go ahead immediately with a definitive feasibility study (DFS), shares are up well over 30%.

Graphite producer and battery anode material developer Volt Resources (ASX:VRC) says it’s gotten itself into a handy joint development deal with alkaline battery producer, Urban Electric Power, and Volt’s tech partner in the US – American Energy Technologies Co. The mission they’ve chosen to accept is all about playing with non-spherical purified graphite for conductivity enhancement and ultra-high purity graphite-based coatings to improve alkaline battery performance.

Trevor Matthews VRC managing director says this is how to best develop commercially based tech with an aim to improve alkaline battery performance, cheaper.

Matthews says the deal positions Volt to become a battery materials manufacturer for the US battery market.

Big River Gold (ASX:BRV) also going big on Wednesday with a binding scheme implementation deed (SID) with Aura Minerals for the total takeover of Big River with BRV shareholders to receive a cash consideration of A$0.36 per BRV share.

If the scheme proceeds, Big River will become a subsidiary of Aura and will be held under a JV between Aura and Dundee and will bid a fond farewell to the ASX.

The company says the scheme consideration of $0.36 in cash per Big River share values Big River’s diluted equity at roughly $91.7 million and represents attractive premiums to Big River’s share price.

 

TODAY’S BIGGEST SMALL CAP LOSERS

(Stocks highlighted in yellow fell after making announcements during the trading day).

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ANNOUNCEMENTS YOU MAY HAVE MISSED

Jade Gas (ASX:JGH) has appointed CEO Chris Jamieson as Managing Director. Jamieson was appointed CEO of Jade Gas in December 2021, after providing consulting services to the company.

Jamieson has overseen delivery of four of the six wells to be drilled at Jade’s flagship TTCBM Gas Project in the South Gobi Basin in Mongolia, which aims to support the country’s energy independence and cleaner energy mix.

“Chris’s appointment as managing director adds further day-to-day oversight to the company’s decision-making process by providing balance between the executive and non-executive members of our board,” Executive Director Joseph Burke said.

Arovella Therapeutics (ASX:ALA), a biotech focused on developing its invariant Natural Killer (iNKT) cell platform to treat blood cancers, has signed a manufacturing agreement with Q-Gen Cell Therapeutics, the cell therapy manufacturing arm of Queensland’s QIMR Berghofer Medical Research Institute (QIMR Berghofer).

The agreement is for the initial manufacturing for its first investigative CAR19-iNKT cell therapy candidate (ALA-101). Arovella said streamlining manufacturing is a critical step to initiate clinical trials for ALA-101 to treat CD-19 producing leukemias and lymphomas.

TRADING HALTS

Vital Metals Limited (ASX:VML) – trading halt, pending an update on Vital’s offtake arrangements and to clarify a news article released by Reuters titled “EV parts maker Schaeffler signs first of a kind European rare earth deal,” which concerns partner, REEtec.

Ookami Limited (ASX:OOK) – trading halt, pending an announcement in relation to a project acquisition and capital raising

Seafarms Group (ASX:SFG) – trading halt, pending an announcement in relation to a potential board movement.

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