- The ASX benchmark ends sharply higher, up circa +1.7%
- All 11 benchmark sectors in the money
- Small caps led by LNR
The ASX Real Estate sector has jumped +3.2% on Wednesday, out front of a broad-based rally, which has seen the benchmark have its best day of business in more than a year.
At match-out on Wednesday December 6, the S&P/ASX 200 (XJO) index was up 117 points, or +1.65%.
Australia’s economy grew just 0.2% over the three months to September 30, and 2.1 per cent over the past year, as per the latest National Accounts read from the Bureau of Statistics (ABS). Economists had pegged growth to expand by about 0.4%/qtr and 1.8% for the past year, according to a Refinitiv survey.
But all the talk overnight was about dissipating global inflation after Wall Street ended mixed after US job openings slid to 8.73 million in October, down from 9.35 million in September.
The uncertain read played out in equity markets – the S&P 500 was as good as flat at -0.06%, the Dow Jones fell -0.2%, while the tech-heavy Nasdaq rose by +0.3%.
Clearly greenlit by European Central Bank boss Christine Lagarde, ECB board member Isabel Schnabel got EU markets excited when she said the central bank can all but take more rate hikes off the table given the “remarkable” fall in inflation.
Schnabel added policy makers ‘should not guide for rates to remain steady’ through mid-2024, as per Reuters.
That’s the kind of chatter that’s led to Big Wednesday here at home, a day that’s been in the cards for some time.
ASX SECTORS ON WEDNESDAY
Momentum in the Australian economy has slowed sharply, according to the latest GDP read, with the impact of the RBA’s aggressive hiking cycle clearly filtering through to stymied demand growth in the economy.
Economic growth just stalled in the September quarter, like the RBA poured sugar in the engine. Which it did.
The +0.2%/qtr lift in real GDP over Q3 2023 was weaker than the market median forecast of 0.5% (although CBA ‘s head of Australian economics Gareth Aird notes the broad range of estimates across the forecasting community, from +0.1% to +1.0%).
Mr Aird also highlights:
- Real GDP rose by a weak 0.2%/qtr in Q3 23 to be up 2.1% on year ago levels
- Household consumption was flat in the quarter, although some government benefits and rebates weighed on the outcome
- Public spending was once again strong, business investment was robust and inventories made a solid contribution to growth
- Net exports were a drag on growth as imports rose and exports fell
- Nominal GDP increased by 1.2%/qtr as higher domestic prices and the small lift in production were partially offset by a fall in the terms of trade
- Real household disposable income fell by a large 1.7%/qtr to be down by a big 5.6% over the year
- The savings rate dipped to 1.1% ‑ well below its pre‑pandemic five year average of ~6.0
- Momentum in the economy looks like it has slowed further in Q4 23 based on more timely activity data.
The recent run of quarterly changes in real GDP paint the picture of an economy that has slowed significantly.
The quarterly changes since Q4 22 now read 0.9%, 0.5%, 0.4% and 0.2% (latest):
The six‑month annualised pace of GDP growth to the September quarter has slumped to 1.3%.
This compares with population growth of ~2.5%/yr. The upshot is that the economy has gone backwards a lot in per capita terms over the past six months.
CBA notes that Real GDP per-capita has now declined in each quarter of 2023. In Q3 23, GDP per person fell by a large 0.5% and is now 0.7% lower than the high in Q2 2022.
The economy on aggregate continues to grow (first chart) but only due to strong population growth of 2.9%/yr for the 15+ population according to the October labour force survey.
Income per capita, as measured by real net national disposable income, fell in the quarter, down 1.3% in the quarter with the terms of trade, increased taxes and inflation impacting on national income.
“The RBA’s highly aggressive rate hiking cycle has clearly worked to slow demand growth in the economy. A lift in tax payable has also weighed on household purchasing power along with the effects of elevated inflation and rising mortgage repayments,” Mr Aird says.
Finally… All this happened during a record period of population growth:
Around the ‘hood…
On the whole, regional markets had a nice bump on Wednesday, hoovering up losses from the Tuesday session as bets on peaking inflation and overall risk sentiment lifted.
In Japan, a private survey showed that sentiment among manufacturers improved markedly in December as the auto sector continued to recover from last year’s semiconductor shortage and supply chain woes.
