• Unfriendly data knocks the wind from the market’s sails, benchmark closes flat
  • InfoTech continues to surge, tracking Wall Street’s gains as investors hunt for value
  • Nearology lithium play by Western Yilgarn wins the trophy, up 57% for the day

 

What a ride it’s been today! From a Futures Index prompt about as reliable as a tabloid magazine horoscope, the ASX was travelling pretty well throughout the morning.

Then a double-drop of ABS data winded the market with some not-very-awesome numbers, which I’ll get to explaining in a minute.

The info arrived at 11:30am, and the benchmark started bleeding its gains all over my nice, clean floor, dipping down into negative territory twice on its way to ending the day flat.

The data that caused the market to wobble came via the ABS retail spending and job vacancy reports, which were dull little pellets of rabbit poop, compared to yesterday’s CPI diamond.

 

YOU GOT SOME BAD DATA, BABY

All the joyous predictions about the CPI’s dramatic fall putting all-but-conclusive concrete pressure on the RBA to keep rates on hold when they meet on Tuesday went sailing out the window today.

That’s because the fresh numbers show a bunch of stuff that the RBA board likes to point at when telling us why they’re tightening the nation’s nipple clamps again.

Starting with job vacancies in Australia, the RBA has already said it wants to get unemployment a lot higher before the end of next year – like 0.9% higher.

That’s going to be difficult, considering that despite a 2% drop against February’s data, there were still 403,000 vacancies on the Aussie labour market in May, which is a huge vacuum to fill, one which is likely to keep unemployment quite low for at least the next few months.

And then there’s retail spending, which the RBA wants to keep low – the less we spend, the happier the RBA will be, on the basis that lower spending = lower inflationary pressure.

But it looks like the retailers have won the battle for Australia’s hearts and minds – admittedly not a fair fight, really. It’s the people who give us shiny news things versus the people who hit us with the interest rate stick every chance they can get.

Anyway… retail turnover rose 0.7% in May, which in turn is going to put pressure on inflation, and I know you’re as bored of this as I am, but there you go.

Two reasons why the RBA might still have a rate rise on the table on Tuesday, which has soured the market’s mood significantly.

 

TO MARKETS

As previously mentioned, the ASX was good and then it wasn’t, leaving the benchmark at flat when the bell rang to say it was time to pack away our toys and get ready to go home for the day.

It wasn’t even a close race among the sectors this session, with InfoTech up top on +1.8% and daylight to the rest of the market.

It’s most likely because of the tech surge in the US which has been rubbing off on local markets quite a bit over the past few weeks, because for an alarmingly large chunk of the tech stocks making big moves today, there’s not a lot of reasons to back those moves up.

Next best sector was Financials (+0.5%) and Consumer Discretionary (+0.36%), the former up on solid (but pedestrian) gains among some big value money giants, and the latter because we’ve all gone mad buying new heaters and blankets to battle winter, and new printers and staples because of the EOFY sales that are on everywhere.

Losing ground today were Real Estate (-1.2%) and Utilities (-1.1%). I’ve spoken to them both, and they’ve promised to do better – which is the best I could ask for, really.

 

TODAY’S ASX SMALL CAP LEADERS

Here are the best performing ASX small cap stocks:

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Wordpress Table Plugin

 

Not a huge amount of change on the leaderboard since lunchtime today, with Western Yilgarn (ASX:WYX) still out in front, up 60% on yesterday’s announcement that the company has conducted a “desktop review” on its recently-renamed Julimar West project, which has come up with some interesting nearological conclusions.

Chief among them is that the company is confident it’s caught a bit of the nearby Gonneville Intrusion that’s powering Chalice Mining’s (ASX: CHN) fabulous Julimar project, home to the 3Mt NiEq Gonneville Resource that put CHN on the map.

Western Yilgarn is champing at the bit to get moving on the site, which it expects to get the greenlight on by the end of June 2023 (which is tomorrow…), after an FNA from the application area for its EL 70/5111 exploration application was removed.

There’s a bunch of weird small caps doing weird things for no reason in the mix, and then archTIS (ASX:AR9) which stacked on a 27.5% jump this morning, on news that it’s signed a $4.06 million deal with the Australian Department of Defence for software licences and services to conduct a proof of concept (PoC) to modernise their workplace environment.

ArchTIS specialises in providing “innovative software solutions for the secure collaboration of sensitive information” – so the deal looks set to do away with Australia’s vast network of heavily-armed carrier pigeons, which currently cost Australian taxpayers about $8.4 billion in statue-cleaning costs alone every year.

Parkway Corporate (ASX:PWN) saw a massive increase in volume – from a four-week average of 2.8 million to around 43 million today, driving a 22.2% gain despite nothing new on the ASX announcements list.

However, recent rumblings from Independent Investment Research (IIR) has flagged the company as a potential 50-bagger, saying its innovative tech for treatment of coal seam gas (CSG) brine could become best available technology with a solid financial uptick for shareholders.

Parkway did get a “please explain” from the ASX, but that looks like it’s been shrugged off, avoiding a trading halt halfway through the day.

 

TODAY’S ASX SMALL CAP LAGGARDS

Here are the least best performing ASX small cap stocks:

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LAST ORDERS

It looks like things are not very happy for Happy Valley Nutrition (ASX:HVM) today, after the company got sent home by the ASX over “concerns regarding HVM’s financial condition”.

In fact, things look pretty grim. It’s been a bumpy month for HVM, with one of the low-lights being the resignation of the company’s CFO, Richard Chew, on 23 June to “pursue other leadership opportunities”.

Chew’s departure follows some boardroom shuffling that saw Randolph van der Burgh leave, and founding investor Grant Horan step up to become an executive director of Happy Valley Nutrition Limited and its subsidiary Five Redlands Road on 18 May.

There’s no word from the company directly as yet, but the kiwi milk producer has been scrambling in recent months to get money in to keep the lights on, after completing a modest ~$650k equity raise, and securing a 3-month stay of execution from creditor Merricks Capital in late March.

The maturity date of the secured debt facility held by Merrick’s is tomorrow.

Elsewhere, they’re shuffling the deck chairs at Namoi Cotton (ASX:NAM), following the resignation of CEO John Stevenson to “pursue other opportunities”, ahead of the company undergoing a strategic review.

Blackpeak Capital has been brought in to help get NAM pointing in the right direction for shareholders, after the company sank from a September ‘22 high of $0.558 per share to today’s price of $0.385 (which is actually a 7% pop against yesterday’s close).

Despite all that, Namoi remains confident that things shuold start looking up, citing an above average ginning volume this season and for the next.

It’s expecting to hit ginning volume of 1.0-1.1 million bales in 2023 season, an increase to the lower side of our previously announced forecast of 0.9 to 1.1 million bales.

 

TRADING HALTS

Booktopia Group (ASX:BKG) – Capital raising.

Olympio Metals (ASX:OLY) – Assay results from the Eurelia project.

Emyria (ASX:EMD) – Strategic acquisition related to Emyria’s psychedelic-assisted therapy program.

European Lithium (ASX:EUR) – Merger transaction financing details.

Kuniko (ASX:KNI) – Strategic investment and execution of an offtake term sheet.

Galan Lithium (ASX:GLN) – DFS results are on the way.

Labyrinth Resources (ASX:LRL) – Capital raising.

Argonaut Resources (ASX:ARE) – Capital raising.

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