• The Emerging Companies index has lifted this week , gaining 5.35%
  • Six ASX sectors finished week in the red and five in green
  • Cyclone Metals acquired significant iron ore Block 103 project in Canada


It’s the start of a new year and after a volatile 2022, investors globally had their fingers crossed for a positive start to 2023. The first week of trade on the Aussie bourse has delivered some optimism.

The S&P/ASX Emerging Companies (XEC) is a benchmark for Australia’s micro-cap companies, containing up to 200 stocks that ranked between 350 and 600 by float-adjusted market capitalisation at the time of their index inclusion. By 4pm AEDT on Friday the ASX XEC was up 5.52% for the past week.

The S&P/ASX 200 (XJO) is Australia’s leading benchmark index, home to the top 200 ASX listed companies by float-adjusted market capitalisation. It didn’t fare as well but remained in the green this week, up 1.27%.

It was a mixed result for the 11 ASX sectors with six finishing in the red, while five were in the green. Leading the winners was the materials sector which rose 4.61% in the past five days (take note that takes in the last Friday due to the public holiday on Monday).

Consumer discretionary rose 3.4%, while industrials was up 0.56%. Healthcare led the laggards, down more than 2%, while energy fell 2.15% and consumer staples were down 1.28%.


Weekly economic overview

Global market continue to remain reactionary to  key economic data and signs as to whether central banks will remain hawkish in their approach to interest rates in 2023 to curb inflation which dominated much of the economic discussion last year.

One of the latest key data points released in the US overnight was jobs figures showing that companies were adding more positions than expected in December.

American payrolls increased 235,000 during the month from 182,000 in November, putting pressure on the US Federal Reserve to hike rates at its February 1 meeting.

Fed meeting minutes released this week for Dec 13-14th, revealed that policymakers were willing to keep rates high for some time to tame inflation.

According to the minutes, Fed policymakers were worried about any “misperception” in the markets that their commitment to fighting inflation was flagging.

However, policymakers are acknowledging that they now needed to balance fighting inflation with the risks of a slowing economy.

As Stockhead’s Eddy Sunarto reported experts believe the market in 2023 will hang on economic data and how companies plan to adapt to a potentially impending recession.

China’s decision to roll back covid-19 restrictions and how this may impact the global economy also has investors jittery.

IMF Managing Director Kristalina Georgieva has warned of “a tough year, tougher than the year we leave behind.”

“We expect one-third of the world economy to be in recession,” Georgieva said.

“Why? Because the three big economies — US, EU, China — are all slowing down simultaneously.”


ASX Small cap winners:

Here are the best performing ASX small cap stocks for Jan 3-6:

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The Tony Sage-backed minnow Cyclone  Metals (ASX:CLE) has acquired the Block 103 project in Canada, which it calls “the largest undeveloped magnetite iron ore project in the world”.

Block 103 covers 7,275 hectares in the Labrador Trough, one of the largest iron ore belts in the world accounting for 99% of Canada’s iron ore.

It has a historical non-JORC resource of 7.2 billion tonnes grading 29.2% iron, based on 4km of the 12km of strike.

CLE said more than $35m has been spent on the project thus far.

Lindian Resources (ASX:LIN) reported “outstanding” high grade rare earths assays today at its Kangankunde Rare Earths Project in Malawi – including 12 metres at 4.2% TREO from surface in drill hole KGKRC00.

LIN says both holes contain mineralisation with very high rare earths grades, broad intersections of non-radioactive material over the entire lengths of the holes, and a large percentage of critical battery metal elements of NdPr, which are used in EVs and wind turbines.

“These first assay results are absolutely outstanding in terms of grade, distribution and continuity, and with a steady stream of assays to follow, we are confident of delivering more of the same and building the case that in 2023, Kangankunde will rapidly emerge as a standout, globally significant rare earths project in terms of grade, scale and non-radioactivity,” CEO Alistair Stephens said.


ASX Small cap losers:

Here are the worst performing ASX small cap stocks for Jan 3-6:

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Invictus Energy (ASX:IVZ) was the biggest laggards this week after what Stockhead’s Gregor Stronach explained as a shocking run of technical difficulties at its Mukuyu-1 well that is currently being drilled in its 80% owned SG 4571 licence in Zimbabwe’s Cabora Bassa Basin.