• The ASX 200 closes lower
  • Small caps lose circa 18% in June
  • Control Bionics jumps 60%

 

It’s been an exhausting June for Aussie small caps. Down again on Thursday as the energy sector wilts, the S&P Emerging Companies (XEC) has lost 18% in a horror month of trade.

A difficult month, to be sure, but let’s not dwell on it. The ASX 200 fell 2% today and more than 9% for June.

The markets tried to hide and had much reason to with weak leads, falling prices on global commodity markets and as the country’s largest lender the Commonwealth Bank said it would increase its fixed home loan rates by 1.4%.

Diana Mousina senior economist and chief legend at AMP Investments says several things are happening all at once here which you should be aware of:

  • Consumers are responding to higher interest rates: housing market indicators are slowing (home price declines have accelerated and auction clearance rates are falling), consumer sentiment is weakening and retail spending is slowing
  • This is the expected consumer response as interest rates rise because the RBA wants to see slowing economic activity to reduce current inflation and inflation expectations.
  • The concern is around too many rate hikes crushing the consumer and causing a significant growth downturn. This depends on how high interest rates go.
  • We see the peak in the cash rate around 2.6% but the risk is that it’s higher

UBS agrees, analysts saying the central bank will top out at 2.6% in November. Fingers crossed.

Meanwhile, some of the greatest minds in Australian economics, are already chewing into an imaginary slice of next Tuesday’s RBA meet pie.

These include the CBA’s Kristina Clifton, who says alongside erstwhile colleague Gareth Aird that based on Governor P Lowe’s recent comments on the ABC that it looks like the RBA will choose twixt raising the cash rate by 25 or 50 basis points and not a mega 75bps.

And today job vacancies over the three months to May rose by a ‘whopping’ 13.8%, Kristina added. A tighter jobs market would be add weight to the central bank’s case for lifting the cash rate.

“Our Australian economics team expect a 50bp increase, which would take the cash rate target to 1.35%. They expect the Governor will likely refer to the increase in the 2022/23 minimum wage of 5.2% and the RBA’s recent upward revision to their assessment of the near term inflation outlook as justification for a consecutive 50bp rate increases,” Ms Clifton says.

 

TODAY’S BIGGEST SMALL CAP WINNERS

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

Scroll or swipe to reveal table. Click headings to sort.

Control Bionics (ASX:CBL) is up about 60%. It’s not great journalism, but terrific honesty and self awareness when I say I have no idea why.

I can tell you CBL is a medtech of fascinating ambition and some pedigree – CEO Rob Wong is an interesting dude. The bounce might be related to progress in Japan a market the developer of wearable communication devices has been eyeing.

Basically CBL is an assistive-tech device maker which uses electromyography (EMG) – waveform recordings of muscle action potentials – and 3D spatial control to capture minute signals to help connect people with motor function and speech difficulties by giving them control of communication and movement through ‘NeuroNode’  – that’s the EMG tech which is effectively a wireless wearable technology which captures and processes neuroelectric signals via a joystick, or touchscreen for example.

The company was founded in Sydney back in 2006 and listed in 2020 with the help of a number of partners in the US and elsewhere including the late Stephen Hawking, who suffered from amyotrophic lateral sclerosis (ALS), and has developed EMG solutions based on the results of research and development with bioengineering experts, medical universities and hospitals.

 

TODAY’S BIGGEST SMALL CAP LOSERS

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

Scroll or swipe to reveal table. Click headings to sort.

 

 

WHAT YOU MAY’VE MISSED ON THURSDAY

First up, the Kaolin Monks from Corella Resources (ASX:CR9) say the company is onto something big,  after High Purity Alumina (HPA) test work on a 25kg composite sample from its Tampu bright white kaolin deposit came back super-duper-pure. We’re talkin’ 5N+ pure, which is industry speak for ‘five nines’ — 99.99957% pure aluminium oxide, to be exact.

It’s massive news for Corella, as this level of purity in HPA feedstock is extremely rare, highly desired for a number of applications, and enormously lucrative. Corella says the news is also fantastic because it’s able to knock out both 5N+ and 4N purity feedstock using a simplified, low cost & more environmentally friendly method. Drilling is set to kick off in August.

Barton Gold (ASX:BGD) has just closed a monster gold sale, pocketing a joyously round and Rubenesque $1,000,000 payment from ABC Bullion, a precious metals refiner and bullion dealer based in Sydney. 

The payment is an up-front deal, with the rest coming from ABC following final processing at its Gawler operation. Barton says it’s planning to spend the money on large-scale exploration programs at Southern Hub, which hosts the Tarcoola and Tunkillia Gold Projects.

And last, but not least, as we head towards the final minutes of the financial year, The Environmental Group (ASX:EGL) has landed a heaving $17.8  million contract contract for the supply portion of the Hastings Technology Metals (ASX:HAS) emission control system at the Yangibana Rare Earths Project in Onslow, Western Australia. 

EGL is set to put its part of the emission control system in place by Q1 2024, to support the plant commissioning date, so operations can begin without spewing stinky sulphur dioxide into the air, saving everyone from having to sit around inside a giant ultra-gross egg fart all day. Oh, and the fart gas is also not at all good for the environment, so that’s another tick in the Well Done EGL column. 

 

PRE-LOVED TRADING HALTS

Openn Negotiation Limited (ASX:OPN) – Capital R, capital A, Capital I, Capital… raising. It’s going to spell “raising”. 

Balkan Mining and Minerals Limited (ASX:BMM) – BMM is not at all BMMed out, because it has some exciting acquisition news. 

Australian Rare Earths Limited (ASX:AR3) – There’s an upgrade on the way of the Company’s JORC Compliant Mineral Resources… and who doesn’t love an upgrade?

3D Oil Limited (ASX:TDO) – News inbound regarding a proposed transaction related to one of the Company’s exploration permits.

Aquis Entertainment Limited (ASX:AQS) – AQS has hit the pause button on the sale of Canberra Casino after a mysterious stranger arrived at the table and plonked down a shiny new offer. Put it all on Red and see who wins, we reckon…