Closing Bell: ASX trips at starting gun while US Futures jump on world not ending yet

• Benchmark index falls on Monday, closing out the day down 0.21%
• Utilities and Materials sectors edge higher, but Health Care anchors the benchmark into the red
• Small caps led by Galileo Mining, Infinity and last week’s rockstar Biotron

There is no indicator for incompetence on markets, other than the benefit of hindsight.

Local markets couldn’t quite get with the program on Monday, despite rising sharply after lunch seeing US futures track higher in delayed recognition that Washington managed to fumble a final-temporary-bandaid funding deal to dodge a US government shutdown – realising that the world (ie: the US) wouldn’t end.. at least for a few more weeks.

At the bell however, the afternoon push couldn’t sustain itself with so few fundies pulling on the oars and the ASX200 benchmark index ultimately fell -0.3%.

In Smallcapland, the Emerging Companies (XEC) Index found +0.3%, while the ASX Small Ords (XSO) lost -0.2%.

The Utilities, Materials and Property Sectors all ended higher, but couldn’t offset everyone else, all 8 other sectors ending choppy trade under the waterline.

If certainty is a straight line, then this is indecision on a Monday:

Busted

Magnis Energy, Catalano Seafood, and loyalty-tech play Rewardle are all on the ASX bad list, suspended after failing to lodge their relevant periodic updates in breach of their obligations.

Around the traps

On Monday, people in NSW and QLD, markets in mainland China, Hong Kong and South Korea were out and about for holidays, while Asian-Pacific equities were mixed, as investors chewed over new manufacturing PMI data across the region. Chinese factory activity turned expansionary in September, but only just, that was good enough for Japanese shares which rallied on the back of China’s PMIs and a jolly upbeat business sentiment read.

Tomorrow, the Reserve Bank of Australia will meet to decide whether to move the dial on interest rates or hold at 4.1% for a 4th straight month.

 ASX by Sectors on Monday   —  Intraday   —   52 Week Range  —  Week – Month – Year

Ripped from the headlines

Oil prices have gained ahead of Wall Street trade on Monday (US time).

WTI crude futures rose above $91 per barrel on Monday. Oil traders have been strung out on tight global supplies ahead of an OPEC+ meeting on Wednesday.

Futures tied to the 3 major US indices have swung sharply higher during our session.

With the painful memories of a September which saw the worst returns of the year to date and the threat of a US federal government shutdown in the rear view mirror, the opening session of October is already looking a good one.

The Yen has hit a 49 week low against a resurgent USD. But there’s still much to shout about in Tokyo.

The Bank of Japan’s index for big manufacturers’ sentiment climbed to 9 in last quarter, almost doubling from from 5 in Q2. That’s the happiest print since Q2 of 2022 and way above market consensus of 6.

The Nikkei 225 jumped +1.5%, while Japan’s broader Topix gained +1.3% to 2,354 by lunchtime on Monday, nixing a rare x2 sessions of losses.

Monday so far in Tokyo: 1) Upbeat data showing Japanese business sentiment surged to downright positive levels in Q3, 2) Added optimism about Japan’s economic outlook. 3) Resurgent(ish) manufacturing data from China – which is a huge market for Japanese firms, 4) The narrowly averted nonsense of a US government shutdown, Japan’s largest trading partner.

Australian homes

CoreLogic’s read on capital city home prices lifted by 0.9% n September 2023, after a 1.0 % gain in August.

Home prices have now found 11% in 7 consecutive months of  ascending home prices.

Adelaide saw the biggest price growth rate (1.7%), followed by Perth (1.3%), Brisbane (1.2%), and Sydney (1.0%).

Housing supply issues, booming migration and rising interest rates continue to dominate the market with the central bank meeting again tomorrow (Tuesday).

RBA Day is tomorrow

Josh Gilbert at Toro, says don’t expect any fireworks tomorrow at 2.30pm Sydenham time as Michele Bullock as she hands down her first-rate decision in her new role as RBA Governor.

“This week’s decision will likely see rates stay on hold for the fourth consecutive month as the Reserve Bank edges closer to the end of its longest tightening cycle in decades.”

Last week’s inflation and retail sales data support the RBA keeping rates on hold, with consumption slowing and core inflation trending lower. At the pump, the price of petrol remains a problem for the central bank, just as it does for consumers.

“The recent jump in oil prices is a cause for concern, and the real test will come in late October, before November’s board meeting, when Q3 CPI is handed down,” Josh told Stockhead on Monday.

“Investors’ focus will shift to Michelle Bullock’s statement following the decision for any clues on what’s next. The board will likely remain hawkish, leaving the door open for another hike, especially with some risks still at play. However, it would be a surprise to see the board hike on the back of an oil-induced spike in inflation with other data points cooling.”

