Closing Bell: ASX ducks and weaves as RBA confirms rate hikes are on the table
The ASX 200 was trading mostly sideways until the RBA let loose the hawks, tipping potential rate hikes and driving the market lower.
The ASX 200 jumped 0.15% to a session high after the RBA held rates before plunging to -0.45%
Bloodbath across sectors and indices, lower across the board
Strong gains in some lithium and defence stocks despite bearish market
ASX ducks as RBA turns hawkish
The market had a brief respite from a down day as the RBA held interest rates today, climbing 0.15% to a session high.
It was not to last.
We’ll discuss the RBA’s comments in further detail below, but suffice to say the market took Governor Michele Bullock’s comments at the press conference as decidedly hawkish.
By day’s end, the market was awash in red and down -0.45%. Info tech and healthcare led the way lower, but not even the major banks escaped unscathed.
Breadth could’ve been worst considering the state of the sectors – 66 companies still managed to make gains while 123 fell to the market’s malaise.
CATL’s failure to restart the Yichun Jianxiawo lithium mine on December 5 offered up some ASX lithium stock gains.
They led momentum in the resources sector yesterday and lit up the ASX200 leaderboard again today.
Elevra Lithium (ASX:ELV) added 5.39% and Galan Lithium (ASX:GAL) 6.25%. PLS (ASX:PLS) ticked up just 1.12% and IGO (ASX:IGO) crept 0.71% higher.
Fresh criticisms over the Ukraine-Russian peace talks also gave ASX defence stocks something to talk about.
Elsight (ASX:ELS) jumped 6.08%, Austal (ASX:ASB) added 3.82% and Electro Optic (ASX:EOS) added 3.62%.
Even Droneshield (ASX:DRO) got some love, climbing 3.44%.
The stock is still down 40% for the past month, but let’s keep that in perspective – the drone defence firm has added a whopping 160% to its share price in the YTD despite all the director-driven controversy.
RBA unanimously holds rates
The RBA delivered a rate hold at today’s meeting, giving the market a sharp little kick up toward neutral as things went exactly as expected.
The Board noted inflation had picked up in recent weeks and economic activity was continuing to recover. The labour market is “a little tight”. Nothing terribly concerning there.
Momentum reversed sharply once traders had time to digest more nuanced comments at the day’s press conference.
“We did not consider the case for a rate cut at all,” RBA governor Michele Bullock said at the conference.
“We didn’t explicitly consider a rate hike at this meeting, but we did discuss what circumstances might be required to consider a rate hike in the future.”
The RBA will be keeping a close eye on inflation, the labour market and domestic activity over the next few months.
Bullock emphasised the high inflation reading from October was mostly driven by a hike in energy prices as government rebates fell off, rather than structural upward pressure on the economy.
“If inflation pressures look to be persistent and not a one-off item, I think that does raise some questions,” Bullock explained.
“We’ve been judging that financial conditions were still a little bit tight.
“If inflation continues to be persistent and does not appear to be coming down, that would raise questions about how tight capacity is, and the board might have to consider if they will need to raise rates.
“It will be a meeting-by-meeting decision.”
Translation: We’re not even thinking about cutting rates, but if inflation stays sticky, a hike will certainly be on the table.
While the market reacted strongly, the RBA appears to be signalling a period of extended hold for now, with no immediate predictions of a rate hike on the horizon.
