• The ASX is poised to extend yesterday’s 1% gain
  • Merger activities in the mining sector push mining stocks higher in New York
  • The IMF has downgraded world growth outlook


The ASX is set to extend gains on Wednesday after a mixed session in New York. At 8am AEST, the ASX 200 April futures contract was pointing up by 0.35%.

Overnight on Wall Street, the S&P 500 was flat, the Dow Jones index lifted 0.3% while tech-heavy Nasdaq fell 0.4%.

M&A activities in the mining sector grabbed investors’ attention after Newmont Corp’s (NYSE:NEM) higher bid for Newcrest Mining (ASX:NCM) yesterday.

Mining giant Glencore (LON:GLEN) has also sweetened its bid for US$22b diversified miner Teck Resources (NYSE:TECK) by putting cash into its previous all-scrip offer.

Aussie mining stocks listed in New York, BHP and Rio Tinto, lifted around 4% after the merger news.

US used vehicle giant Carmax surged 10% after a solid Q4 profit.

In the cannabis sector, HEXO Corp shares tanked 28% and Tilray Brands dropped 8% after Tilray announced that it wants to acquire HEXO as the industry continues to consolidate.


IMF trims growth outlook

Meanwhile, traders are cautious heading into a pivotal US inflation report later tonight (AEST) that should support one more rate hike by the Fed.

Separately, the minutes from the Fed’s late-March meeting will be released later today.

The Fed’s New York President John Williams signalled that the Fed’s median forecast of a 25bp rate rise in May is a reasonable starting place.

“We need to do what we need to do in order to make sure we bring the inflation down to 2% the next few years,” Williams said.

This comes as the IMF trimmed world growth outlook, warning that the banking turmoil could slash economic output to near recessionary levels.

“With the recent increase in financial market volatility, the fog around the world economic outlook has thickened,” the IMF said.

In its outlook, the IMF has also forecast the Australian economy to grow by 1.6% this year followed by 1.7% through 2024.

Aussie population growth is expected to be close to 2% for both years, which means a modest fall in per capita GDP.


Gold price could ‘go to US$1,700’

Crude prices jumped 2%, with Brent trading now at US$85.55 a barrel.

Gains were made after the EIA (Energy Information Administration) released its short-term energy outlook, which predicts steady demand improvements over the next couple of years and no massive production shocks.

“Crude is starting to make a move higher, and if after tomorrow’s inflation report prices continue to rise, the US$85 level might not provide much resistance,” said Oanda analyst, Edward Moya.

Spot gold was up 0.6% to US$2,003 an ounce on more trading flows now that Europe is back from holiday.

Philip Newman, managing director at Metals Focus, believes the gold price would not be able to hold on to the US$2k level for much longer.

He said that gold will tumble in the second half due to weaker central bank gold demand and the market realising that the Fed will remain hawkish.

“These factors combined will drive gold prices lower, perhaps to US$1,700s,” Newman told Kitco News.

Now read: The sub-$30m explorers seeking out West Africa’s gold premium

Spot iron ore climbed by +1.8% to $US119.60 a tonne, while Bitcoin was up 2% in the last 24 hours to US$30,205.

Today will be the date for the massive network upgrade (or Shapella upgrade) for Ethereum.

This means that 18 million tokens are freed from the Ethereum Beacon chain, and will be available to be sold, held or staked for longer.


5 ASX small caps to watch today

RooLife Group (ASX:RLG)
RooLife said Fiji Kava (ASX:FIJ) has entered into an exclusive distribution agreement with RooLife for e-commerce distribution in Australia and China. Under the terms, RooLife has been granted performance rights to achieve retail sales of up to $15m, with a minimum of $9m in China over a period of five years. RooLife has also been appointed as the exclusive distributor of the Fiji Kava range of capsules and drinking kava products in China.

Mandrake Resources (ASX:MAN)
Mandrake has significantly increased its acreage at the 100%-owned large-scale Utah Lithium Project in the prolific ‘lithium four corners’ Paradox Basin southeast Utah. Mandrake has now secured 76,850 acres (~311km2) of prime lithium ground with staking ongoing. Successful field visit has been completed to finalise well access and prepare for lithium-brine sampling.

Errawarra Resources (ASX:ERW)
Metallurgical testwork on REE mineralisation from the Newmont and O’Connor areas at Salazar is well advanced, having been conducted in various phases since 2011. Work undertaken to date indicates the REE clay minerals are amenable to acid leach extraction at low temperatures and atmospheric pressure. The Australian Nuclear Science and Technology Organisation (ANSTO) has been engaged to undertake further metallurgical studies aimed at optimising previous leach test results utilising hydrochloric and organic acid.

Brightstar Resources (ASX:BTR)
A 30-hole, 6,000m RC drilling program at Cork Tree Well was completed successfully in March. Gold assays received to date include: 2m @ 4.23g/t Au from 106m, and 2m @ 3.00g/t Au from 140m and 4m @ 1.88g/t Au from 152m. These results have confirmed extensions of the mineralised lodes both along strike and at depth.

Venus Metals (ASX:VMC)
Venus will acquire a 0.3% net smelter royalty (NSR royalty) for the Youanmi Gold Mining leases from St Clair Resources via its subsidiary, Redscope, which currently holds a 0.7% NSR royalty at Youanmi. Once the acquisition is completed, Redscope’s royalty holding will increase to a 1% NSR royalty.


At Stockhead we tell it like it is. While Roolife Group, Errawarra Resources and Brightstar Resources are Stockhead advertisers, they did not sponsor this article.