Closing Bell: Intense relief as ASX rallies on easing inflation

ASX surges 1.75pc after CPI “good enough to rule out an interest rate hike”. 

Relieved. Via Getty

The local benchmark index is back in record territory after extended gains on Wednesday as quarterly inflation data assuaged fears around another RBA rate hike next week.

• ASX rises on Wednesday after soft June Qtr CPI bump
  
• All sectors end higher
  
• Small caps led by GTE and SPA
  

At match out, the S&P/ASX 200 index added 139.10 points, or 1.75%, to 8092.30.

Wednesday'’s June quarter inflation figures were a welcome respite to recent growing fears that inflation here was stickier and trickier than even the RBA thought.

The Australian Bureau of Statistics (ABS) data put an end to some of the local economist warnings about what might need to be done by the central bank to get the inflation genie back in the 2-3% bottle.

Aussie Q2 CPI (consumer price inflation) data, although a little mixed, is  going to take the pressure off Gov. M Bullock to raise rates again.

Headline inflation rose by 1% over the quarter, bringing the annual rate to 3.8% from 3.6% prior, the first increase in annual CPI since December. Tony Sycamore at IG said the RBA will likely look through this number because of the various subsidies announced in the federal budget expected to drag it lower again.

"The trimmed mean rose by 0.8% in the June quarter (consensus was +1.0%), allowing the annual rate to fall to 3.9% from 4.0% prior – for a sixth quarter of lower annual trimmed mean inflation," Sycamore noted.

Over at Betashares, chief economist, David Bassanese said the June quarter CPI was "good enough to rule out an interest rate hike by the RBA next Tuesday."

According to Krishna Bhimavarapu, APAC Economist at State Street Global Advisors, the soft CPI data came in just a touch above their dovish expectations.

"The data reiterates our view that the interest rates are restrictive enough in Australia, and the next move by the RBA could very likely be a cut in November 2024.

"We think a rate hike at this stage is less likely and could tip the economy into a deeper downturn.”

The Reserve Bank meets next week.

That time June Qtr inflation nixed rate hikes:

The benchmark and its various affiliates enjoyed Wednesday and the happy CPI tailwind, despite another mixed session where Wall Street struggled to digest a Ploughman's lunch of earnings reports.

Come the close in Sydney, Utilities was the only sector not getting some love. The local gains came despite another mixed session on Wall Street and as the Australian dollar was whipped down 0.75% to below US65¢ for the first time in ages.

At home, once again, it was the wee S&P/ASX 200 Information Technology (XIJ) index which soaked up the local love.

The S&P 500 is down 0.5% from the beginning of July.

The Magnificent 7 is down a collective 3% but index heavy weights Microsoft and Apple are down circa 8%.

Nvidia os 17% off its recent peak.

Meanwhile the Russell 2000 is up almost 11%.

As it was on Monday, the XIJ wallowed in the rate-sensitive sector rotation:

ASX XIJ leaders On Wednesday

The top performing stocks in this index were Deep Yellow (ASX:DYL) and Charter Hall (ASX:CHC), up 6.55% and 6.4% respectively.

Over the past five days, the index has gained 1.6% and is currently sitting equal with its best ever score. Nice one.

ASX Sectors on Wednesday near 4pm

Small Cap Wrap

We've been watching GTI Energy (ASX:GTR), which reported a positive start to its drilling campaign at the Lo Herma ISR Uranium Project in Wyoming’s Powder River Basin.

The company has completed the first 10 out of 76 planned drill holes. Early results are promising, with the most notable findings being 14.5 feet of mineralisation at 0.064% eU3O8, and 16.5 feet at 0.054% eU3O8 from two of the drill holes. Drilling is moving ahead of schedule, with the team completing 1,908 meters (6,260 feet) so far and averaging over 610 metres (2,000 feet) of drilling per day. The results so far show good mineralisation.

iTech Minerals (ASX:ITM) has confirmed the presence of spodumene, a key lithium-bearing mineral, at the GMF1 Pegmatite in Reynolds Range, NT. Analysis of samples from GMF1 shows spodumene content of 84% and 83%.

The company had previously reported high-grade assay results from the GMF Pegmatite, reaching up to 8.24% Li2O. Recent fieldwork has also identified fine-grained spodumene at nearby pegmatites, including Mt Stafford and GMF2. ITM has now confirmed multiple spodumene-bearing pegmatites extending over 4.5 kilometres, with many more still to be explored.

West Cobar Metals (ASX:WC1) has reported promising results from recent tests at its Salazar Project in WA. The tests, which are part of a broader effort to refine the project’s processing methods, showed excellent scandium extraction rates. Using hydrochloric acid (HCl), 91% of scandium was extracted from upper saprolite and 90% from lower saprolite in 24-hour tests. With sulfuric acid (H2SO4), the extraction rates were even higher, at 92% for upper saprolite and 70% for lower saprolite.