ASX Leaders
Today’s best performing stocks (including small caps):
| Code | Name | Last | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| BRIR | Big Riv Indust Ltd | 0.005 | 67% | 20 | $21,965 |
| HCD | Hydrocarbon Dynamics | 0.003 | 50% | 925153 | $2,874,959 |
| AUA | Audeara | 0.042 | 45% | 2194027 | $5,245,785 |
| ALY | Alchemy Resource Ltd | 0.013 | 44% | 66907736 | $10,692,686 |
| OD6 | OD6 Metals Ltd | 0.11 | 38% | 23035726 | $15,914,359 |
| RBR | RBR Group Ltd | 0.023 | 28% | 178807 | $2,154,779 |
| IMM | Immutep Ltd | 0.32 | 25% | 20168535 | $375,798,933 |
| TSK | Tusker Minerals | 0.15 | 25% | 303970 | $11,730,874 |
| RLG | Roolife Group Ltd | 0.005 | 25% | 616288 | $7,513,982 |
| ORN | Orion Minerals Ltd | 0.022 | 22% | 1421732 | $145,285,012 |
| WR1 | Winsome Resources | 0.375 | 21% | 3643933 | $75,630,220 |
| CMO | Cosmo Metals Limited | 0.018 | 20% | 35053991 | $6,513,701 |
| CTN | Catalina Resources | 0.003 | 20% | 1010906 | $7,157,548 |
| IFG | Infocus Group Hldltd | 0.012 | 20% | 5059896 | $4,885,684 |
| SMX | Strata Minerals | 0.024 | 20% | 50000 | $5,154,544 |
| TEG | Triangle Energy Ltd | 0.003 | 20% | 693 | $5,503,085 |
| AUR | Auris Minerals Ltd | 0.025 | 19% | 1722665 | $26,809,145 |
| PKY | Pathkey.Ai Ltd | 0.019 | 19% | 644962 | $4,909,548 |
| FL1 | First Lithium Ltd | 0.13 | 18% | 128 | $11,954,096 |
| 6KA | 6Kadditive | 1 | 18% | 1980590 | $147,616,817 |
| AJX | Alexium Int Group | 0.007 | 17% | 20783 | $9,654,782 |
| IPB | IPB Petroleum Ltd | 0.007 | 17% | 7682873 | $4,238,418 |
| TSL | Titanium Sands Ltd | 0.007 | 17% | 570000 | $14,068,483 |
| FRX | Flexiroam Limited | 0.015 | 15% | 30000 | $19,726,182 |
| AT1 | Atomo Diagnostics | 0.038 | 15% | 1962394 | $26,735,784 |
In the news…
Alchemy Resources (ASX:ALY) shares are at a 2-year high after the company hit high-grade iron ore at its Valley Bore project in WA.
A maiden drilling program hit up to 20m at 62.9% iron from 14m and 22m at 60.8% iron from just 5m – exceptionally shallow for how high the grades are.
Read Stockhead’s full coverage of the results here.
OD6 Metals (ASX:OD6) waved off a ‘please explain’ from the ASX after its shares ripped more than 30% higher in trade today. OD6 said “nothing to see here” and pointed to a recent analyst report from East Coast Research.
East Coast pegged OD6 with a 28.5c–34.9c share target over the next 12 months, implying an upside of up to 335.9%. Nothing to sniff at.
Winsome Resources (ASX:WR1) also copped an ASX price query, but wasn’t so quick to wave it away. WR1 will be in a halt until it can respond, estimating a return to trade on Thursday December 11.
Cosmo Metals (ASX:CMO) has similarly hit some very shallow mineralisation at its Spring Creek project, this time of the golden variety.
A follow up round of drilling targeting high-grade mineralisation hit 6m at 9.99g/t gold from just 11m below surface, with plenty more assays from the program still to come.
CMO has about 12 km of prospective strike to test, so hitting shallow, high-grade gold this early is a great sign.
