• ASX slides early and long on Monday
  • Small cap index crashes -2.3%
  • Besra Gold (ASX:BEZ) just tripled its own sense of self

 

We’re all in the same boat on Monday, floating aimlessly about the big blue of the Pacific amidst inflation and its various paranoid guises. The S&P/ASX 200 was 1.5% lower and the ASX small cap index (XEC) had lost 2.3% by 3.30pm Sydney time.

Inflation is the most important number in markets right now, according to Josh Gilbert eToro analyst and occasional human bridge over troubled waters.

That’s why this week’s US inflation (Oct. 13) read is totally sold out already and is already rating as one of the most watched economic events since porn.

Prices stateside have stayed high for ages, with last month’s reading up 8.3% on an annual basis, higher than the market had expected (although lower on a monthly basis.)

The hope that inflation will soften enough for the Fed to pivot and begin to ease on raising rates seems forlorn after Friday’s robust jobs read. No good deed apparently goes unpunished in ’22.

“With CPI still at a 40-year high, if inflation once again comes in stubbornly high, it may prompt further action from the Fed, such as larger hikes in November and December or continued rate rises into 2023. Either would be a tough pill to swallow for markets.”

The worry, Josh adds, for the local market is contagion from a further sell-off in US equities and the fear that a US recession could harm growth in Australia.

Meantime it already looks like looming carnage in the form of control-at-all-costs is awaiting all in China this week.

A near 2,000 COVID-case spike, the nation’s highest in about two months, comes as Shanghai cases hit a three month high and mainland Chinese stocks come back online after the Golden Week holiday.

They fell just as the benchmark here at home fell and most other indices around the region retreated on Wall Street weakness and a general all-pervading sense of lostimism.

The problem for everyone here is the upcoming 20th Communist Party Congress (and this summary of what’ll likely happen by Bloomberg isn’t too bad).

Major second and first tier cities are either in or within the shadow of lockdown. The financial hub of Shanghai is already in all sorts of tightening control and there can be no threat whatsoever  – none – to endanger the smooth transition of whatever exactly the politburo is cooking up for us.

The Shanghai Composite is only short 0.6%, while the tech-focused Hang Seng index has given back 2.6% and it’s tech version, the Hang Seng Tech index is short some 4%.

While we’re poking about the region, Singapore iron ore futures on an active contract jumped 1.7% in morning trade to $US95.50 – that’s returning to last month’s levels. The iron ore majors have followed suit, led by Fortescue Metals (ASX:FMG).

Oil prices are also ready to roll, post OPEC+ last week. On the gas front, moreover, Alinta boss Jeff Dimery is in Sydney and he’s not mincing words on the state of energy prices.

“It’s horrendous. It’s unpalatable,” he said of the notion that national energy costs could blow right out.

The Alinta CEO said on Monday he expects power bills to rise by “at least” 35%, on current market prices  – as a perfect storm of war, supply constraints and a messy transition collide.

Just quickly too, the Commonwealth Bank (ASX:CBA) lifted its rates by up to 1.75 percentage points leaving CBA’s highest term deposit rate at 4%, for terms of 2-to-5 years for those lucky few with between $50k to $2m lying about unwanted.

RateCity says there’s now 4 Aussie banks – not all big – offering term deposit rates above 4 per cent; Judo Bank, Macquarie Bank, AMP and Rabobank Australia.

The highest rate on offer is 4.85 per cent for five years from Judo Bank.

On the big four bank front all the majors have been busily making hay, lifting along song with the six straight months of central bank rate hikes.

 

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

Malaysia-focused gold explorer Besra Gold (ASX:BEZ) jumped well over 100% in morning trade, before settling to a more dignified 70% on the afternoon run home.

Besra Gold is raising capital at a solid material premium to its last close after signing a subscription agreement with Quantum Metal Recovery for the issue of some 11.1 million new shares at 9 cents a pop to raise $1 million.

