• ASX slides to a 1.0% dip as Hump Day fails to live up to its name.
  • Unemployment has to rise to ease inflation, according to very-employed RBA chief.
  • Omnia Metals (ASX:OM1) leads the winners worth watching among Small Caps today.

 

The ASX has delivered an inverse Hump Day today, a goodly chunk of the day diving into negative territory before bottoming out at -1.2% shortly after 2:00pm, and then rising gently like a gross, mouldy sourdough loaf to end the day… still down, but not by quite as much.

As it was this morning, it’s mostly the bloated, overweight Financials sector causing the heartstopping congestion for the market, with that sector down more than 3.0% for the day, while Consumer Staples and Energy battled it out for second-worst performance, each around -1.2%.

Consumer Discretionary (+0.45) and Utilities (+0.46%) were neck and neck for the best result late in the afternoon – but it simply wasn’t enough to keep the market anywhere near buoyant enough to make everyone happy.

Overseas, it’s been a slightly bumpy ride for markets throughout Asia as well today, with Japan’s Nikkei down 0.54%, Shanghai down 0.32% and the Hang Seng sinking 1.48%.

 

FROM THE HEADLINES

In possibly the most shocking news you’re likely to hear all month, Reserve Bank governor Philip Lowe has come out in defence of Australia’s banks making record profits, while the economy teeters on the edge of The Recession We Probably Didn’t Need To Have, But Will Likely End Up With Anyway™.

That’s as opposed to The Recession We Had To Have®, delivered by then-Treasurer Paul Keating in 1990, when mortgage interest rates were up near what you’re paying on your credit cards in 2023, and Australians had a legitimate excuse to complain about how sore everyone’s arse was, all the time.

The bad news for mortgage holders is: while appearing before Senate estimates – basically the same thing as a public service job interview, where a panel of uniquely unqualified people try to figure out if you’re going to be a threat to them in any way – Lowe confirmed more interest rate hikes are on the way.

“I don’t think we’re at the peak yet, but how far we have to go up I don’t know,” Lowe said, sending a very clear message that the entire thing’s careening out of control and no one can remember that the nation’s safe word is “pumpernickel”.

During the session, Lowe also took some time out to have a moan about how hard things are for him at the top, because – as the public face of the RBA – he gets a lot of static about interest rates from people like me.

Lowe also said he found it “a bit unfair” that criticism of rate hikes was directed at him, and pointed out that “there are nine of us” on the RBA board who make the decision, no doubt garnering huge quantities of sympathy from the infinitesimally tiny fraction of the population that could name the other eight off the top of their head.

Still, Lowe has acknowledged that “unemployment needs to rise to bring inflation back down”, which could be construed as a thinly-veiled threat to his “anonymous” RBA Board counterparts who aren’t shouldering their share of the blame from irate punters down the pub.

There is other good news on the horizon for Aussies who are wondering why it is that The Banks will hike their mortgage rates the instant the RBA announces a rate hike, but will often take quite some time to lift savings rates, and when they do, it’s never by the “full amount”.

The ACCC says it has been hard at work investigating how this could ever possibly be the case, and that the investigation should be finalised by December… by which time it will be too late and we’ll all be eating garbage from the neighbour’s bin for Christmas lunch, because the economy is a complete shambles.

 

ASX SMALL CAP LEADERS

Here are the best performing ASX small cap stocks:

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Among the Small Caps today, the nominal winner (by a country mile) is eCargo (ASX:ECG), up a whopping 75% from $0.02 to $0.035 a pop for absolutely no reason at all.

Putting that inexplicable movement aside, though, and this morning’s winner Omnia Metals (ASX:OM1) is still riding high, up a very solid 55.5% after revealing that during its due diligence, the company has found an enormous “exciting, high priority target” with extensive “spodumene suite” pegmatite granites outcropping at the Senay 5 target, measuring 2.3km in length and 440m in width.

The mapped pegmatites are highly prospective for lithium based on striking geological similarities with the world class Wabouchi (yes, that Wabouchi!) lithium deposit (36.7Mt @ 1.16% Li2O), which is located 38km along strike from Omnia’s Senay project.

“We are buoyed by the early results of our due diligence process which highlights significant outcropping, prospective pegmatite granites of the Senay Suite,” Omnia Metals executive director, James Warren, said.

“We know the Lac Des Montagnes Project has the right geology to host world-class lithium deposits, so we are excited by the outcomes of the early targeting work that has been completed.”

