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Market Highlights: Wall Street worries to drag ASX lower, ECS, Nimy Resources and Classic Minerals to ease the pain
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- ASX to open lower, despite Tech stock gains in New York
- Bond rout sees US 10-year yields threaten 5%, so everyone’s upset
- Nimy strikes massive nickel-copper sulphides, and ECS sells off a lot of cannabis
Aussie shares are poised for a fall on Tuesday, with ASX 200 futures down sharply as commentators forecast a 5% US 10-year Treasury Yield is on the post, despite the momentary relief of no US government shutdown for 45 more days.
A little carnage in the US bond market overnight took the fun out of early October as more hawkish chatter from the US Federal Reserve rekindled September stress around the higher-for-longer debate.
Fears that interest rates will stay toppy for a longer time and the ongoing leap in Treasury yields continue to weigh on Wall St punters.
Speaking to gathered bankers in Mississippi on Monday night, Fed speaker Gov. Michelle W. Bowman said she expects – and would vote for – further hikes to the US cash rate.
“I remain willing to support raising the federal-funds rate at a future meeting if the incoming data indicates that progress on inflation has stalled or is too slow to bring inflation to 2% in a timely way,” she said overnight.
ASX futures were down 80 points, or 1.13% at 9.30am AEDT, although the local IT Sector found a strong ally in US growth stocks on the tech heavy Nasdaq overnight.
Mixed emotions and signals saw Wall Street kick off October business in quiet fashion on low volumes, still blinking at the late run US lawmakers made in Washington at at a an agreement (for a few weeks) for funding the business of the US government, thusly avoiding a calamitous shutdown.
The Dow Jones closed down -0.2%, while the S&P 500 managed a +0.01% win, while the tech heavy Nasdaq Composite added 0.7%, rising for the fourth straight session into the new month.
The other thing bothering Wall Street is the rising bias of bond yields. The US 10-year Treasury yield topped out overnight at 4.7% – new, new fresh 16-year high. This one going back to October 2007.
In company news, Tesla shares added 0.5% rebounding from early losses as deliveries for Q3 missed market estimates.
Apple gained 1.5% and Nvidia found some of its old form, jumping 3% thanks to Goldman Sachs adding the chipmaker’s stock to its conviction list.
Meanwhile in US Smallcapland, the Russell 2000 index of wee companies fell -1.6% amid the confusion, moving into the red for the year to date.
And in another sign of ongoing uncertainty, the US Utilities Sector has now lost circa 20% this year, the single worst-performing sector on Wall Street.
Former president Donald Trump has found himself face-to-face with his nemesis – the judge he’s repeatedly lambasted – as Day One of his trial begins in a case which has the potential to cripple his business and his standing in New York.
The Year of Lithium, dangerously…
When 2023 popped out in January, most punters thought it’d be the year of the electric battery metal.
Portfolios looked and found the clean energy, new metals and lithium names as materials to get into – followed a bit by copper and nickel.
Uranium was not atop the list.
Fast forward to the start of October and the uranium price has more than doubled in the last two months. On the other hand, the price of lithium has taken a bath – down almost two-thirds in 2023 – just as EV sales are starting to find drivers around the world.
As Our Emma wrote last week, nuclear industry punters are chattier than they’ve been in many a year as the spot clocked a decade high of US$67/lb last week.
On the demand side, there’s a forecasted supply shortfall of approximately 1.5 billion pounds in less than 17 years, which is why the World Nuclear Association (WNA) and price reporter Ux Consulting are saying new operations will be needed to fill the void.
Uranium demand from nuclear power plants will almost double by 2040.
Rick Rule says the momentum could be an opportunity for fans of the big catch.
“It’s much easier to get a 10,000 bagger if you start with a sub $2m market cap, than if you start with a $200m market cap,” he says. Too right.
Get it into you: Emma runs the rule over -$50m ASX resources explorers with exposure to uranium
In other markets …
Gold price was down -1.5% to US$1,821 an ounce.
