• ASX lower with small caps down 1.14% in the past five days tracking broader market
  • Magnetite Mines leads the gainers this week after two positive announcements
  • Software company Nuix successfully defends a $183 million claim by former CEO

By close (AEDT) on Friday the S&P/ASX Emerging Companies index  (XEC) – a benchmark for Australia’s micro-cap companies – was down 1.14% for the past five days.

The Benchmark S&P/ASX 200 –home to the the top 200 ASX listed companies by float-adjusted market cap – was down 1.04% for the past five days.

All 11 sectors were in the red with real estate leading the losses down 5.80%, followed by the IT sector down 4.30%.

 

Weekly economic overview

In Australia the Reserve Bank of Australia (RBA) in its first meeting of the year followed the US Federal Reserve’s decision last week to raise the cash rate by 25bp.

The Aussie cash rate now stands at 3.35% after the RBA’s ninth interest rate rise since May 2022 with the central bank in its  accompanying policy meeting statement signalling more hikes to come.

“The board is seeking to return inflation to the 2–3% range while keeping the economy on an even keel, but the path to achieving a soft landing remains a narrow one,” the statement said.

This week Federal Treasurer Jim Chalmers said that inflation remains the government’s “major focus”, while signalling that a recession despite the RBA’s continual rate hikes.

And in its latest Statement on Monetary Policy released this morning the RBA upgraded its near-term inflation forecasts in response to a strong December quarter CPI number and expectations wages will grow at a faster rate than previously expected.

Trimmed mean inflation, currently at 6.9%, is now expected to fall to 4.3% by the end of the year, compared to the central bank’s previous forecast of 3.8%.

Headline inflation is expected to ease to 4.8% by the end of the year, down from its current rate of 7.8%. However, the RBA doesn’t expect it to return to its 2-3 per cent target until mid-2025.

The RBA signalled more rate hikes ahead but did not how many.

“The board expects that further increases in interest rates will be needed to ensure that the current period of high inflation is only temporary,” the report noted.

“In assessing how much further interest rates need to increase, the board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.

“It remains resolute in its determination to return inflation to target and will do what is necessary to achieve this.”

 

ASX IPOs this week

There were no companies listing on the ASX this week.

 

ASX Small cap winners:

Here are the best performing ASX small cap stocks for February 6-10:

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Leading the gainers this week is Magnetite Mines (ASX:MGT)  which has had impressed investors with positive news this week, including that it has boosted resources to 3.3 billion tonnes at its Razorback magnetite iron ore project in South Australia by updating its “highest quality” Iron Peak resource.

MGT said Iron Peak is now of suitable size and quality to investigate processing the deposit in the first years of operations.

The potential implications of this are material improvements to the project risk profile, cost base and overall economics.

MGT also signed a non-binding agreement to export high grade magnetite concentrate from the Razorback mine through Sanjeev Gupta’s GFG Alliance’s ports in Whyalla.

Among other gainers is software firm Nuix (ASX:NXL) which this week announced it had successfully defended against a $183 million claim by its former chief executive Peter Sheehy.

 The Australian reported the Federal Court of Australia found Sheehy was not entitled to cash out his options in the business when it hit markets in 2020.

The Federal Court found although former chief executive Eddie Sheehy held 453,273 options in the business, after winning an earlier NSW Supreme Court case, he was not able to exercise them.

 

ASX Small cap losers:

Here are the worst performing ASX small cap stocks for February 6-10:

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Lithium and gold exploration company Manhattan Corp (ASX:MHC) is trending lower this week despite announcing it has entered into a binding agreement to acquire 100% of the shares in Afro Mining which via its subsidiary Continental Lithium, has the rights to 109 mineral licences comprising the Chebogue lithium project in Nova Scotia, Canada.

MHC will become the largest tenement holder in Nova Scotia for exploration of lithium and critical metals and will hold the strike extension ground adjacent to the Brazil Lake pegmatites, which is one of its priority targets.

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