I’ve done the math several times, and that’s like circa three times more than its last close at 3.2 cents.

Quantum’s already a big shareholder of the $7m market cap goldie and likes what it sees at the company’s 3.3Moz ‘Bau’ gold project in Malaysia which also includes an additional 4.9Moz – 9.3Moz exploration target, which Reuben says is quite insane for a company of this size.

In August, drilling at the ‘Jugan’ prospect returned thick quality hits like 64m @ 1.9g/t and 67m @ 1.8g/t from ~140m depth.

“Quantum has with this placement shown a clear commitment to support our exploration and development strategies at Bau and we welcome their increased investment in Besra,” CEO Dr Ray Shaw says.

Doc Ray is a man “very excited with the enthusiasm Quantum has shown for Bau” and he does “look forward to further developing our relationship.”

As would I, doc, as would I.

Staying with the earth turners, Galileo Mining (ASX:GAL) is back hitting nickel sulphide mineralisation (up to 51m thick) near the Callisto PGE-gold-nickel-copper discovery in WA.

One of 2022’s most celebrated finds is getting bigger, for GAL as four drill holes in the recently completed region some 400m north of Callisto intersected “thick disseminated nickel sulphide mineralisation.”

Assays are expected in five weeks.

State Gas (ASX:GAS) has secured a large strategic investment from leading energy entrepreneurs, Trevor and Philip St Baker who the company says were won over by the recent progress at the Company’s 100%-owned gas projects in Central Queensland “in the context of the unprecedented global opportunity in the natural gas market.”

The St Baker group, headed by Trevor, has a pretty strong track record of successful energy sector investments in Australia and overseas.

The arrival on the scene of the notoriously keen energy sector experts has triggered an associated capital raising to help accelerate production from its east coast gas projects.

Under the strategic investment and associated placement, $7m in new equity will be dished out at $0.28 per share, representing a 20% discount to the last-traded price of $0.35 and a 19.2% discount to the 10-day VWAP of $0.347) to the strategic investors and other, possibly equally Sophisticated Investors.

State Gas Directors are all in, the company says, pending shareholder approval to be sought at the upcoming Annual General Meeting in November.

GAS says the net proceeds will be used to continue the horizontal well drilling and testing program at the GAS 100%-owned Rolleston-West Gas Project and to support the previously announced Compressed Natural Gas Trucking project which will utilise the Company’s conventional gas sourced from its 100%-owned Reid’s Dome Gas Field.

Proceeds will also help fund planning and survey work for a proposed export pipeline to connect the Company’s gas projects with the east coast gas pipeline network, along with additional working capital and drilling associated with its carbon sequestration joint-venture in
Central Queensland.

As part of the investment package, electricity and gas market executives, Jon Stretch and Philip St Baker will join the GAS Board of Directors.

The strategic investment in State Gas and additional Board expertise comes at a time of unprecedented market upheavel and as gas prices both overseas and at home go old school beserko.

And finally, Aussie-listed prop-tech company, Openn Negotiation (ASX:OPN), says its proprietary software is now live in the United States, a pretty happy milestone for Monday.

Usage will continue under pilot conditions during the December quarter.

The news comes as OPN reports a “successful integration” of Openn’s products and systems with the Canadian Real Estate Association (CREA), as well as making Openn’s software available within the REALTOR.ca property sales website.

In short OPN says the US Production server has gone live, and Pilot tests are moving to the live listing phase.

OPN reports that its North American business ambitions are now 85% of milestones in the bag with raining, support systems and processes progressing to commercial launch in first quarter, CY 2023.

 

ASX SMALL CAP LAGGARDS

Here are the best performing ASX small cap stocks:

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

Wordpress Table Plugin

Monday is more about finding your feet.

 

TRADING HALTS

Open Learning (ASX:OLL) – capital raise

GME Resources (ASX:GME) – capital raise

Pushpay (ASX:PPY) – pending an announcement regarding that takeover

Featured Companies

You might be interested in