Shares in Japan, South Korea, Hong Kong and mainland China all advanced – despite Moody downgrading China’s outlook from “stable” to “negative, citing heightened risks from China’s maudlin domestic performance and its lower mid-term economic growth “and the ongoing downsizing of the property sector.”
Nevertheless, the Hang Seng climbed over one hundred points – some +0.75% – into lunch on Wednesday, hitting the clear green for the first session since Wednesday last week, boosted by buying in Tech and Consumer stocks, while the Properties & Construction Sector also lifted.
We’re also watching gold…
Which has held around $2,020 an ounce on Wednesday after declining for two straight sessions.
Spot gold traders have hit the pause button ahead of the key US monthly jobs report later this week, which will provide further breadcrumbs toward the future path of the US Federal Reserve’s monetary policy, which is now at something of a crossroads.
US Futures tied to the three major indices are higher ahead of the Wednesday open in New York:
TODAY’S ASX SMALL CAP LEADERS
Here are the best performing ASX small cap stocks:
Swipe or scroll to reveal full table. Click headings to sort:
| Code | Company | Price | % | Volume | Market Cap |
|---|---|---|---|---|---|
| LNR | Lanthanein Resources | 0.012 | 100% | 106,456,215 | $6,729,453 |
| CT1 | Constellation Tech | 0.003 | 50% | 166,668 | $2,942,401 |
| CTO | Citigold Corp Ltd | 0.006 | 50% | 1,115,836 | $11,494,636 |
| VPR | Volt Power Group | 0.0015 | 50% | 250,002 | $10,716,208 |
| WEL | Winchester Energy | 0.003 | 50% | 166,668 | $2,040,844 |
| 8IH | 8I Holdings Ltd | 0.02 | 43% | 144,609 | $5,002,984 |
| AD1 | AD1 Holdings Limited | 0.007 | 40% | 71,434 | $4,294,625 |
| RHY | Rhythm Biosciences | 0.195 | 34% | 91,479 | $32,065,675 |
| OLL | Openlearning | 0.02 | 33% | 50,001 | $4,018,036 |
| DM1 | Desert Metals | 0.051 | 31% | 2,270,854 | $2,926,602 |
| H2G | Greenhy2 Limited | 0.009 | 29% | 555,556 | $2,931,291 |
| MPP | Metro Perf.Glass Ltd | 0.135 | 29% | 40,000 | $19,464,699 |
| LNU | Linius Tech Limited | 0.0025 | 25% | 166,668 | $9,044,581 |
| ME1 | Melodiol Glb Health | 0.0025 | 25% | 1,304,424 | $9,225,840 |
| MRD | Mount Ridley Mines | 0.0025 | 25% | 180,953 | $15,569,766 |
| RBR | RBR Group Ltd | 0.0025 | 25% | 166,668 | $3,236,809 |
| YOW | Yowie Group | 0.032 | 23% | 14,114 | $5,682,765 |
| 3DP | Pointerra Limited | 0.048 | 23% | 1,797,577 | $27,840,368 |
| SGC | Sacgasco Ltd | 0.011 | 22% | 3,444,553 | $6,962,245 |
| 4DS | 4Ds Memory Limited | 0.105 | 22% | 10,084,264 | $150,421,303 |
| BXN | Bioxyne Ltd | 0.012 | 20% | 1,199,158 | $19,016,454 |
| EVR | Ev Resources Ltd | 0.012 | 20% | 2,425,000 | $9,545,883 |
| YOJ | Yojee Limited | 0.006 | 20% | 83,334 | $6,529,926 |
| SRI | Sipa Resources Ltd | 0.025 | 19% | 426,089 | $4,791,321 |
| NNL | Nordicnickellimited | 0.16 | 19% | 98,501 | $7,892,101 |
Top of the pops is Lanthanein Resources (ASX:LNR) which rocketed up 100% on news it’s inked a farm-in agreement which will see it earn up to a 70% interest in WA’s Lady Grey lithium project.
It’s a strategically important patch of land, some 360km east of Perth, which is literally over the fence from Covalent Lithium’s fully-operational Earl Grey Mine, which boasts a resource of 189Mt @1.53% Li2O at Mount Holland in the Forrestania Greenstone Belt.
“This transaction positions Lanthanein with a prospective lithium project in one of the most desired jurisdictions for lithium explorers in Western Australia,” Lanthanein technical director Brian Thomas said.
