Closing Bell: Interest piqued? Not for sliding local markets on Rates Day
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The interest rate rise came and the markets fell, then turned a corner. The question now is — will the wheels stay on?
Already lagging, the ASX Emerging Companies (XEC) index has closed 0.8% lower. The benchmark has closed 0.4% behind.
The ASX200 (XJO) index fell after the Reserve Bank of Australia lifted the official cash rate for the first time in over a decade, but 25 minutes later the benchmark began to climb as sideline buyers took their new positions.
As for the rest of us, the RBA has signalled its clear intent.
Marcel Thieliant, Capital Markets senior Australia & New Zealand economist, take it away:
“The RBA started hiking the cash rate today and we expect rates to reach around 2% by the end of this year.”
Yes, it’s quite the trajectory. Most everyone thought the Bank would lift the cash rate to 0.25%, not the more ballsy 0.35% Governor Philip Lowe and his minions opted for.
Marcel says the statement shed any vestiges of the Bank’s long-standing dovishness, arguing that inflation had picked up faster and to a higher level than previously anticipated and that there were also signs that inflation is picking up.
The Bank now expects inflation of 6% for this calendar year.
“We understand (this) refers to the Bank’s forecast for Q4 and is broadly in line with our forecast. What’s more, the Bank now expects the unemployment rate to fall from 4.0% to 3.5% by early-2023, lower than the trough of 3.75% predicted in February.
“And while the Bank sounded cautious about the outlook for GDP growth, it kept its optimistic forecast of 4.25% annual growth in Q4 this year unchanged,” Thieliant added.
(Stocks highlighted in yellow rose after making announcements during the trading day).
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Another lithium pivot well received by investors. Torian Resources (ASX:TNR) spin-off MMG will acquire the large ‘Scotty’ sediment-hosted lithium project in Nevada for $2m.
This is a good neighbourhood. The 14,000-acre project surrounds the ‘Bonnie Claire’ project (host to one of North America’s largest lithium resources at 18.3Mt LCE), is 70km from Albermarle’s ‘Clayton Valley’ mine (the only producing lithium mine in the US) and 330km from Tesla’s Gigafactory.
Metalstech (ASX:MTC) has some lovely new infill drilling results out of the 1.5Moz gold, 10.93Moz silver ‘Sturec’ mine in Slovakia include 173.2m grading 3.27g/t gold and 11.8g/t silver from surface.
This intersection is not true thickness, the company says, which is always the width of the vein/orebody etc at its narrowest point. Resource modelling suggests the true thickness on mineralisation in this area is about 55m.
This ongoing drilling program was designed to increase confidence in the existing resource (infill drilling), as well as extended mineralisation to the south (extensional drilling).
MTC has an exploration target of between 2.2Moz and 5.1Moz of gold eq, which is in addition to the existing resource.
Halo Technologies (ASX:HAL) listed last week and its shares nosedived almost 30%. Well today it’s found buyers, rising sharply. The listing came after the company raised more than $36 million through an IPO priced at $1.20 per share.
JV partners Legacy Iron Ore (ASX:LCY)and Hawthorn Resources (ASX:HAW) cemented a deal with a subsidiary of billionaire Gina Rinehart’s Hancock Prospecting, which shelled out an initial $9m to earn into the ‘Mt Bevan’ iron ore project in WA.
Mt Bevan hosts a 1,170 million tonne magnetite resource @ 34.9% iron, 250km north of Kalgoorlie in WA. While magnetite iron ore resources are lower grade than hematite in the ground, they can be concentrated into a higher-grade product which fetch higher prices.
This initial investment of $9m gives Hancock a 30% interest in Mt Bevan, with $8m cash being paid to LCY and HAW in proportion to their interest in the project (Legacy $4.8m and Hawthorn $3.2m).
LCY will hold 42% and HAW will hold 28% upon completion of the initial investment.
Hancock can earn an additional 21% by funding the completion of a pre-feasibility study (PFS), a detailed look at whether the project is economic to build.
LCY ($200m market cap) and HAW ($63m market cap) are up 240% and 280% respectively since the deal was first unveiled November last year.
(Stocks highlighted in yellow fell after making announcements during the trading day).
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Caravel Minerals ‘(ASX:CVV) infill and extensional drilling has intersected more thick zones of copper mineralisation at the Bindi deposit near Perth, WA.
Assays from infill holes at the Bindi East, Bindi Hinge and Bindi West positions continued to demonstrate good continuity of the mineralised zone along strike and down dip along with higher grades in the starter pits.
Notable intersections include 136m grading 0.33% copper from a down-hole depth of 44m (21CARC134), 132m at 0.29% copper from 38m (22CARC004) and two separate zones of 80m at 0.33% copper from 162m and 44m at 0.24% copper from 168m at 22CARC001.
Extensional drilling has also confirmed the potential for a new mineralised zone to be defined in the Lower Limb position east of the current Bindi resource.
De Grey (ASX:DEG) has been making hay in sun with regional exploration at the 9Moz Mallina gold project. The latest results open up a potentially larger corridor that can potentially deliver further Hemi-style discoveries on De Grey’s 100% owned ground.
While the maiden 6.8Moz Hemi intrusion has rightly stolen the headlines, there’s about to become more focus on new targets DEG has uncovered at its Pilbara gold project with resource definition drilling complete ahead of an update later this quarter.
Firebrick Pharma (ASX:FRE) has announced it has recruited the first patient into its confirmatory Phase 3 trial for Nasodine Nasal spray as a treatment for the common cold.
The randomised controlled Phase 3 trial expects to recruit up to 450 adults with early cold symptoms to achieve a target treatment population of 196 who are confirmed by PCR to have a viral cold.
“This is the second Phase 3 trial for Nasodine and we are excited to take what we believe will be the final step towards commercialisation of Nasodine in Australia and lay the pathway for international approval and distribution,” said executive chairman Dr Peter Molloy.
Medtech LBT Innovations (ASX:LBT) saw its share price rise ~6.50% to 8.2 cents today after announcing it had executed a binding sale agreement for an APAS Independence with urine analysis module to Albany Medical Centre in New York.
The sale follows a successful evaluation-to-buy by a laboratory which is part of Albany Medical Centre health system, a not-for-profit with 1520 hospital beds across 4 hospitals in north-eastern New York.
Widgie Nickel (ASX:WIN) has announced results from a recently completed geophysical program at its Mount Edwards Project has identified several new high-quality conductors that potentially represent a nickel sulphide mineralisation.
“Our first greenfields exploration program has generated some high order anomalies in highly prospective terrain,” managing director Stever Norregard said.
“These targets confirm the potential for further new nickel discoveries on our tenement package, which the company will progressively be testing.”
These stocks went into trading halts today and are due out on the next few days:
Botanix Pharmaceuticals (ASX:BOT) – acquisition of a dermatology asset
Senetas Corporation (ASX:SEN) – capital raising