Put another snag on the interest rate cycle. Via Getty
Closing Bell: It’s gotta be bonds after ASX pantsed by lingering inflation, fears of August rate hike
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- ASX falls 0.7pc on sticky CPI read
- Consumer Discretionary stocks dragged down by CKF and HVN
- Top small cap performers include Metallica and Actinogen Medical
Bond yields soared and the ASX200 seemed to hit terminal velocity at around lunchtime, following a dodgy inflation read which nudged the market into pricing in a potential August rate hike.
The S&P/ASX200 closed lower Wednesday, dropping 55.80 points or 0.71% to 7,783.00.
The brittle benchmark accelerated into a Wednesday ditch, crossing the 1% line of no return, after the ABS dropped some uglier than imagined inflation data fro the previuos month.
The headline read was bad, but the Reserve Bank’s preferred measure – core CPI – really spiked, hitting 4.4% in May from 4.1% in April.
We’re the only country in the G10 where underlying inflation is intolerably high, according to Deutsche Bank chief economist Phil O’Donaghoe.
“We now assume the cash rate ends this year at 4.6%.”
Deutsche sees the RBA lifting interest rates in August and has the first rate cuts “pencilled in [for] Q2-2025.”
From being down 42 points (-0.54%) ahead of the Bureau of Stats release this morning, the ASX200 doubled its losses over the next few hours to hit (-1.04%) in mid-arvo trade.
All this thanks to a monthly consumer price (CPI) read which showed inflation spiking a bit more than expected.
According to the ABS, the Aussie CPI hit 4% in May, up from 3.6% in April and an unwelcome high shot on the 3.8% expected by economists.
That did not make life joyful for the rate sensitive sectors.
After some of the solid recent returns made by local property, consumer discretionary and banking stocks, it was those rate fearing sectors which led the retreat with the smart/scared money following bond bullishness.
The AUD jumped about 0.5% on the news and Australia’s 3-year bond yield found an easy 11 basis points to hit 4.35%
Wait – here’s what happened in Aussie Bonds today:
On the ASX, the discretionary stock majors were hit hardest, the sector giving back all the gains of the previous session and more led by a near 3% slide over at Wesfarmers (ASX:WES).
Also terrible and not very discreet abut it – Harvey Norman. The brokers at Barrenjoey lowered their price target (PT) on Harvey Norman Holdings (ASX:HVN) to $4.00 from $4.50 laying the blame at the feet of faltering retail conditions amid the declining macro outlook.
CKF and HVN were the worst of the big caps down 8.9% and 8.3% respectively.
But also terrible today – lithium.
More terrible than usual and it’s usually been a terrible sector without any external help.
All the headline lithium producers, Liontown Resources (ASX:LTR), Mineral Resources (ASX:MIN) and Pilbara Minerals (ASX:PLS) lost between 5 and 2.5%. after China’s lithium futures index fell another 5% on Tuesday (to $US12,000 a tonne) to take its losses for June somewhere near 16%.
On the M&A front uranium developer Bannerman Energy (ASX:BMN) has taken advantage of the peter Dutton rally in uranium stocks, lobbing a $76 million cap raise in the form of a share placement.
Fund managers were being offered Bannerman shares at $3.30 a pop – representing a 7.8% discount to the last close and 10.% lower than the 5-day volume-weighted average price.
The other miners weighed on Wednesday too. Copper futures are at their lowest levels since mid-April with rising inventories hard to move amid the uncertain global demand outlook.
The latest PMI reports have also noit helped, suggesting a poor outlook for manufacturing exacerbated by slowing industrial demand in top copper consumer, China.
Over the last five days, the index is virtually unchanged, but is currently 1.6% below its 52-week high.
ASX Sectors on Wednesday
The UNASX
On Wall Street overnight, the S&P 500 rose by +0.39%, the blue chips Dow Jones index was down by -0.76%, and the tech-heavy Nasdaq lifted by +1.26%.
Nvidia led the way for the “Magnificent 7”, bouncing back by +6.75% after a -13% slump in the previous three sessions.
Also – Finland’s unemployment rate rose to 10.2% in May, from 9% a year ago. Bet you didn’t know that.
