ASX Small Caps Lunch Wrap: Who’s been busy demanding their money back this morning?

Australian markets are largely flat this morning, as the country sighs resignedly ahead of the Reserve Bank’s inevitable lifting of interest rates later on this afternoon.

The RBA is due to hand down its call on how many basis points are going to be added to the cash rate at 2.30pm, however it’s unlikely to be anything particularly surprising.

Something that would be a little surprising, though, has reportedly started landing on the desks throughout the US political landscape, after crypto exchange FTX (or what’s left of it, that is) fired off a bunch of letters to ask for about US$100 million in donations back.

According to Axios, the team tasked with the unpicking of the collapsed exchanges finances have been sending out “confidential” letters, requesting the return of donations made by both former FTX CEO Sam Bankman-Fried and FTX Digital Markets Co-CEO Ryan Salame.

The pair were two of the largest political donors in the previous US election cycle, with Bankman-Fried alone writing cheques totalling around US$37 million to the Democrats, and Salame coughing up around US$19 million to Republican causes.

How this one gets sorted out is undoubtedly going to be anyone’s guess – the world of political donations in the United States is somewhat murky at best, but FTX is basically saying give us back the money, or we’ll commence “actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced”.

So there may well be at least some of the funds on their way back into the company’s bank account – but there’s still no guarantee those funds won’t be “mysteriously hacked” along with the countless millions that have slowly been disappearing from FTX since SBF and his cronies were pinched in the Bahamas.

TO MARKETS

The ASX 200 kicked off the morning with a couple of little dips today, see-sawing around -0.1% a few times while the market worked to find its feet before heading into cheerier territory as lunch time approached.

The mild uptick today has been led by Utilities (+0.9%), Energy (+0.8%) and Financials (+0.6%) – not gains that are likely to be setting the world on fire any time soon, but enough to lift against a slide from Real Estate (-0.5%) and Consumer Staples (-0.3%).

Up the top end of town, Energy Resources of Australia (ASX:ERA) is the best performer, with the $941 million market cap company stacking on 6.25% this morning, possibly due to market sentiment around uranium becoming the Next Big Thing (again).

It’s either that, or just market reaction to famously-100%-stable US filmmaker Oliver Stone’s hugely pro-nuclear power documentary Nuclear Now, reviews of which are positively glowing.

NOT THE ASX

Overseas, and Wall Street put in a weak-kneed effort overnight, as US fears about inflation married to concerns over the ultra-rapid deflation of that Chinese “weather balloon” severely dampened risk appetite among investors.

The S&P 500 closed 0.60% lower, the tech-heavy Nasdaq was down by 1% while the Dow eked out the best of the day’s results, down by just 0.10%.

Although the S&P 500 index is up by 7.5% and Nasdaq by 14.5% this year, the combination of stubborn inflation, more hikes, and a disappointing earnings season are potential catalysts for a downturn in the market, Earlybird Eddy Sunarto reports.

“The good news is that there’s plenty more data to come before the next Fed meeting that could soothe some of those concerns, and so there’s plenty more time for investors to pick themselves back up,” said OANDA analyst, Craig Erlam.

In overseas tech news, Microsoft has announced a surprise in-person event tomorrow where it’s expected to announce and demo its Bing/ChatGPT integration, in which developers are expected to reveal that the most difficult part of the integration work was convincing the AI that Bing was, in fact, still a thing.

In Asia, markets are slightly higher this morning. Japan’s Nikkei is up 0.16%, while Shanghai has added 0.21% and the Hang Seng has climbed 0.86% in early trade.

In crypto, all eyes are on mega-exchange Binance’s announcement that it is suspending USD deposits and withdrawals starting on 08 February, the reason for which has not been made particularly clear by the Binance boffins.

“All other methods of buying and selling crypto remain unaffected, including bank transfers using one of the other fiat currencies supported by Binance (including Euros), buying and selling crypto via credit card, debit card, Google Pay and Apple Pay, and via our Binance P2P marketplace,” the exchange said in a statement.

Rough translation: “SBF and FTX has the SEC all WTF about BTC and USD so you’re all SOL for the next little while”.

That’s probably not 100% correct – but luckily for us, our man Rob “You Gotta Read Between the Lines” Badman has unpicked it for us here, so you should go there and see what he says before descending into any significant levels of panic.

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for February 7 [intraday]:

Swipe or scroll to reveal full table. Click headings to sort:

Top of the Pops this morning is EV Resources (ASX:EVR), after the explorer revealed it has entered an agreement for a $25 million investment commitment from Sapphire Global Energy Fund, sending its price up 46.7% by lunchtime.

The cash will be used to “strategically acquire projects and as working capital to develop further the Company’s current portfolio, including but not limited to drilling campaigns and funding towards JORC compliant mineral resource estimates of the projects”.

“The investment commitment is another major milestone that will enable us to grow significantly over the next 12 months,” EV Resources executive director Navin Sidhu said.

“We look forward to implementing our vision to become a strategically diversified explorer and developer of precious and green energy metals. Sapphire is very supportive of the company and realises the potential we have, thus they have provided us with an extremely competitive and sizeable facility.

“This facility enables us to drawdown when necessary, allowing us to better manage our funding needs, reduce dilution and not be at the mercy of the markets.”

Meanwhile, Omnia Metals (ASX:OM1) is up a shade over 35% on news that it has moved to  increase its exposure to the future metals sector by entering into an earn-in agreement to acquire up to a 100% interest in 540km2 of granted claims in the James Bay region, Quebec, Canada.

Omnia has the option to earn-in up to a 100% interest of the rights to the Lac des Montagnes project, made up of three highly prospective properties – Senay Lithium (136km2), Lac des Montagnes Lithium Central Zone (98km2) and Lac des Montagnes Lithium East Zone (306km2).

The Lac des Montagnes Belt is host to Namaska Lithium’s (TSXV:NMX) world class Wabouchi lithium deposit (36.7Mt @ 1.16% Li2O) which is located 38km along strike from the project.

And last of the morning’s most mentionables is C29 Metals (ASX:C29), up more than 23% on news that its maiden hole since pivoting towards lithium in October last year has intersected a 30m brine aquifer at its Pocitos 7 project within Argentina’s Salta Province.

With brine samples taken for assaying and testing using Ekosolve direct lithium extraction technology, flow testing of the aquifer that was intersected from a depth of 370m achieved a pumping rate of more than 2,000 litres an hour using a 49mm pipe and a submersible pump.

This is a strong indicator that the aquifer is easily capable of delivering brine flow rates required for production should assaying prove that lithium is present in the desired quantities.

“We are extremely pleased to intercept brines and have hit a 30m or more aquifer zone at Pocitos 7 and have such a healthy pump rate particularly given the size of the pipe and pump utilised,” C29 director Jeremy King said.

ASX SMALL CAP LOSERS

Here are the most-worst performing ASX small cap stocks for February 7 [intraday]:

Swipe or scroll to reveal full table. Click headings to sort: