RBA boss Philip Lowe addressing the media, as Australia's rage actually physically embodies itself and prepares to eat his entire head. Pic via Getty Images.
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I certainly picked a great day to come back to work, after lying in state for 5 days with the flu and not paying any attention at all to what’s been going on.
So I totally missed the previous three sessions that the ASX “allegedly” went on a positive run… something it only seems to do when I’m not around, leading many to come to the conclusion that I am the Bad Luck Albatross gliding gently off the bow of the Good Ship HMAS X.
If you fall into that category, I look forward to more of your clearly unhinged and highly disturbing emails.
Anyway… overall, local markets finished the day lower by roughly 1.0% and, in the interests of getting back into bed as quickly as possible this afternoon, I’m choosing to blame it on you.
You see, Australians (in general), for quite some time now have – if the data I’m interpreting is correct – consistently engaged in paying more and more money for stuff.
If you don’t believe me, then last week’s shocking revelation that for the 12 months to the end of April, Australians have gone absolutely bananas on paying more money for stuff, lifting the amount of money we pay for stuff by 6.8%.
And, quite stupidly (in my opinion), Australians have not been demanding an extra 6.8% worth of stuff to go with the extra 6.8% more money we are paying for the aforementioned stuff.
And that’s given the board at the Reserve Bank of Australia a proper lightbulb moment: “If Australian’s love paying more and more money for stuff, then we should give them what they want and raise interest rates a quarter of 1%, so then they can pay more money for the debt that they have gone into indulging their love of paying more and more money for stuff”.
So that’s exactly what the RBA board did, and – as I have clearly shown – it’s all your fault, and you should be more careful with what you wish for next time.”
To be fair, though, the benchmark didn’t exactly start the day well, dipping 0.7% off the back of a highly mediocre session on Wall Street overnight.
From there, things bumbled along until RBA Board Boss Phillip “I’m Gonna Need to Lay” Lowe and his mates dropped a 0.25% clanger on every debt holder in the country.
Here’s a quick game for you all, dear readers: Take a look at this very pretty chart, and see if you can spot the exact moment the RBA raised rates today.
For those of you who said it happened at any other time than when the benchmark took off for the Mexican border with a still-smoking revolver in one hand, I have some crypto in a shoebox you might be interested in eating.
Our Man Eddy Sunarto reports that the RBA said although inflation in Australia has passed its peak, 7% is still too high. Meanwhile, wages growth is picking up in response to the tight labour market.
“The RBA Board is still seeking to keep the economy on an even keel as inflation returns to the 2–3 per cent target range, but the path to achieving a soft landing remains a narrow one,” it said.
The central bank also said that “some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe.”
First impressions from market analysts for home loan borrowers on fixed term mortgages set to expire in the latter half of this year include statements like “You poor bastard”, and “How much is your home insured for?”.
Needless to say, things are going to really sting for a lot of families in the run up to Christmas.
A look at the sectors shows that it was actually a relatively great day, provided your entire $600 portfolio was diversified entirely within the Utilities sector… and if that’s the case, I offer you my hearty congratulations on your $3.36 gain.
The rest of the market sucked harder than a tonne of ticks in a blood bank, with Consumer Discretionary (-1.86%), Industrials (-1.49%), Health Care (-1.41%) and Financials (-1.29%) all falling more than 1.0% for the day.
For what it’s worth, Consumer Staples and the Telcos also came close to being the wrong kind of terrible, close enough to hitting -1.0% that they deserve to be lumped in on that list as well.
The take home for the day: The two best market scans for the day were the XJR ASX 200 Resources index, and the XSO ASX Small Ords – both of them closed out proceedings at -0.8%.
But… there was a very bright spark among the Small Caps today, which I’ll get to on the other side of this lovely-looking table of letters and digits and colours.