The company says the results are a "significant step forward" in validating and improving the project’s processing flowsheet and "suggest that scandium could become a major asset" for the Salazar Project.

Ordell Minerals (ASX:ORD) has begun its first drilling program at the Barimaia Gold Project in WA, following its ASX listing. The initial 2,600-metre drilling aims to explore and expand known gold areas over a 2.5-kilometre stretch.

The project shares similar geology with Ramelius Resources’ Eridanus deposit and has shown promising results from previous exploration, including high-grade gold hits. A follow-up drilling phase is scheduled for September to further investigate these findings.

West African Resources (ASX:WAF) has reported promising results from its first grade control drilling at the Kiaka Gold Project in Burkina Faso. The drilling has uncovered thick zones of gold mineralisation, with notable findings including 30 metres at 4.1 grams per tonne and several other strong gold intersections.

These results confirm the resource model and support the planned open-pit strip ratio. The grade control drilling is on track and budget to support the start of mining in the first quarter of 2025.

At Stockhead we tell it like it is. While GTI Energy is a Stockhead advertiser, it did not sponsor this article.

NOT THE ASX

The Bank of Japan (BoJ) raised its policy rate to 0.25%, amid efforts to normalise those cray-cray monetary settings. The BoJ said it will trim its monthly bond purchases to about 3 trillion yen per month in the first quarter of 2026.

On Wednesday more fizzling data from Beijing, with the Non-Manufacturing (services) PMI read July down to 50.2 from 50.5 in June.

That's the 19th straight month of expansion (over 50) in the service sector, but the latest figure was the softest pace since last November.

Overnight in the EU, GDP grew by 0.3% in Q2 2024, beating the expected 0.2%, and pretty good considering Germany's economy fell 0.1% into contraction.

It was Ireland that showed the Eurozone's pluckiest growth at 1.2%.

Meanwhile, the US national debt has surpassed $35 trillion for the first time.

Wall Street was mixed. Here's some random US earnings highlights.

On the drug front, Merck (MRK) beat Q2 expectations with $2.28 EPS and $16.11bn revenue, driven by strong drug sales. The company raised its full-year sales forecast to $63.4-$64.4bn but lowered profit guidance to $7.94-$8.04 EPS due to acquisition costs.

Next door, Pfizer (PFE) added 3.5% after raising its FY revenue guidance to $8.5bn and its annual profit forecast to $2.45-$2.65 per share, citing better-than-expected sales of COVID-related treatments.

Procter & Gamble (PG) fell 2% premarket after reporting Q4 earnings of $1.40 per share, beating estimates of $1.37, while revenue was $20.53B, missing the expected $20.74B. PG did secure its first volume increase in two years.

And JetBlue Airways (JBLU) rose 6% premarket after reporting a surprise Q2 profit of 8 cents per share, defying expectations of an 11-cent loss. The airline delayed a $3B Airbus (EADSY) purchase, and revenue fell 6.9% to $2.43B.

US Futures are mixed at 4pm in Sydney.

ASX SMALL CAP WINNERS

Here are today's best performing ASX small cap stocks.

Swipe or scroll to reveal full table. Click headings to sort:

Code	Name	Price	% Change	Volume	Market Cap
TD1	Tali Digital Limited	0.0015	50.0	2,700,000	$3,295,156
TX3	Trinex Minerals Ltd	0.003	50.0	62,000	$3,657,305
VPR	Voltgroupltd	0.0015	50.0	2,003,975	$10,716,208
AHN	Athena Resources	0.007	40.0	4,417,007	$5,352,338
T3D	333D Limited	0.011	37.5	484,771	$955,559
AAJ	Aruma Resources Ltd	0.019	35.7	2,509,964	$2,756,481
KPO	Kalina Power Limited	0.004	33.3	3,705,911	$7,459,182
CMG	Criticalmineralgrp	0.2	33.3	690,437	$6,329,086
AD1	AD1 Holdings Limited	0.009	28.6	597,910	$6,290,539
GTE	Great Western Exp.	0.033	26.9	93,364	$9,048,276
ZMM	Zimi Ltd	0.019	26.7	240,903	$1,899,971
BUY	Bounty Oil & Gas NL	0.005	25.0	850,440	$5,994,004
PNX	PNX Metals Limited	0.005	25.0	20,000	$23,880,859
SPA	Spacetalk Ltd	0.021	23.5	2,552,801	$8,007,364
JAY	Jayride Group	0.011	22.2	2,804,782	$2,126,782
RMI	Resource Mining Corp	0.018	20.0	117,240	$9,785,217
AUK	Aumake Limited	0.006	20.0	3,674,335	$9,572,034
SVG	Savannah Goldfields	0.026	18.2	56,759	$6,183,868
TKM	Trek Metals Ltd	0.034	17.2	1,270,001	$14,890,713
CBL	Control Bionics	0.062	17.0	940,000	$10,562,199

Great Western Exploration (ASX:GTE) has come up with a much-loved diamond drilling design for the Oval and Oval South copper-gold targets near Meekatharra in WA.