US Futures on Wednesday arvo in Sydney
ASX SMALL CAP LEADERS
Today’s best performing small cap stocks:
Swipe or scroll to reveal full table. Click headings to sort:
| Code | Name | Price | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| CNJ | Conico Ltd | 0.002 | 100% | 4,966,528 | $1,805,145 |
| CLZ | Classic Min Ltd | 0.002 | 50% | 6,915,275 | $551,029 |
| HLX | Helix Resources | 0.003 | 50% | 7,876,848 | $6,528,387 |
| DBO | Diabloresources | 0.022 | 38% | 303,851 | $1,649,143 |
| KOR | Korab Resources | 0.009 | 29% | 261,892 | $2,569,350 |
| GCM | Green Critical Min | 0.005 | 25% | 300,000 | $4,546,340 |
| SI6 | SI6 Metals Limited | 0.003 | 25% | 1,190,393 | $4,737,719 |
| MLM | Metallica Minerals | 0.021 | 24% | 1,886,749 | $16,318,707 |
| MTH | Mithril Resources | 0.188 | 21% | 1,220,961 | $13,109,314 |
| AML | Aeon Metals Ltd. | 0.006 | 20% | 1,838,791 | $5,482,003 |
| AHK | Ark Mines Limited | 0.155 | 19% | 188,625 | $7,208,034 |
| LNR | Lanthanein Resources | 0.004 | 17% | 1,136,400 | $7,330,908 |
| PUR | Pursuit Minerals | 0.004 | 17% | 4,199,245 | $10,906,200 |
| LEX | Lefroy Exploration | 0.115 | 16% | 175,172 | $19,845,390 |
| LSA | Lachlan Star Ltd | 0.058 | 16% | 352,350 | $10,378,660 |
| PGO | Pacgold | 0.115 | 15% | 67,182 | $8,414,544 |
| CMD | Cassius Mining Ltd | 0.008 | 14% | 1,529,857 | $3,794,031 |
| SPQ | Superior Resources | 0.008 | 14% | 4,269,547 | $14,008,543 |
| A1G | African Gold Ltd. | 0.024 | 14% | 30,000 | $5,023,530 |
| ETM | Energy Transition | 0.024 | 14% | 922,773 | $29,492,969 |
| AAM | Aumegametals | 0.058 | 14% | 918,754 | $26,802,297 |
| EVG | Evion Group NL | 0.018 | 13% | 1,418,382 | $5,535,347 |
| HOR | Horseshoe Metals Ltd | 0.009 | 13% | 1,093,000 | $5,196,629 |
| HAV | Havilah Resources | 0.190 | 12% | 572,403 | $53,828,666 |
Diablo Resources (ASX:DBO) cancelled a bunch of securities this afternoon. Enough to enlarge the survivors to 2.2cents for a 37% gain. Easy money.
In complex, but ultimately happy news, Actinogen Medical (ASX:ACW) says its had a very positive phase 2a biomarker trial for its Xanamem Alzheimer’s Disease candidate, which was published in the (100th edition!) of the Journal of Alzheimer’s Disease. ACW says the trials demonstrate potential Xanamem efficacy in patients with elevated blood pTau.
And Metallica Minerals (ASX:MLM) is higher because of this, and nothing else matters right now.
Elsewhere this morning, Classic Minerals (ASX:CLZ) was up early, after announcing an extension to the closing date of its non-renounceable pro-rata rights issue at an issue price of $0.004 per new share, with 1 bonus option for every 2 shares subscribed for, exercisable at $ 0.02 on or before 30 June 2027.
Minbos Resources (ASX:MNB) has signed a non-binding collaboration agreement with Talus Renewables to develop the Capanda Green Ammonia Project through the deployment of Talus green ammonia technology, TalusAg, “a first-to-market green ammonia system which enables sustainable and cost-effective localised ammonia production”.
Mithril Resources (ASX:MTH) has received firm commitments for a capital raising of $3.7 million at $0.20 with cornerstone investment by Jupiter Gold and Silver Fundn at a 29 per cent premium to its last traded share price.
Eastern Resources (ASX:EFE) has engaged Nagom, an experienced lithium consultancy in Perth, to plan and manage metallurgical testwork for samples from the Lepidolite Hill Project.
And Cassius Mining (ASX:CMD) was up on news that its international arbitration against the Government of the Republic of Ghana – seeking damages in excess of USD 275 million as a consequence of Ghana’s “breaches of contract and statute” – has taken a step in the right direction for the company, with the Tribunal finding that it has jurisdiction to hear the company’s contractual claims despite Ghana’s objections.
