• ASX up after Jerome Powell’s reassuring remarks on Fed policy
  • Tech and bank stocks did well but Woolworths dragged
  • Block Inc, parent company of Afterpay, faces a Department of Justice investigation

 

Aussie shares edged higher by 0.23% on Thursday after Jerome Powell’s remarks overnight calmed global markets.

The Fed Reserve had earlier kept the Fed Funds rate at the range of 5.25% – 5.5% as per market expectations, but it was chairman Jerome Powell’s words that got traders excited.

Powell told the press post-FOMC meeting that another rate increase by the Fed is “unlikely”.

“I think we’d need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to 2% over time. That’s not what we think we’re seeing,” he said.

However, he warned about sticky price pressures in the US economy. 

“Inflation is still too high. Further progress in bringing it down is not assured and the path forward is uncertain.”

On the ASX today, Tech stocks led, followed by Banks, while Staples was dragged down by Woolworths (ASX:WOW).

Source: MarketIndex

 

Woolies’ shares fell -4% as the retailer had a bit of a boost in its March quarter sales, up by 2.8% to $16.8 billion. But it wasn’t quite what the analysts were expecting. Woolies mentioned that food prices pretty much stayed the same compared to last year during this quarter.

National Australia Bank (ASX:NAB) meanwhile pushed other bank stocks higher after its shares rose by +1.5%. NAB has kept things steady with an 84¢ per share interim dividend, and its profit for the first half of the year nudged up by 1.4% to $3.49 billion. The bank also said it was upping its share buyback by another $1.5 billion.

Elsewhere, gold diggers rallied while oil-related stocks fell after the WTI  dipped below the 200-day moving average, suggesting a potential downward shift in the long-term trend. 

Across the region, Asian stock markets mainly rose  on the back of Fed Chair Powell’s comments.

The US dollar fell against major currencies, with the Aussie dollar and Japanese Yen climbing by around +1% each against the greenback.

 

Block Inc in hot water

Meanwhile, news have surfaced in the last few hours that Afterpay’s parent, Block Inc, would be facing a Department of Justice investigation.

According to reports,  there’s some talk going on between federal prosecutors and a former employee regarding serious compliance issues at Cash App and Square that apparently go a long way back. 

The ex-employee has been spilling the beans, saying that Block’s compliance section was a mess, and the folks in charge shouldn’t have been there in the first place.

There are apparently documents showing that Cash App and Square haven’t been gathering enough information from customers to properly assess risks.

There are also accusations of Square processing transactions involving countries under economic sanctions, and even Block handling cryptocurrency transactions for terror groups.

Block Inc (ASX:SQ2) fell around -5% today.

 

ASX SMALL CAP LEADERS

Today’s best performing small cap stocks:

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Cracking the top of the small caps market on Thursday was critical minerals-hunting junior Krakatoa Resources (ASX:KTA), smashing through on news that the company has identified a promising new niobium-REE gravity target at the Mt Clere tenement, located in the northwestern margins of the Yilgarn Craton in Western Australia. It’s an extensive, 40km long target catchment area with potential for alkaline intrusive systems including carbonatites, and the company says that infill soil sampling is underway, so we can expect further updates soon-ish.

Pivotal Metals (ASX:PVT) is concentrating its efforts in Quebec, Canada, eschewing the usual trendy lithium search in that region in favour of copper, nickel, and PGMs. First assay results from the first two of 34 diamond drill holes are back from its 100% owned Horden Lake project. It’s hit some thick copper zones, with Cu-Ni-Au-PGM-Co mineralisation, including 37.5m at 1.31% Cu equivalent.

Vinyl Group (ASX:VNL) was up on yesterday’s news that that Songtradr has issued a conversion notice for a portion of its Tranche #2 convertible note, increasing its beneficial ownership in VNL to 19.95%. The company says that Songtradr will convert a principal balance of $1,629,351 into 77,588,162 ordinary shares in VNL at the conversion price of $0.021 per share, with Songtradr CEO Paul Wiltshire saying his company is “very impressed with the strategic progress and discipline Josh and the team at Vinyl Group have shown over the last year”.

