ASX Small Cap Lunch Wrap: Local stocks rise on Wednesday morning after US traders spend up ahead of cash rate call

It’s early days, so no-one lose their bottle just yet, but the benchmark Aussie index has made a positive start to November.

It’s lunchtime on Wednesday and local markets are tracking, in their own timid way, some of the sneaky gains made on Wall Street overnight as The Fed’s big monetary meet continues to overshadow fresh corporate quarterlies.

The Federal Reserve’s FOMC decision will drop tomorrow morning – 5am Sydenham time – if you’d like to get out ahead of that.

For now, the major mining and healthcare names providing the leads.

At midday AEDT the S&P/ASX200 was up 19 points, or 0.28%, at 6799.8 points. 

The good news while we slept is that US indices rose overnight.

The S&P 500 benchmark closed +0.7% higher. The Dow Jones Industrial Average rose +0.4% and the Nasdaq Composite found +0.5%.

The bad news is October was Wall Street’s third straight monthly fall – a hat-trick which also happens to be the US markets’ worst streak of monthly contractions since COVID-19 broke them in April 2020.

The other October culprit, spikey US bond yields, only made marginal gains – traders also hitting pause ahead of the FOMC meeting (5am Sydney time) which is expected to be a low key affair as markets widely anticipate no change to the policy interest rate.
 

LUNCHTIME ON THE ASX200

ASX small caps continue to feature heavily in the ‘let’s sell’ corner of the local bourse. November so far doesn’t look too bad…

But last month and the last 12 months paint a clearer picture:

       XSO     —    XEC

         October      —       One Year

Meanwhile, Aussie home prices have lifted for a ninth straight month in October.

The 0.9% increase in property data firm CoreLogic’s capital city benchmark index released this morning describes an Aussie residential property market on the march, regardless of rising rates, inflation, cost of living pressures and all them other things.

Three Australian cities have now endured house price rises well into double figures in just the first 10 months of 2023.

1. Sydney (10.9%)

2. Perth (10.8%) 

3. Brisbane (10.2%)

On the local bourse, local investors have turned to the big iron ore diggers and resources stocks after the Materials Sector’s losses on Tuesday which followed more grim economic data – manufacturing this time – out of China.

The BHP, Rio Tinto and Fortescue Metals all moved ahead, while the other market giant – healthcare company CSL – added almost 0.5%.

Elsewhere – at the smaller end of town –  there’s movement afoot for Magnum Mining (ASX:MGU) which has signed an agreement with Midmetal of Saudi Arabia to jointly fund a feasibility study on producing zero-carbon “green” pig iron with Magnum.

Battery materials and tech company Novonix (ASX:NVX)  announced that its NOVONIX Anode Materials division finalised its US$100 million grant award from the US Department of Energy to expand domestic production of high-performance, synthetic graphite anode materials at its Riverside facility in Chattanooga, Tennessee.

And also attracting attention on Wednesday is the newly listed lithium explorer Chariot Corporation’s (ASX:CC9) – our Nadine McGrath is digging around, noting a non-executive director has shown his support for the company, ponying up for 180,000 ordinary shares for ~$48k in an on-market trade.

ASX SECTORS AT MIDDAY ON WEDNESDAY

NOT THE ASX

US stock futures have turned lower on Wednesday as pretty much everyone with a dollar in their pocket braces for the Federal Reserve’s November policy decision. The outcome might be a foregone conclusion – it is widely expected to hold interest rates steady – but how a priced-in but very fragile market responds could be interesting to watch.

In regular business on Tuesday in New York, all 11 benchmark S&P sectors ended the session higher led by real estate, financials and utilities.

The Dow rose +0.4%, the S&P 500 +0.7% and the Nasdaq +0.5%, as US indices climbed for a second session as October’s overselling attracts the opportunists.

It was another night of fairly mixed – let’s say hot and cold –  corporate results, marginally rising US Treasury yields and the geopolitical background which continues to both deteriorate and add to broader economic uncertainty

Pfizer last night reported its first quarterly loss since 2019 as demand for its COVID-19 vaccine crashed by 70%, tearing a big hole on the big pharma’s revenue.

US futures at 9.30pm, Tuesday in New York

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for 1 November [intraday]:

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A delighted Loyal Lithium (ASX:LLI) gave the ASX an update on maiden drilling at its Trieste Lithium Project, located in… yes, the James Bay Region of Québec, in Canada.

“The drilling program is targeting Dyke #01, a large, prominent weather-resistant outcrop ridge, with all drill holes to date successfully intercepting spodumene bearing pegmatite. Dyke #01 remains open in all directions with drill core displaying large and abundant spodumene crystals from surface.”

The stock has gained 45% in morning trade.

Gold Hydrogen (ASX:GHY) says it’s locked onto significant concentrations of hydrogen and helium in its Ramsay 1 Well –  which GHY reckons confirms historic measurement and demonstrating an active hydrogen system in the Ramsay Project area.

Here’s what they reckon they got:

Testing and laboratory results measured air-corrected hydrogen at 73.3% at 240m below ground level, consistent with the 76% air-corrected concentration of hydrogen reported in the Ramsay Oil Bore 1 in 1931.

“These measurements validate historical results, and confirm the presence of a hydrogen play at shallow depths in the Ramsay Project area,” the company reports.

“A major connected fracture zone was encountered in the Parara limestone, which is key for the migration of hydrogen from deeper sources to shallow zones.

“Helium was also detected with an air-corrected content of 3.6% at 892mMD depth. This is a relatively high concentration of helium which is a rare and valuable resource, and if found in commercial grades and quantities, could be a significant value-add to the Ramsay Project.”

Helium in its natural form is the rarest element in the universe – betcha didn’t know that. Globally there are projects producing helium at < 1% due to its high commercial value.

Managing director Neil McDonald:

“It is incredibly exciting that we have replicated the results of 100 years ago at 240m. With the additional find of helium, which could be a significant value-add to the project, we view these results as being better than planned.”

Next up, McDonald says, is the Ramsay 2 well – expected to spud in mid-November.

ASX SMALL CAP LOSERS

Here are the most-worst performing ASX small cap stocks for 1 November [intraday]:

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