ASX SMALL CAP LAGGARDS
Today’s best performing small cap stocks:
Swipe or scroll to reveal full table. Click headings to sort
| Code | Name | Price | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| LPD | Lepidico Ltd | 0.002 | -33% | 1,146,483 | $25,767,358 |
| VML | Vital Metals Limited | 0.002 | -33% | 5,911,765 | $17,685,201 |
| ALR | Altairminerals | 0.003 | -25% | 151,000 | $17,186,310 |
| IBG | Ironbark Zinc Ltd | 0.003 | -25% | 16,710,535 | $6,375,490 |
| PUA | Peak Minerals Ltd | 0.003 | -25% | 215,410 | $4,165,506 |
| SVG | Savannah Goldfields | 0.015 | -25% | 282,111 | $5,621,698 |
| OCN | Oceanalithiumlimited | 0.031 | -23% | 298,240 | $2,163,060 |
| FIN | FIN Resources Ltd | 0.007 | -22% | 1,486,088 | $5,843,418 |
| ADD | Adavale Resource Ltd | 0.004 | -20% | 2,000,000 | $5,201,327 |
| AYT | Austin Metals Ltd | 0.004 | -20% | 1,206,620 | $6,620,957 |
| LRL | Labyrinth Resources | 0.004 | -20% | 1,545,040 | $5,937,719 |
| PKO | Peako Limited | 0.004 | -20% | 1 | $2,635,424 |
| POS | Poseidon Nick Ltd | 0.004 | -20% | 3,388,805 | $18,567,674 |
| RDS | Redstone Resources | 0.004 | -20% | 1,784,444 | $4,626,892 |
| ABX | ABX Group Limited | 0.038 | -19% | 954,559 | $11,751,895 |
| 1MC | Morella Corporation | 0.003 | -17% | 6,223,407 | $18,536,398 |
| BMO | Bastion Minerals | 0.005 | -17% | 286,000 | $2,610,503 |
| CCZ | Castillo Copper Ltd | 0.005 | -17% | 3,920,666 | $7,797,032 |
| CZN | Corazon Ltd | 0.005 | -17% | 2,861,810 | $3,693,587 |
| FAU | First Au Ltd | 0.003 | -17% | 2,064,554 | $4,985,980 |
| GMN | Gold Mountain Ltd | 0.003 | -17% | 697,258 | $9,533,230 |
| NAG | Nagambie Resources | 0.010 | -17% | 86,527 | $9,559,628 |
| RGL | Riversgold | 0.005 | -17% | 627,462 | $7,257,461 |
TRADING HALTS
Pexa (ASX:PXA) – pending a public announcement by the Australian Registrars National Electronic Conveyancing Council (ARNECC).
Traka Resources (ASX:TKL) – pending the release of an announcement relating to an acquisition and a capital raising.
Bannerman Energy (ASX:BMN) – pending the release of an announcement relating to a proposed capital raising.
IN CASE YOU MISSED IT
Marmota (ASX:MEU) has agreed to raise $1.25m through the placement of shares priced at 4.5c with key sophisticated and professional investors. This price is identical to the closing price on the ASX over the last four trading days.Proceeds will be used to fully fund the gold exploration that is due to begin at Campfire Bore.“Our team has already mobilised to site over the weekend, and is now preparing tracks, drill collars and sumps.
This is Marmota’s first ever program at Campfire Bore, and the first drilling at Campfire Bore in more than 8 years by anyone,” chairman Dr Colin Rose said.
Airtasker (ASX:ART) has inked a $6m media partnership with leading Australian outdoor media company oOh!media to build brand awareness at its more than 35,000 sites around Australia.
De Grey Mining’s (ASX:DEG) extensional drilling at the Eagle and Diucon deposits has returned high-grade hits such as 4.6m at 31.8g/t gold that represent further upside to its definitive feasibility study that was released last year.
GreenTech Metals (ASX:GRE) has started staged follow-up reverse circulation drilling targeting the underexplored Austin, Shelby, Yannery and Ayshia prospects at its Whundo copper-zinc project in WA’s West Pilbara region.
Intra Energy Corporation (ASX:IEC) is a step closer towards drilling at its high priority Maggie Hays Hill project near Esperance in WA after successfully completing a heritage clearance survey.
Norwest Minerals (ASX:NWM) has added the large ‘Tamba’ copper-gold geochemical target to its upcoming drilling program in the West Arunta province in Western Australia. It is associated with elevated gravity features and magnetic structures which extend through Prodigy Gold’s Arcee prospect.
Western Yilgarn (ASX:WYX) has appointed Craig Moulton as its managing consultant to o lead and implement its next phase of exploration.
Moulton has over 30 years’ experience in the global exploration and mining industry and brings with him an extensive network across Australia and overseas developed while working in senior management roles on top tier projects operated by miners such as Rio Tinto, CRAE, Hamersley Iron, Pilbara Iron and Cleveland Cliffs.
He has also led junior explorers and is an experienced deal maker, having recently completed two deals with a maximum value of ~$25m with Chalice Mining (ASX:CHN) while serving as the chief executive officer of Northam Resources.
At Stockhead, we tell it like it is. While Airtasker, De Grey Mining, GreenTech Metals, Intra Energy Corporation, Norwest Minerals and Western Yilgarn are Stockhead advertisers, they did not sponsor this article.
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