Here are the best performing ASX small cap stocks:
Swipe or scroll to reveal full table. Click headings to sort:
| Code | Company | Price | % | Volume | Market Cap |
|---|---|---|---|---|---|
| ADD | Adavale Resource Ltd | 0.027 | 69% | 76,335,360 | $8,312,688 |
| CCE | Carnegie Cln Energy | 0.0015 | 50% | 1,072,373 | $15,642,574 |
| DCX | Discovex Res Ltd | 0.003 | 50% | 512,046 | $6,605,136 |
| TMX | Terrain Minerals | 0.009 | 29% | 11,422,478 | $7,582,395 |
| BLZ | Blaze Minerals Ltd | 0.023 | 28% | 24,892,437 | $8,235,148 |
| MIO | Macarthur Minerals | 0.185 | 28% | 615,649 | $24,019,756 |
| ENT | Enterprise Metals | 0.005 | 25% | 300,000 | $2,820,323 |
| PYR | Payright Limited | 0.005 | 25% | 513,169 | $3,523,541 |
| SMN | Structural Monitor. | 0.68 | 21% | 274,275 | $75,140,591 |
| AVE | Avecho Biotech Ltd | 0.006 | 20% | 1,706,647 | $10,810,796 |
| GTG | Genetic Technologies | 0.003 | 20% | 259,404 | $28,854,145 |
| ICN | Icon Energy Limited | 0.006 | 20% | 500,000 | $3,840,068 |
| SIG | Sigma Health Ltd | 0.755 | 19% | 22,950,690 | $672,640,524 |
| NWM | Norwest Minerals | 0.032 | 19% | 1,885,813 | $6,679,023 |
| PEC | Perpetual Res Ltd | 0.013 | 18% | 87,181 | $6,000,324 |
| BNZ | Benzmining | 0.36 | 18% | 124,000 | $25,336,721 |
| JGH | Jade Gas Holdings | 0.047 | 18% | 511,933 | $40,216,168 |
| ADX | ADX Energy Ltd | 0.007 | 17% | 19,845,641 | $21,322,772 |
| CXU | Cauldron Energy Ltd | 0.007 | 17% | 652,251 | $5,589,412 |
| XTC | Xantippe Res Ltd | 0.0035 | 17% | 159,389,127 | $34,440,299 |
| MGV | Musgrave Minerals | 0.295 | 16% | 9,628,924 | $150,758,027 |
| GAS | State GAS Limited | 0.195 | 15% | 73,059 | $38,221,492 |
| GMN | Gold Mountain Ltd | 0.004 | 14% | 1,076,062 | $6,894,764 |
| VAL | Valor Resources Ltd | 0.004 | 14% | 9,834,865 | $13,310,622 |
| MRC | Mineral Commodities | 0.056 | 14% | 445,223 | $33,881,341 |
The day’s Small Caps winner is undoubtedly Adavale Resources (ASX:ADD), which cranked out a +100% gain this morning on news that diamond drilling has confirmed the presence of nickel-bearing massive sulphides at the Luhuma Central prospect within its Kabanga Jirani nickel project in Tanzania.
Given the beating the entire market took at 2:30pm, it makes sense that ADD’s trading price eased a little this afternoon, ending the session up 68.75%.
That all took place thanks to Adavale hitting an intersection of massive sulphides over 4.15m from a down-hole depth of 223.35m, further evidence that the company’s exploration program is on the right track.
That’s a major positive given the Kabanga Jirani project’s location right next to Lifezone and BHP’s development Kabanga project, which has a resource of 58Mt at 2.62% nickel.
The company says that visual observation of between 1% and 5% pentlandite – an iron-nickel sulphide – appears to align well with portable XRF readings that indicate a nickel grade of between 1.2% and 2.3% nickel, though the latter is no replacement for laboratory assays.
Next best for the day is Blaze Minerals (ASX:BLZ), which is up another 27.8%, still running on news from late May that it had entered an agreement to buy 340sqkm at the greenfields North Spirit lithium project in Ontario, near Patriot Lithium’s (ASX:PAT) tenements.
The acquisition is set to cost BLZ an initial $100,000 cash and $550,000 worth of shares (55m shares at 1c). The company will then pay an additional $2.65m cash and $5.95m shares in staged payments right up to the release of a mining feasibility study.
A late charge by Macarthur Minerals (ASX:MIO) saw it clamber into third place on the ladder, up 27.6% on no fresh news, so it’s probably been the beneficiary of a little bit of Nickelmania blowback from Adavale’s barnstormer.
And in fourth place (formerly third place, but things change, man… things change) is Structural Monitoring Systems (ASX:SMN), which jumped 21.4% after issuing an update on installation and testing of its Aft Pressure Bulkhead (APB) system in commercial aircraft.
The company says that testing through US carrier Delta is continuing, with the 23rd installation deemed a success, and that “the final tests requested by Boeing are now almost complete and we expect the certification package to be submitted soon”.
