'Lionel Ritchie, eat your heart out.' Pic via Getty Images.
ASX Small Caps Lunch Wrap: Who else is trying to dance on the ceiling this morning?
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Well, Budget Night has come and gone – the one night of the year where everyone who took high school economics becomes an expert, and gets to tut quietly at their TV as anchors who are clearly severely out of their depth attempt to stop two bespectacled nerds from brawling live on air.
I had planned to do a piece-by-piece breakdown of the budget today, but this morning I realised two things:
- My dear, dear colleague Christian Edwards stayed up allll night to deliver this Budget Wrap masterpiece, and
- I would rather drink paint.
Instead, I’d like to discuss something that is weighing heavily on Wall Street – which means, by extension, it’s weighing heavily on our local markets as well.
That’s because, as we all know, the Australian Stock Exchange looks and behaves like one of those poor conjoined twins that used to feature in 19th Century travelling “freak” shows – dysmorphic, vaguely humanoid things that will occasionally show independent movement and emotion, but mostly just get dragged around the place by the bigger creature that is obviously in charge.
The Big Debate that is looming in the US is, of course, the dreaded Debt Ceiling Crisis – a now-annual event, during which America gets perilously close to reaching a self-imposed borrowing limit which, if reached, will end the universe as we know it and crush the Global Economy into a fiscal singularity.
The entire planet’s economies will be compressed down to the size of a single atom, which will then explode and create an entirely new universe based solely on the concept of debt, spawning a new branch of science based on the combined principles of physics and finance, with a dash of iffy pharmacology in there to help make things look pretty.
I think that’s how it works, anyway.
The thing is that the US is rapidly approaching the debt ceiling, and in years gone by, the crisis was dealt with by Congress simply voting to let themselves borrow more money, because that makes perfect sense and is a very responsible thing to do.
But, instead of that happening, the approach of a debt ceiling has now become a political pinch point, and an opportunity for either party to hold the administration to ransom, and make outlandish demands under threat of letting the nation hit that ceiling.
Because when it does, everything shuts down – all federal government services get furloughed because there’s no money in the bank to pay federal government employees, from National Park Rangers through to the military. This is a Bad Thing.
With the US economy already in a fairly precarious state, a government shutdown is – potentially – a massive tipping point that could plunge America into an economic existential crisis. This is also a Bad Thing.
Negotiations are set to start today, with US President Joe Biden sitting down with Reublican House Speaker Kevin McCarthy and other congressional leaders at the White House.
That will probably go about as well as you’d expect.
One solution that’s been floated as a workaround to the crisis is as simple as it is breathtakingly dumb – if the Biden administration were to mint a 1 trillion dollar coin (I know…) the debt ceiling would suddenly not be an issue and the current political wrangling would be rendered moot.
But, that won’t happen, and the theatrical posturing and debate around the debt ceiling negotiations is set to continue, thanks to the yawning chasm between the two sides of politics in the US, which is matched only be the yawning vastness of empty, vacuous space between the ears of more than a few of the people doing most of the shouting.
The end result, though, is a lot of uncertainty on Wall Street, which means increased uncertainty here at home – so we’ve all got more question marks to look forward to as the debt ceiling deadline looms larger each day.
How exciting is that?
And because too much excitement is never enough, let’s go take a look at what’s happening on the local market scene this morning.
TO MARKETS
Local markets opened lower this morning, dragged down by worries on Wall Street where things weren’t very shiny and happy overnight.
The benchmark dipped as low as -0.37% before rallying (a bit) around 11:00am, and by lunchtime things were slightly improved at -0.2%.
We’ll kick off the local market wrap with some salacious gossip, following news that Bubs Australia (ASX:BUB) has fired CEO and company co-founder Kristy Carr “with immediate effect due to failure to comply with reasonable board directions”.
Carr had been on a four-week personal leave break after a blow-up with the board that saw executive chairman Dennis Lin exit the building about a month ago, with the board also announcing his firing this morning as well.
“Noting the recent deterioration in Bubs’ financial performance over the half year, the non-executive directors considered the time was right for a change in leadership and to change the governance framework of the company to ensure that it aligns with ASX Corporate Governance Principles and best practice,” the company said in a statement to the ASX this morning.
Bubs had been something of a market darling during the Great American Baby Formula Crisis, after gaining approval to ship 1.25 million tins of formula to the US last year, causing a 40% intraday trading price spike for the company.