Lanthanein says it’ll be drilling by early next year.
Desert Metals (ASX:DM1) says it has received commitments of $3.75 million through a heavily over-subscribed conditional share placement, with bids reportedly topping $6 million.
The $3.75 million is set to arrive via the issue of approximately 115.4 million fully paid ordinary shares at an issue price of $0.0325 a pop, with the money earmarked to drive drilling and exploration in Côte d’Ivoire and to continue exploration on the company’s Western Australian portfolio.
Noble Helium (ASX:NHE) made back some of its losses from recent days, after releasing a clarification statement on drilling results from its North Rukwa Helium Project in Tanzania.
TODAY’S ASX SMALL CAP LAGGARDS
Here are the day’s worst performing ASX small cap stocks:
Swipe or scroll to reveal full table. Click headings to sort:
| Code | Company | Price | % | Volume | Market Cap |
|---|---|---|---|---|---|
| POD | Podium Minerals | 0.003 | -50% | 840,734 | $485,782 |
| ADR | Adherium Ltd | 0.025 | -44% | 5 | $14,998,225 |
| AUH | Austchina Holdings | 0.003 | -25% | 50,000 | $8,311,535 |
| BP8 | Bph Global Ltd | 0.0015 | -25% | 1,750,000 | $3,231,126 |
| DCX | Discovex Res Ltd | 0.0015 | -25% | 284,962 | $6,605,136 |
| KNM | Kneomedia Limited | 0.003 | -25% | 201,227 | $6,133,085 |
| NVQ | Noviqtech Limited | 0.003 | -25% | 2,437,600 | $5,237,781 |
| ERW | Errawarra Resources | 0.1 | -23% | 6,812,399 | $12,469,687 |
| ADD | Adavale Resource Ltd | 0.0085 | -23% | 5,150,411 | $8,034,062 |
| JPR | Jupiter Energy | 0.017 | -23% | 50,000 | $27,947,266 |
| OCT | Octava Minerals | 0.056 | -21% | 1,963 | $3,181,688 |
| PHL | Propell Holdings Ltd | 0.015 | -21% | 9,100 | $2,286,755 |
| TGH | Terragen | 0.015 | -21% | 113,758 | $7,012,541 |
| SER | Strategic Energy | 0.012 | -20% | 12,883,990 | $7,287,227 |
| BUY | Bounty Oil & Gas NL | 0.009 | -18% | 7,458,683 | $15,075,511 |
| ICG | Inca Minerals Ltd | 0.009 | -18% | 2,006,546 | $6,428,791 |
| LCL | LCL Resources Ltd | 0.018 | -18% | 15,165,879 | $17,474,698 |
| HRE | Heavy Rare Earths | 0.074 | -18% | 464,960 | $5,443,914 |
| POD | Podium Minerals | 0.028 | -18% | 805,675 | $12,387,444 |
| A8G | Australasian Metals | 0.14 | -18% | 9,319 | $8,860,484 |
| BLY | Boart Longyear | 1.225 | -18% | 97 | $439,441,815 |
| EG1 | Evergreenlithium | 0.165 | -18% | 73,113 | $11,246,000 |
| SVG | Savannah Goldfields | 0.048 | -17% | 241,797 | $11,625,533 |
| ECT | Env Clean Tech Ltd. | 0.005 | -17% | 1,708,080 | $17,085,331 |
| LRL | Labyrinth Resources | 0.005 | -17% | 3,071,434 | $7,125,262 |
TRADING HALTS
Tivan (ASX:TVN) – pending the release of an announcement by the Company regarding a proposed capital raising.
Qualitas (ASX:QAL) – trading halt is requested in relation to a proposed capital raising by QRI.
Boss Energy (ASX:BOE) – pending an announcement by the Company in relation to a material acquisition and a capital raising.
Holista CollTech (ASX:HCT) – pending the release of an announcement regarding the outcome of the Federal Court Hearing commencing today in relation to the ASIC’s civil penalty proceedings against the company.
Elevate Uranium (ASX:EL8) – pending the release of an announcement by the Company regarding a proposed capital raising.
Magnis Energy Technologies (ASX:MNS) – to allow the Company the time it needs to prepare a disclosure in relation to iM3NY Credit Facility.
5E Advanced Materials (ASX:5EA) – pending an announcement regarding a proposed material refinancing and capital restructuring transaction.