Here are the least best performing ASX small cap stocks:
Swipe or scroll to reveal full table. Click headings to sort:
| Code | Company | Price | % | Volume | Market Cap |
|---|---|---|---|---|---|
| TD1 | Tali Digital Limited | 0.001 | -50% | 197,997 | $6,590,311 |
| CLE | Cyclone Metals | 0.001 | -33% | 1,200,000 | $15,396,757 |
| KEY | KEY Petroleum | 0.001 | -33% | 186,000 | $2,951,892 |
| SOV | Sovereign Cloud Hldg | 0.05 | -29% | 1,334 | $11,879,363 |
| CYQ | Cycliq Group Ltd | 0.006 | -25% | 15,000 | $2,780,133 |
| MCT | Metalicity Limited | 0.0015 | -25% | 1,106,768 | $7,472,172 |
| WSR | Westar Resources | 0.071 | -24% | 40,950,483 | $17,165,709 |
| BCB | Bowen Coal Limited | 0.17 | -23% | 17,756,996 | $405,211,005 |
| YBR | Yellow Brick Road | 0.055 | -21% | 40,132 | $22,846,702 |
| SIX | Sprintex Ltd | 0.03 | -21% | 125,711 | $9,665,464 |
| CSF | Catalanoseafoodltd | 0.0415 | -20% | 9,996 | $1,752,608 |
| 1ST | 1St Group Ltd | 0.004 | -20% | 2,415,730 | $7,084,956 |
| BFC | Beston Global Ltd | 0.008 | -20% | 2,128,623 | $19,970,469 |
| GCR | Golden Cross | 0.004 | -20% | 791,330 | $5,486,281 |
| NZS | New Zealand Coastal | 0.002 | -20% | 1,505,403 | $4,135,025 |
| ZER | Zeta Resources Ltd | 0.285 | -20% | 4,000 | $200,051,111 |
| M2M | Mtmalcolmminesnl | 0.026 | -19% | 191,960 | $1,992,832 |
| OPA | Optima Technology | 0.013 | -19% | 600,561 | $4,021,472 |
| REZ | Resourc & En Grp Ltd | 0.027 | -18% | 35,223,436 | $16,493,591 |
| EEL | Enrg Elements Ltd | 0.015 | -17% | 413,300 | $18,166,216 |
| BME | Blackmountainenergy | 0.02 | -17% | 46,042 | $4,397,380 |
| MRD | Mount Ridley Mines | 0.0025 | -17% | 2,274,062 | $23,354,649 |
| NES | Nelson Resources. | 0.005 | -17% | 780,000 | $3,531,566 |
| BBN | Baby Bunting Grp Ltd | 1.49 | -16% | 4,321,192 | $240,133,550 |
| AL8 | Alderan Resource Ltd | 0.006 | -14% | 652,300 | $4,316,863 |
A couple of sad stories for two local health stocks today, with both EBOS Group (ASX:EBO) and Pacific Edge (ASX:PEB) getting some grim news.
First up is EBOS Group, with the company dipping into a trading halt pre-open this morning to get ahead of a major blow: losing a $2 billion Pharmaceutical Benefits Scheme (PBS) medicine supply contract with Australian Chemist Warehouse to competitor, Sigma Healthcare (ASX:SIG).
I know, I know… these aren’t exactly Small Cap companies, but it’s interesting, so shush!.
EBO announced its halt at 7:59am today, citing “new information received by EBO regarding the Australian Chemist Warehouse contract”, and about 20-something minutes later Sigma delivered the details on what that meant.
“Sigma Healthcare is pleased to announce it has signed a binding term sheet with Chemist Warehouse for the supply of both Pharmaceutical Benefits Scheme (PBS) medicines and Fast-Moving-Consumer-Goods (FMCG) product for a period of five years,” SIG said.
Great news for Sigma – which golds the existing FMCG supply contract – but clearly terrible news for EBO as the contract generates roughly $2 billion in revenue for the latter.
As you’d expect, trading prices moved accordingly – at the time of writing, SIG is up 20% and EBO is down 10.3%.
Probably softening the immediate blow a little bit for EBO is the fact that the existing contract is set to run out on 30 June next year, so with a year or so left to run there’s still a few dollars to be made.
It’s gonna make for some awkward eye contact in the Chemist Warehouse loading dock for a while, though.
The other health company being hit with bad news today is Cancer diagnostics company Pacific Edge, after the United States Medicare shambles decided to stop reimbursing customers in the US for PEB’s Cxbladder diagnostic tests.
According to a Local Coverage Determination (LCD) from Novitas, the Medicare Administrative Contractor (MAC) with jurisdiction for Pacific Edge’s US laboratory, notes Cxbladder tests Triage, Detect, Monitor, Resolve and Detect+ are “not considered medically reasonable and necessary”, which is one of the thresholds required for coverage under the US Social Security Act.
This is, again, clearly terrible news… the US healthcare market is the spiritual home of the richest pickin’s there are on the planet, and the finding (on its surface) basically tips PEB’s products out of the “anyone can get them for free” section of the shop and deep into the “the price of checking to see if you have kidney cancer is approximately 1 kidney” territory of America’s horrifying user-pays sector.
Pacific Edge is currently preparing a proper response to it all, which we should have sometime tomorrow, if all goes to plan.
EBOS Group (ASX:EBO) – EBO had grim news regarding its Australian Chemist Warehouse contract. See above for all the deets.
TechGen Metals (ASX:TG1) – Capital raising.
Terragen (ASX:TGH) – Capital raising.
Redflow (ASX:RFX) – Capital raising.
Odessa Minerals (ASX:ODE) – Capital raising.
Solis Minerals (ASX:SLM) – Capital raising.
Pacific Edge (ASX:PEB) – US Medicare is set to cease funding for the company’s cancer diagnosis product Cxbladder. Again, see above for all the deets.
Polynovo (ASX:PNV) – PNV has audiences on the edge of their seats, as the company hits ‘pause’ so it can finalise an announcement on revenue performance. Will Marion’s wedding to Julio go ahead? Or will Andre wake up from his coma in time to stop it from happening? And just what is up with Sandra’s “new look” this week? You’ll have to wait until the next exciting episode of Polynovo (Streaming now on the ASX).
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