GTE says the drill plan comprises four holes to test both targets.

There's enthusiasm to burn for this – especially since GTE recently secured WA Government co-funding under the Exploration Incentive Scheme. GTE says the government co-funding is also a big endorsement of the prospectivity of the two targets.

The family tech designer and manufacturer, Spacetalk (ASX:SPA) was also having a cracker of a session on Wednesday, after achieving positive cash flow from operating activities of $0.85 million in Q4FY24, up from -$1.5 million in Q4 FY23, and positive free cashflow of $0.37 million, up from Q4 FY23’s -$2.24 million.

That’s due to turnaround measures put in place by the company, and a 58% increase vs PCP for customer receipts.

Appen (ASX:APX) is higher after revealing late Tuesday that growing revenue has largely offset its loss of its Google account, with June revenue reaching $21.1m.

CEO & Managing Director Ryan Kolln said Appen’s success in generative AI is resulting in a positive revenue trajectory in Q2.

“Q2 FY24 was promising as the early positive indicators of LLM-related growth have started to develop into significant opportunities.”

"Generative AI development depends on vast amounts of high-quality data. The competitive edge for model builders is largely based on accessing unique and superior data. Appen’s expertise, platform, and global crowd workforce are becoming crucial sources of data for many leading model builders."

Also doing well on Wednesday, Volt Resources (ASX:VRC) which was leading the charge this morning on a solid quarterly, which outlined that the company has achieved record Q2 Ordinary Revenue receipts of $2.0 million. YTD ordinary revenue receipts were up ~ 75% to $3.0 million vs YTD FY23 comparison $1.7 million.

Additionally, the company \achieved record YTD Net Cash from Operating Activities totalling $1.3 million (YTD FY23 comparison $0.4 million) – which is up ~200%, and leaves Volt with $2.4 million in the bank.

Kalina Power (ASX:KPO) delivered its quarterly today, outlining the company’s continued process to secure funding to complete the project development of its projects.

This includes KDP’s ~200MW projects deploying natural gas-fired Combined Cycle Power Plants integrated with Carbon Capture and Sequestration (‘CC-CCS’) as well as potential investment at KDP’s Saddle Hills project.

Algorae Pharmaceuticals -1AI (ASX:) was up on complicated news around some fresh, positive Pre-Clinical Results that showed its drug AI-116 “significantly reduces glutamate-induced toxicity in vitro, exceeding that of existing FDA registered drug for dementia, Donepezil”.

Alterity Therapeutics (ASX:ATH) was up because its quarterly says that the company saw positive interim data reported from ATH434-202 Phase 2 clinical trial showing improvement on the UMSARS Activities of Daily Living Scale and stable or improved neurological symptoms in some patients. The quarterly also says the company has “Cash balance on 30 June 2024 of A$12.6” – which I’m assuming is meant to have the word “million” on the end, because otherwise it’d be your shout for lunch.

Positive quarterly data has landed from New Age Exploration (ASX:NAE), which focuses on its Wagyu Gold Project, located in the well-endowed gold region of the Central Pilbara next door to De Grey’s Hemi (things are going well). There is also focus on how the sale of the company’s Lochinvar metallurgical coal project is going. (Actually, it has been sold.)

3D-printing company 333D (ASX:T3D) revealed a new services agreement with each of Next Healthcare and Cloud Strike (t/a Align Radiology) to provide ongoing digital asset management and 3D printing services to those entities. It’s all very complicated but the main thrust is that it's most likely going to be steady, ongoing work for 333D as it develops software and processes to meet the needs of both entities.

ASX SMALL CAP LAGGARDS

Here are the day's least performing ASX small cap stocks.