The company made the announcement at 9:45am, and investors greeted the news with a deafening round of complete indifference, leaving the trading price steady at $0.185.
In far more boring news, the Health Care sector is leading the way on the ASX this morning, rising 0.94%, with Real Estate recovering somewhat from yesterday’s hosing to add 0.75% before lunch.
Lagging, however, are Financials (-0.87%) because all the finance wonks stayed up late for Budget Night parties, while Telcos (-0.65%) and Energy (-0.55%) are turning in sub-par performance as well.
Tellingly, the XSO Small Ordinaries index is the only one showing positive change this morning, up +0.18%.
In Large Cap news, uranium digger Paladin Energy is up 5.7% on no news, and Dicker Data is up 6.2% on the heels of a positive earnings report filed yesterday.
NOT THE ASX
A combination of debt ceiling fears, CPI dramas and a gloomy old set of forecasts saw Wall Street slide overnight, leaving the S&P 500 falling by 0.46%, the Dow by -0.17%, and tech-heavy Nasdaq by -0.63%.
Among the hardest hit was PayPal, which plunged 13% after cutting its margins forecast.
Semiconductor firm Skyworks Solutions fell over 5% after forecasting revenue and earnings that are below analysts’ estimates, and most other Apple suppliers like Qualcomm, Broadcom, Qorvo also fell broad-based by over 1%, Earlybird Eddy Sunarto reports.
Wall Street is bracing for the US CPI data for April to drop later today, with the expectation of a rise to 0.4% for April on the heels of a far more modest 0.1% for March.
“The Fed won’t be raising rates on a hot report, but it will justify calls that rates will stay higher for longer,” Oanda analyst Edward Moya told Eddy.
In Japan, the Nikkei has fallen 0.44% this morning because just when you thought that country couldn’t get any weirder, it did.
That’s thanks to Japanese fast-food chain Pizza-La releasing its latest taste sensation – a pizza specifically made for dogs.
It’s called (and I promise you I’m not making this up…) the “Wanko Pizza Teriyaki Chicken”.
When you’ve stopped giggling, I’ll continue.
“Wanko” is (I’m told) a colloquial term for “dog” in Japan, like the way Americans use the term “hound”, weirdos on Reddit say “puppers” and Australians say “dog”.
The pizza itself is the same as the human version of the popular pizza, topped with teriyaki chicken, corn, mushrooms, and chopped seaweed. Yum yum yum.
The key difference, though, is the base is “made with chicken, not dough” – like a giant, un-crumbed slab of mechanically separated chicken meat.
If I’ve ruined your lunch, you are welcome.
In China, Shanghai’s markets are down 0.99%, while Hong Kong’s Hang Seng has also fallen, down 0.65%.
In cryptoland, things are largely flat and super-boring today, as the market waits for US CPI data (and other stuff that it was designed to be immune to) to be released in America over the next 24 hours.
The defiantly de-centrified Rob Badman has all the details over at Mooners & Shakers, because he’s a very reliable chap like that.
ASX SMALL CAP WINNERS
Here are the best performing ASX small cap stocks for May 9 [intraday]:
Swipe or scroll to reveal full table. Click headings to sort:
Code Company Price % Volume Market Cap MGU Magnum Mining & Exploration 0.03 76% 96,795,045 $11,982,934 VPR Volt Power Group 0.002 33% 75,000 $16,074,312 WEL Winchester Energy 0.004 33% 1,625,390 $3,061,266 CPH Creso Pharma Ltd 0.021 31% 25,940,425 $34,192,651 MHI Merchant House 0.069 25% 62,445 $5,184,657 BXN Bioxyne Ltd 0.025 25% 100,000 $13,312,908 AEV Avenira Limited 0.018 20% 29,446,410 $22,908,382 CLT Cellnet Group 0.018 20% 880,826 $3,653,920 AJQ Armour Energy Ltd 0.006 20% 14,997,132 $18,813,039 HLX Helix Resources 0.006 20% 2,093,276 $11,615,729 MTH Mithril Resources 0.003 20% 190,000 $8,157,725 1AG Alterra Limited 0.013 18% 5,003 $7,662,078 CAQ CAQ Holdings Ltd 0.013 18% 47,320 $7,895,649 IVX Invion Ltd 0.007 17% 2,500 $38,529,793 OAU Ora Gold Limited 0.0035 17% 14,637,263 $11,810,775 RDN Raiden Resources Ltd 0.0035 17% 12,857 $5,563,747 FYI FYI Resources Ltd 0.1275 16% 1,799,259 $40,294,935 PIQ Proteomics Int Lab 1.04 16% 303,672 $108,881,093 GLH Global Health Ltd 0.19 15% 30,601 $9,570,558 AGE Alligator Energy 0.039 15% 13,802,732 $112,354,726 CRS Caprice Resources 0.055 15% 455,610 $5,604,333 DYL Deep Yellow Limited 0.64 14% 4,061,622 $423,205,489 SIO Simonds Grp Ltd 0.125 14% 19,388 $39,589,710 LOT Lotus Resources Ltd 0.21 14% 2,019,696 $248,562,348 LGM Legacy Minerals 0.17 13% 358,607 $8,074,120
The morning’s Small Cap Winner – by a country mile – is Magnum Mining (ASX:MGU), which has soared 82.5% on news that its signed a Memorandum of Understanding (MOU) for an offtake deal with Mitsubishi covering “all products associated with the proposed operations at its 100% owned Buena Vista Green Iron Project in Nevada, USA”.