Oil prices tumbled -2%, with Brent crude now trading at US$90.48 a barrel.
Iron ore were flat at US$119.50 a tonne.
Base metals prices were mixed with nickel futures falling by -0.1%, and copper futures climbing by +1.24%.
The Aussie dollar fell over -1.2% US63.51c.
Bitcoin meanwhile lifted more than +1.53% in the last 24 hours to trade at US$27,520.
ASX small caps to watch today
The Aussie medicinal cannabis cultivator and manufacturer, has secured a new $24 million offtake agreement to supply medicinal cannabis dried flower over the next five years to MediCann Health.
The deal builds on the existing two-year contract and expects to deliver over four tonnes of dried cannabis flower over five years:
- Binding agreement secured with MediCann Health to supply $24 million of medicinal cannabis dried flower.
- Supply will commence in January 2024 with over four tonnes of dried cannabis flower to be delivered over five years.
- Under the agreement, ECS will supply two ECS strains of GMP medicinal cannabis dried flower exclusively to MediCann.
- Builds on existing two-year contract highlighting the strong demand for ECS flower, the benefit of the recent capacity upgrades and ECS’ strong foundations as a globally competitive business
Both ECS and MediCann expect the volumes ordered under the Offtake Agreement to exceed the minimum annual volumes.
“The agreement underscores the Company’s strong presence in the B2B sector and highlighting the positive outcomes stemming from its recent capacity and production enhancements,” ECS told the exchange on Tuesday morning.
Classic says it’s entered into a binding agreement with Reed Exploration, a wholly-owned subsidiary of ASX-listed Hannans (ASX: HNR), to snap up the mining tenements comprising the Forrestania Gold Project (other than the tenements comprising the Kat Gap discovery, which are already owned by Classic).
Here’s the terms:
• Classic will pay $50,000 as a non-refundable deposit payable on execution of the binding tenement sale agreement
• Classic will, on or before 30 November 2023: as consideration for the FGP Tenements
▪ Pay Reed Exploration $200,000 as cash consideration
▪ Issue to Reed Exploration 500,000,000 fully paid ordinary shares in Classic at a deemed issue price of $0.001 per share; and pay Reed Exploration $106,196 as reimbursement for amounts paid to maintain the FGP Tenements in good standing
A few years back in 2017, Classic acquired 80% of the gold rights on the FGP Tenements from a third party, with Reed Exploration retaining its 20% interest in the gold rights associated with the FGP Tenements.
Classic will now have the rights to explore for gold and all other minerals, including lithium and nickel.
Chairman John Lester says it’s an exciting opportunity for Classic:
“We now can proceed to exploit the gold resource on this tenement 100% instead of having only 80% of the gold rights. Dean Goodwin will also be able to explore for other minerals for the Company’s benefit. Congratulations to the entire management team.”
Nimy says it’s onto massive nickel-copper sulphides the first hole of RC drilling at Mons, intersecting 13m of massive sulphide mineralisation in total, containing pyrrhotite, pentlandite, chalcopyrite and pyrite.
Some bullies you might like:
• Mineralised intersection is continuous and commencing from 102m depth.
• The massive sulphide intersections are coincident with the modelled MLEM plate locations.
• Samples have been delivered to Perth for expedited assaying.
• Holes have been cased in preparation for downhole electromagnetic (DHEM) survey to enhance
understanding of the plates’ dimensions.
• Drill Rig has been moved to Block 3 to test modelled conductive plates at that location.
• Nimy has an additional 31 VTEM anomalies with similar characteristics undergoing investigation.
Nimy executive director Luke Hampson says it’s a big win for their strategy of extensive VTEM and follow up MLEM.
“The intersections represent proof of concept in our search for massive sulphide mineralisation in an enormous holding covering an 80km strike of greenstone in over 2000km² that has already delivered very deep intersections of low-grade nickel from previous drilling.”
Samples have been delivered to Perth for urgent turnaround and we look forward to confirmation of this significant development.