There’s a bit of a conga line of penny dreadfuls lurching skyward on teensy volume, until we get to Legacy Minerals (ASX:LGM), which has been on the rise since February 8, and has a renewed spring in its step on the heels of an announcement this morning that it’s drilling into low-sulphidation epithermal veins has been consistently intersected in diamond drilling across a 1.5km strike of the Mee Mar Prospect including at a newly discovered vein trend.

“This project’s scale is demonstrated by the fact that every diamond drill hole testing the strike of the Mee Mar vein intercepted epithermal veins and breccia – delivering a continuous strike of 1,500m which remains open to the north, south and at depth,” Legacy CEO and managing director, Christopher Byrne said.

LGM is trading around 16% higher for the day as a result of the news, easing from a very early peak of nearly 29%.

Also making some moves today were PolarX (ASX:PXX), up 14.2% on no news but reasonable volume, while 88 Energy (ASX:88E) saw significant volume today pushing its price up 13.6%.

 

ASX SMALL CAP LAGGARDS

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LAST ORDERS

The pickin’s are slim for news we haven’t already discussed elsewhere on the site today, but there are a few little tidbits worth mentioning before the bell goes to tell us it’s time to knock off.

Some bittersweet news from QEM (ASX:QEM), which has announced that the company has promoted Tim Wall from Deputy Chair to Chair, after John Foley stepped down from the Board of Directors.

QEM says that Foley has been “a highly regarded member of the board since the company’s inception in 2014 and was instrumental in QEM’s listing on the ASX in 2018”, contributing “considerable time and resources to the Company outside of his duties as Chair”.

“I am relinquishing my role at a time when QEM is transitioning from early-stage explorer to pre-development and this transition requires additional skills within the Board to take the company forward,” Foley said.

“With the transition period of the last few months, I am confident that Tim Wall is well positioned to step into the role.

“I make this decision knowing the team is extremely well led by [managing director Gavin Loyden], and will be very capably overseen by Tim and the rest of the QEM Board.”

Meanwhile, Link Administration Holdings (ASX:LNK) says its received advice from the Australian Commissioner of Taxation regarding the Australian income tax implications of the in-specie distribution of Link Group’s shareholding in PEXA Group (ASX:PXA), which confirms the availability of demerger tax relief for certain Link Group shareholders.

The company says that the “the cost base of Link Group shareholders’ pre-Distribution holdings should be apportioned between their Link Group and PEXA shareholdings based on the following percentages: Link Group 54.44% / PEXA: 45.56%.”

“This reflects the volume weighted average price of $1.89 for Link Group shares and $11.92 for PEXA shares in the 5 trading days after the implementation of the Distribution on 10 January 2023.”

There’s another lengthy and tedious document written in impenetrable blend of Tax and Legalese – you can grab a copy of it from the Link Group website if you’re interested.

Some news from Deep Yellow (ASX:DYL) today, after the Commonwealth Department of Climate Change, Energy, the Environment and Water (DCCEEW) approved the Mulga Rock Project Sandhill Dunnart Conservation Plan (SCDP), in accordance with Condition 2 of the Environment Protection and Biodiversity Conservation Act.

Under Condition 2 of Ministerial Statement No. 1046, DYL was required to prepare the SDCP to manage the potential impact to the Sandhill Dunnart marsupial associated with the implementation of the project and reduce the threat to the Sandhill Dunnart posed by feral animals within the defined area.

DYL was also required to ensure that the proposed defined area of the SDCP be located outside of the MRP development envelope and within the project boundary, contain at least 6,000ha of suitable habitat and contain a local population of Sandhill Dunnart.

The Sandhill Dunnart is a small carnivorous marsupial that looks like a mouse with really big ears, in case you were wondering. Adult Sandhill Dunnarts are usually about 10cm long from nose to tip of the tail, and they’re listed as “Endangered”, hence the need to make sure that there’s a few of them left romping around the countryside.

And lastly, some good news for Rugby League fans – or bad news, depending on how deep your loathing of the Brisbane Broncos runs – after the team revealed that it is on track to make more money than it did in 2021.

Brisbane Broncos Limited (ASX:BBL) says, thanks to members and fans returning to home games in 2022 following the Covid-19 impacted seasons, the club’s profit before tax for the financial year ended 31 December 2022 is expected to be approximately 11.5% above the 2021 result.

 

TRADING HALTS

Catalano Seafood (ASX:CSF) – Announcement regarding a material agreement.

Creso Pharma (ASX:CPH) – Capital raising.

… And that’s it from us for the day. Tune in tomorrow, when it will be Thursday. Same as last week.

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