ASX Laggards
Today’s worst performing stocks (including small caps):
| Code | Name | Price | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| HCF | H&G High Conviction | 0.015 | -40% | 3505 | $485,162 |
| VEN | Vintage Energy | 0.003 | -25% | 167843 | $8,347,655 |
| BAP | Bapcor Limited | 1.8375 | -22% | 11733608 | $797,619,375 |
| CRS | Caprice Resources | 0.1 | -20% | 25681508 | $86,897,494 |
| SAN | Sagalio Energy Ltd | 0.008 | -20% | 90000 | $2,046,601 |
| CKA | Cokal Ltd | 0.055 | -19% | 790271 | $73,368,531 |
| NOR | Norwood Systems Ltd. | 0.013 | -19% | 609398 | $8,254,842 |
| TER | Terracom Ltd | 0.09 | -18% | 8130800 | $88,106,286 |
| SUM | Summitminerals | 0.034 | -17% | 4798531 | $5,898,790 |
| ECS | ECS Botanics Holding | 0.005 | -17% | 500000 | $9,576,297 |
| ERA | Energy Resources | 0.0025 | -17% | 607087 | $1,216,188,722 |
| LMG | Latrobe Magnesium | 0.02 | -17% | 12721098 | $75,067,603 |
| USC | Us1Criticalminsltd | 0.01 | -17% | 136759 | $9,766,229 |
| BEO | Beonic Ltd | 0.13 | -16% | 36164 | $10,477,311 |
| PET | Phoslock Env Tec Ltd | 0.017 | -15% | 4827077 | $12,487,810 |
| DTR | Dateline Resources | 0.21 | -14% | 27124801 | $851,393,042 |
| AX8 | Accelerate Resources | 0.006 | -14% | 5159311 | $5,818,321 |
| EE1 | Earths Energy Ltd | 0.006 | -14% | 1066833 | $3,709,750 |
| ID8 | Identitii Limited | 0.006 | -14% | 400000 | $5,761,095 |
| NGX | Ngxlimited | 0.12 | -14% | 223169 | $12,685,658 |
| PRM | Prominence Energy | 0.003 | -14% | 262804 | $3,112,117 |
| ROG | Red Sky Energy. | 0.003 | -14% | 649216 | $18,977,795 |
| SPX | Spenda Limited | 0.003 | -14% | 5525086 | $17,027,004 |
| HWK | Hawk Resources. | 0.025 | -14% | 7927989 | $9,821,192 |
| GTI | Gratifii | 0.06 | -13% | 132990 | $26,392,956 |
In Case You Missed It
Caprice Resources (ASX:CRS) has grown the Vadrians gold system footprint to at least 400m vertical depth with Phase 4 drilling.
Vertex Minerals (ASX:VTX) continues to reach key operational milestones at its Reward Gold Mine in New South Wales.
Everest Metals (ASX:EMC) has rolled up its sleeves for a 7000m drilling program to delineate a maiden gold resource in the Murchison.
Frontier Energy (ASX:FHE) has locked in $11.5 million through a strongly backed placement to professional and sophisticated investors.
Stellar Resources’ (ASX:SRZ) testwork on the Severn deposit confirms the potential to produce a premium tin concentrate from Heemskirk project in western Tasmania.
Theta Gold Mines (ASX:TGM) is advancing the TGME gold project as it locks in the heavy-hitting processing gear.
Aurora Labs (ASX:A3D) is shifting from printing metal to powering drones – and if it delivers fast, this $20m small cap could help drive the frontline.
Australian Critical Minerals (ASX:ACM) has drill permits in place at the Flint project, chasing gold and silver targets in one of the world’s great epithermal belts.
Ariana Resources (ASX:AA2) has inked a strategic term sheet with global mining services group Xinhai to accelerate the Dokwe gold project.
Godolphin Resources’ (ASX:GRL) testing has produced potentially saleable zinc and lead-gold-silver concentrates from its Lewis Ponds project in NSW.
Rhythm Biosciences (ASX:RHY) has received ISO accreditation for its GeneType business paving the way to launch ColoSTAT.
Trading halts
Aumake Limited (ASX:AUK)– cap raise
Canadian Phosphate Limited (ASX:CP8)– cap raise
Charger Metals NL (ASX:CHR)– project update & cap raise
European Lithium Limited (ASX:EUR)– offtake deal pending
Jindalee Lithium Limited (ASX:JRL)– exploration plan approval
MetalsGrove Mining Limited (ASX:MGA)– cap raise & land acquisition
Metallium Limited (ASX:MTM)– funding deal/collaboration
Ore Resources Limited (ASX:OR3)– cap raise
Patriot Resources Limited (ASX:PAT)– cap raise + acquisition
Nelson Resources Limited (ASX:NES)– cap raise & project acquisition
Superior Resources Limited (ASX:SPQ)– cap raise
Winsome Resources (ASX:WR1)– price query
At Stockhead, we tell it like it is. While Alchemy Resources is a Stockhead advertiser, it did not sponsor this article.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
Originally published as Closing Bell: ASX ducks and weaves as RBA confirms rate hikes are on the table