Meteoric Resources (ASX:MEI) says it has entered into a non-binding MoU with Neo Performance Materials (TSX:NEO) for an offtake of 3,000 metric tonnes total rare earth oxide (TREO) per year from its Caldeira Project in Minas Gerais, Brazil, to supply Neo’s magnet manufacturing plant. The deal allows a right of first refusal for Neo to purchase additional MREC (mixed rare earth carbonate) that Meteoric produces from the Caldeira Project in excess of 6,000 MT TREO per year, on similar terms.

Augustus Minerals (ASX:AUG) has been granted a co-funded drilling grant of up to $110,000 for 2 x 700m deep diamond drill holes under the WA Government’s Exploration Incentive Scheme (EIS) for the Minnie Springs prospect. The deeper diamond drill program is designed to test and to provide a 550m deep, 1km wide geological/geochemical/structural cross-section through the large 3km long by 1km wide copper moly porphyry system, linking the Mo mineralised leucogranite to the extensive Cu in soil anomaly to the northeast.

Insignia Financial (ASX:IFL) says Funds Under Management and Administration (FUMA) increased by $11.7 billion (+3.9%) to $312.3 billion as at 31 March. Total net outflows for the quarter were $1.7 billion, largely reflecting the transitory impact of execution of wrap platform consolidation.

 

ASX SMALL CAP LAGGARDS

Today’s best performing small cap stocks:

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IN CASE YOU MISSED IT

Adavale Resources (ASX:ADD) has completed maiden reconnaissance exploration for uranium at its Mundowdna and Mundowdna South licences in South Australia ahead of schedule and under budget. Assays are currently pending.

Board members of Lithium Universe (ASX:LU7) have visited various Chinese lithium refineries in Shangdong, Hubei and Sichuan provinces, gathering feedback on its process design. It added that the consensus among industry players indicates the current pricing represents the likely breakeven point to produce battery-grade lithium hydroxide and carbonate.

ADX Energy (ASX:ADX) has received firm commitments from institutional and sophisticated investors for the subscription of shares worth a total of $13.5m under a two tranche placement. The strong demand from offshore and domestic institutional investors and family offices endorses the company’s growth opportunities in the heart of energy starved Europe. Proceeds from the placement will be used to evaluate, analyse and production test the Welchau-1 gas condensate discovery as well as assessing its exploration prospectivity and potential deepening. Funds will also be used for the drilling of a gas exploration well in the ADX-AT-I licence, drill and tie-in the Anshof-2A sidetrack well, and for gas processing upgrades including a CO2 reduction plant at its Vienna Basin oil and gas fields.

Alvo Minerals (ASX:ALV) has appointed Ore Investments chief executive officer and founder Mauro Barros as a non-executive director. Ore Investments – a prominent Brazilian natural resources private equity group – had made a $4.2m investment into the company in April at a 25% premium, giving it a 19.9% stake in ALV and the right to nominate a non-executive director. Barros is a qualified lawyer with broad experience in mining and the capital markets in Brazil, which he will use to aid the company’s exploration and development efforts at the Palma copper-zinc project as well as Bluebush and Ipora ionic clay-hosted rare earths projects in Brazil.

Hot Chili (ASX:HCH) is raising up to $29.9m through a private placement of shares priced at $1 each, or a ~18.6% discount to the 10-day VWAP, to institutional, professional, and other investors. Proceeds from the placement will provide up to 18 months of funding for the ompletion of the Costa Fuego pre-feasibility study, completion of the water supply business case study, completion of the Costa Fuego environmental impact assessment, ongoing exploration, drilling and consolidation activities. The placement will also improve HCH’s trading liquidity on the TSX Venture Exchange.

 

TRADING HALTS

Brazilian Critical Minerals (ASX:BCM) – pending release of exploration results.

Tourism Holdings (ASX:THL) – pending the release of a market guidance update.

Southern Cross Electrical Engineering (ASX:SXE) – pending the announcement of a material project award.

Theta Gold Mines (ASX:TGM) – pending the release of an announcement regarding a capital raise.

Uvre (ASX:UVA) – pending the release of an announcement in relation to a potential acquisition of a mineral project and capital raising.

 

At Stockhead, we tell it like it is. While ADX Energy, Alvo Minerals, Hot Chilli, Adavale Resources and Lithium Universe are Stockhead advertisers, they did not sponsor this article.