Swipe or scroll to reveal full table. Click headings to sort:

Code	Company	Price	%	Volume	Market Cap
88E	88 Energy Ltd	0.002	-33.3	1,824,243	$86,678,016
MCT	Metalicity Limited	0.002	-33.3	35,442,713	$13,457,558
RML	Resolution Minerals	0.002	-33.3	1,000,000	$4,830,065
CMO	Cosmometalslimited	0.036	-32.1	839,766	$6,792,294
MEL	Metgasco Ltd	0.0035	-30.0	12,348,207	$7,237,934
ADD	Adavale Resource Ltd	0.003	-25.0	19,491,731	$4,261,061
MKL	Mighty Kingdom Ltd	0.003	-25.0	127,691,537	$12,863,772
OVT	Ovanti Limited	0.003	-25.0	34,400	$4,960,422
SI6	SI6 Metals Limited	0.0015	-25.0	37,042,818	$4,737,719
SMM	Somerset Minerals	0.003	-25.0	11,581,997	$4,123,995
ERA	Energy Resources	0.015	-25.0	24,351,018	$442,965,984
FEG	Far East Gold	0.135	-25.0	456,546	$46,365,630
NWC	New World Resources	0.019	-24.0	60,461,061	$70,890,376
MDI	Middle Island Res	0.013	-23.5	2,586,623	$3,711,678
DEL	Delorean Corporation	0.068	-22.7	1,904,366	$18,983,441
DGR	DGR Global Ltd	0.017	-22.7	5,139,922	$22,961,257
SOC	Soco Corporation	0.11	-21.4	33,000	$19,381,552
LVH	Livehire Limited	0.026	-21.2	455,943	$12,196,731
E33	East 33 Limited.	0.012	-20.0	948,745	$11,627,759
NGSDA	NGS Ltd	0.028	-20.0	62,185	$3,797,694

TRADING HALTS

Culpeo Minerals (ASX:CPO) – pending an announcement on a proposed capital raising.

Kairos Minerals (ASX:KAI) – pending an announcement by the Company in relation to a material Mt York Gold Project transaction.

CurveBeam AI (ASX:CVB) – pending an announcement about an accelerated non-renounceable entitlement offer.

DroneShield (ASX:DRO) – pending an announcement in relation to a proposed capital raising.

Bastion Minerals (ASX:BMO) – pending the release of an announcement with respect to a material capital raising.

Estrella Resources (ASX:ESR) – pending an announcement regarding exploration results at the Timor Leste project.

IODM (ASX:IOD) – pending an announcement regarding a capital raising.

Brightstar Resources (ASX:BTR) – poending a capital raising, and a potential change of control transaction involving the company.

Prospect Resources (ASX:PSC) – pending the release of an ASX announcement regarding a material capital raise.

Alto Metals (ASX:AME) – pending an announcement in connection to a potential material corporate transaction involving a change of control of Alto and the outcome of a third party capital raising upon which the conclusion of that potential transaction is conditional.

Cokal (ASX:CKA) – pending an announcement providing information in respect of mine services and a working capital agreement.

ICYMI – PM Edition

Koba Resources (ASX:KOB) is looking to carry out an 11,000m drilling program in August to grow resources and find new uranium mineralisation at the Yarramba project.

Eagle Mountain (ASX:EM2) is homing in on the porphyry potential at the Silver Mountain project following the discovery of high-grade gold and silver-rich zones along significant geological trends.

TrivarX (ASX:TRI) has reached a key milestone in its aim to develop the first depression screening tool for use in clinical practice in sleep centres.

GTI Energy (ASX:GTR) has wrapped up the first 10 drill holes at the Lo Herma project with mineralisation meeting expectations for economic ISR mining methods.

Cosmo Metals (ASX:CMO) has hit broad zones of gold mineralisation at the Kanowna project, confirming the belief that targets are live structures associated with the prolific Kanowna Shear.

iTech Minerals (ASX:ITM) has confirmed that spodumene is the lithium bearing mineral at the GMF1 pegmatite within the Reynolds Range project.

Intra Energy Corporation (ASX:IEC) has knocked off a 1960m RC drilling program at the Maggie Hay Hill project after testing both lithium and gold targets.

Neurotech (ASX:NTI) has reported positive results from the extension phase of the Phase 1/2 trial of NTI164 to treat Rett Syndrome.

Lumos Diagnostic (ASX:LDX) concludes the FY24 with strong quarterly results including positive cash flow of US$3.1m, a substantial improvement from the US$2m in the previous quarter.

RareX (ASX:REE) has been awarded with land access and heritage approvals for the majority of the new Khaleesi rare earths and niobium project tenure in WA’s East Yilgarn region.

Control Bionics (ASX:CBL) has received investment by NorthStar in Control Bionics to fund future opportunities for the medical devices company, focused on helping patients with communication challenges.

The Calmer Co (ASX:CCO) will see its Calmer Co products expand at Coles around Australia from 1,563 listings to a total oof 2,183 listings, a 40% increase.

At Stockhead we tell it like it is. While Koba Resources, Eagle Mountain, Trivar, GTI Energy, Cosmo Metals, Itech Minerals, Intra Energy Corporation, Neurotech, Lumos Diagnostics, RareX, Control Bionics and The Calmer Co are Stockhead advertisers, they did not sponsor this article.

Originally published as Closing Bell: Intense relief as ASX rallies on easing inflation