• ASX 200 ends 1.7% higher
  • Small caps ahead 2.1%
  • China’s odd. Hawson’s Iron down 75% this week. Toys R Us are killing it.

 

The ASX 200 and the Emerging Companies (XEC) index fell 1.7% and 2.1% respectively on Tuesday.

Almost the full 11 sectors were  in the green, except for energy. Tech stocks led the charge after Wall Street put in a decent show overnight, for once.

Tech stocks are up over 2%, thank you the Nasdaq and some strong US Q3 company earnings.

I read the Reserve Bank of Australia’s (RBA) minutes from its Monetary Policy meeting which were published earlier. It took hours. Ha!

The good news is the RBA board ‘ummed and ahhed enough over the decision to life rates by just 25 basis points –  a half-arsed version of the 50 bps everyone largely expected – to reassure faithful readers of the minutes that they made an effort and didn’t just pluck this one out of the half-arse they left out.

Final par, pretty much as per:

“The Board will continue to monitor the global economy, household spending and wage- and price-setting behaviour closely… The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”

 

A big red flag

China’s putting its latest Q3 numbers on hold which is pretty interesting. I’ve been watching for many moons now and that’s never happened.

Frankly it doesn’t need to – why hit pause when you get to choose whatever song you play?

And there’s usually a good whack of economic data due out this week, including the GDP numbers which are not only always fun, but are actually starting to get quite fascinating.

China’s GDP growth rate could be on the rack. I mean, you’d think it would be.

According to math, China’s economy just has to be significantly underperforming in 2022. The whole world of this poisoned chalice of a year is packed with a whole world of economic headwinds, and while China has fewer of them than many – the usually robust economic engine has spluttered along with its own challenges. zero-COVID is a good start, the rattling state of the country’s giant property sector is another.

Most domestic analysts expect China to fall short of its 2022 GDP growth target of circa 5.5%.

But even today, The Economist research group reckons China’s GDP growth this year could slump as low as 3.3% this year — a number whose relatively miniscule size to recent more fruitful years is as small as it is problematic to any politicians standing out in front of it.

Which brings us to the elephant in the Great Hall of the People.

This week, the Chinese Communist Party is holding its 20th National Congress, important in its own right, surely, but the 20th is particularly significant and promises t elevate the President Xi Jinping from garden variety All Powerful Leader to something… unprecedented.

I mention this because China also didn’t offer up its September trade data as expected on Friday.

No explanation was forthcoming (no surprise there) nor was there any attempt to explain away why today’s data wasn’t released as planned.

Apart from the overall GDP number, the releases were supposed to include the details of monthly industrial output, energy production, fixed asset investment, property investment and sales, retail sales and housing prices.

Contrast this with the chatter delivered at an extraordinary press conference held by the hugely influential National Development and Reform Commission (NDRC).

Out of the blue, Zhao Chenxin, the NDRC deputy director stood up in front of the cameras on Monday and declared that the Chinese economy ‘rebounded significantly in Q3.’

Speaking at the surprise, pre-arranged press conference which in itself just screams “set up,” to me, Zhao said while there’d been ‘challenges – a volatile global environment, a pesky pandemic and recent extreme drought, the Chinese economy on the whole was recovering well.

“From what we know so far, the economy rebounded significantly in the third quarter, and from a global point of view, China’s economic performance is still outstanding.”

China’s economic situation contrasted sharply with much of the world, he said, with consumer inflation only marginal,

Certainly China’s inflation situation is enviable, but these NDRC guys rocked up and started volunteering all kinds of upbeat ideas:

  • The economy’s shown “strong resilience and huge potential.”
  • “There’s more opportunities than challenges.”
  • There’s 1.4 billion consumers…
  • another mega-infrastructure spend in the post…
  • the world’s greatest middle class primed to shop
  • …a just wonderfully intact industrial supply chain and;
  • (above all) the genius of Xi and the state’s unbridled policy support.

 

Still they continued:

“Orders for

  • energy equipment,
  • petrochemical equipment,
  • mining machinery,
  • construction machinery,
  • computer numerical control machine tools,
  • industrial robots

“…and other key equipment in China are all increasing substantially,” the NDRC told media,

So.

To recap: No official data.

But heaps of spontaneous supportive rhetoric.

Meanwhile, on the main stage, Xi plays it real safe while delivering the work report over  two hours.

So I don’t see what’s going on, but damn it’s interesting.

 

ASX SMALL CAP LEADERS

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Peak Rare Earths (ASX:PEK), hasn’t got news, but it’s got groove. The rare earth play’s main focus is the NdPr-rich Ngualla rare earths project in Tanzania and the Teesside refinery in the UK.

There is the expectation that demand for magnet rare earths, the main two being neodymium and praseodymium (NdPr), will increase rapidly alongside growth in the EV and wind power sectors.

Reuben says, PEK’s vertically integrated project is currently the subject of a BFS update – the most advanced of all project studies – which should be released imminently.

Toys’R’Us (ASX:TOY), still up very strongly after moving some 30% this morning for still no discernible reason. Is it Christmas?

As Gregor posits –  did we miss a new batch of Hot Wheels or something?

Odd.

Burgundy Diamond Mines (ASX:BDM)–  this diamond and polish stone digger has had a busy morning, up circa 20%, after it released an investor presentation which… didn’t say much at all, really.

The major takeaway from the slideshow is that BDM is currently sitting on around $15 million in rough and polished stones, many of which are a very rare, fancy orange colour.

 

 

ASX SMALL CAP LAGGARDS

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Still sinking is Hawsons Iron (ASX:HIO), down another 25% today on the back of a heroic sell-off Monday. Down almost 75% for the week.

St Barbara is not enjoying Tuesday. The goldie has lost well over 20%, after a meandering first quarter. Babs has had some real problematic labour issues at its Gwalia mine which has led to a downgrade in full year guidance.

Also struggling are the struggletons at NewsCorp (ASX:NWS). The owner of some quality media assets had given away well over 3.5% ahead of lunchtime.

 

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