TODAY’S ASX SMALL CAP LEADERS

Here are the best performing ASX small cap stocks:

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My dear G Stronach often says it best:

“Biotron’s (ASX:BIT) Festival of Mystery Gains is continuing again today, picking up from where it left of on Friday and adding another 39%, again on no news.

“The ASX has already been through the motions of the standard “is there something you’re not telling everyone?” routine, thanks to the company’s  recent sharp rises – and in surprising volume for the third session from the past five – following positive-but-not-headline-making news around this time last week.”

A big day for Galileo Mining (ASX:GAL) up 37% and making decent progress on delivering a maiden Indicated and Inferred Mineral Resource Estimate for the company’s Callisto Pd–Pt–Au–Rh–Ni–Cu sulphide deposit.

Galileo says its sitting on 17.5 Mt @ 1.04g/t 4E1, 0.20% Ni, 0.16% Cu (2.3g/t PdEq2 or 0.52% NiEq3), and the contained metal includes 585,000oz 4E, 35kt Ni and 28kt Cu (~1.27Moz PdEq or ~91,000t NiEq)

Roughly 8Mt (46%) of the resource is inside the indicated category with a 2.5g/t PdEq grade or 0.58% NiEq (metal content within indicated resource category of ~639,000oz PdEq or ~45,800t NiEq).

Gold Mountain (ASX:GMN) lived up to its name, finding a fathomless 40%. Leeuwin Metals (ASX:LM1) also made some ground – up about 20% despite no market-moving news since 04 September. And, Infinity Mining (ASX:IMI) is climbing on no fresh news, up 22.7%.

Alderan Resources (ASX:AL8) has given back half its earlier gains to close at +10%, after snapping up 100% ownership of seven lithium exploration projects consisting of 24 granted exploration licences covering 472km2 in Brazil’s Eastern Lithium Belt, here’s the bullies:

• All projects are within, and to the south, of ‘Lithium Valley’ in resource rich Minas Gerais state – home to 40 of Brazil’s top 100 mines
• Recent discoveries in Lithium Valley include dual-listed Sigma Lithium Corporation’s (NASDAQ: SGML; TSX: SGML) Grota do Cirilo Project and Latin Resources Ltd’s (ASX: LRS) Salinas Project. Grota do Cirilo has a NI43-101 compliant Measured and Indicated Resource of 77.034Mt grading 1.43% Li2O and Inferred Resource of 8.557Mt grading 1.43% Li2O.
• Salinas has a JORC compliant Measured, Indicated & Inferred Mineral Resource estimate of 45.2Mt grading 1.34% Li2O
• Right geological setting – projects located on margins of known and interpreted fertile G4 granites
• Pegmatites and lithium indicators such as spodumene, beryl and niobium plus artisanal mining within and proximal to project areas

Veem (ASX:VEE)is ahead near 20% on Monday.

The Aussie designer and manufacturer of ‘disruptive, high-technology marine propulsion and stabilisation systems for the global luxury motor yacht, fast ferry, commercial workboat and defence industries’, (VEE make cool propellers) says it’s struck JV deals with Sharrow Engineering to partner together to design and then VEEM to exclusively manufacture and sell Sharrow propellers worldwide, up to 5m in diameter, for inboard motor vessels.

Progressing with the project is subject to VEE’s ‘acceptance of the performance of the Sharrow design’ on test vessels with the testing to be done over the coming weeks.

Veem’s chairman, Brad Miocevich says the Sharrow propeller technology has revolutionised the outboard motor market.

VEE adds that the total addressable market for inboard propellers is estimated to be US$2.6 billion with the annual new build market estimated at US$338 million.

Syrah Resources (ASX:SYR) climbed to 57c by just after lunchtime, ahead some 13%, after reporting of rising anode production in China and improved natural graphite demand, thanks to the burst of activity in the cheapest electric vehicle war.

On Monday,SYR said new production was underway at its Balama graphite operation in Mozambique.

Syrah’s been in the blues (reds) after its controversial call to mothball operations in May when demand for in “volatile” market conditions across China and an excess of finished product in its key markets, hit margins.

SYR will drop its quarterly update later this month.

TODAY’S ASX SMALL CAP LAGGARDS

Here are the best performing ASX small cap stocks:

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TRADING HALTS

Fenix Resources (ASX:FEX) – Pending the release of announcements in relation to a material right to mine transaction

Bulletin Resources (ASX:BNR) – Pending an announcement in relation to an update on its Ravensthorpe Lithium Project

Black Rock Mining (ASX:BKT) – Pending an announcement in respect to an update on debt financing progress for the Mahenge Graphite Project

Pharmaxis (ASX:PXS) – Pending an announcement by the Company to the market in relation to a company restructure.

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