“This MOU gives the Buena Vista Green Iron Project a sound basis for moving forward to a Feasibility Study,” Magnum CEO Neil Goodman said.
“The Ferrous Raw Materials Division of Mitsubishi is an internationally recognised and respected commodity trading team. Magnum welcomes this important strategic alliance and the surety it can bring to the Project’s development.”
Second best on the charts today is Aussie cannabis company Creso Pharma (ASX:CPH), which has jumped 25% on news that the company’s wholly-owned US subsidiary, Sierra Sage Herbs, has finalised a new product range of functional (non-psychedelic) mushrooms.
On top of that, Sierra Sage Herbs has also inked a deal to expand its distribution partnership with global e-commerce marketplace Groupon, that connects shoppers with merchants through group voucher discounts and promotions, opening up avenues to significantly increase its market share in the United States.
And in third place for no apparent reason is Avenira (ASX:AEV), after a large spike in volume and interest in the WA-based gold explorer saw it climb 20%, despite no news to the ASX since late April.
ASX SMALL CAP LOSERS
Here are the most-worst performing ASX small cap stocks for May 9 [intraday]:
Swipe or scroll to reveal full table. Click headings to sort:
Code Company Price % Volume Market Cap CCE Carnegie Cln Energy 0.001 -33% 250,000 $23,463,861 MEB Medibio Limited 0.001 -33% 76,088 $6,225,891 CLE Cyclone Metals 0.0015 -25% 200,000 $18,178,496 APX Appen Limited 2.51 -21% 9,372,719 $396,577,805 NCL Netccentric Ltd 0.04 -20% 36,977 $14,150,583 SCU Stemcell United Ltd 0.004 -20% 601,168 $6,423,649 APC Aust Potash Ltd 0.019 -17% 5,642,813 $23,889,590 HTM High-Tech Metals Ltd 0.195 -15% 55,000 $5,672,142 BME Black Mountain Energy 0.017 -15% 155,845 $3,664,484 BAT Battery Minerals Ltd 0.003 -14% 70,000 $11,749,298 FAU First Au Ltd 0.003 -14% 515,124 $3,831,741 MRD Mount Ridley Mines 0.003 -14% 37,526,258 $27,247,090 RMX Red Mount Min Ltd 0.003 -14% 200,000 $7,951,479 OPN Oppenneg 0.038 -14% 108,341 $8,840,242 ATX Amplia Therapeutics 0.095 -14% 99,464 $21,340,609 FTC Fintech Chain Ltd 0.013 -13% 59,000 $9,761,544 RLF Rlfagtechltd 0.165 -13% 19,500 $17,267,810 OPA Optima Technology 0.02 -13% 10,000 $5,780,867 ENT Enterprise Metals 0.007 -13% 350,000 $5,640,646 LNU Linius Tech Limited 0.0035 -13% 342,426 $14,356,099 NGS NGS Ltd 0.015 -12% 1,034,299 $2,521,227 VTM Victory Metals Ltd 0.265 -12% 479,746 $16,217,009 LRD Lord Resources 0.115 -12% 567,392 $4,710,176 AOA Ausmon Resorces 0.004 -11% 140,000 $4,361,802 AVE Avecho Biotech Ltd 0.004 -11% 100 $8,270,412
