Closing Bell: Resource stocks win ASX tug of war as market ends flat

The ASX has finished a tumultuous day of trade by edging into positive territory, as gold and iron ore stocks provide much needed support.

It was anyone’s guess whether the bulls or the bear would win today’s ASX tug of war. Lucky for us gold and iron stocks are on a tear. Pic: Getty Images

• Iron ore surges to four-month highs at US$104/tonne

• Gold lifts 1.4pc to five-week high

• Banks mostly lower as profit taking continues

Resource gains outweigh bank sell down

It was a veritable tug of war on the ASX today as surging resources stocks went to war with floundering banking shares and managed to snatch victory right at the last second.

The ASX lifted just 9 points or 0.1%, struggling into positive territory in the last ten minutes of trade.

The sell down in major banking stocks continued throughout the day, undercutting the resource sector’s momentum.

Commonwealth Bank (ASX:CBA) was hit hard, down another 3%. NAB (ASX:NAB) also took a sizeable whack, shedding 2.69% while the rest of the top 7 fell between 1.27% and 0.34%.

The exceptions were Macquarie (ASX:MQG) which added 0.23%, and QBE (ASX:QBE), which tipped up 0.22%.

Iron ore and gold were the champions of the materials sector and the greater market today, clawing higher on rising commodity prices despite a day of choppy trading that trended mostly negative.

Source: Market Index

Healthcare also put in an excellent showing, with several mid and small cap stocks climbing. Botanix Pharmaceuticals (ASX:BOT) jumped 9.6% and Clarity Pharmaceuticals (ASX:CU6) 7%.

Still, it was iron and gold miners that topped the gainers lists today. More on the iron gang in a second.

Pantoro Gold (ASX:PNR) jumped 12%, West African Resources (ASX:WAF) 8% and Ramelius Resources (ASX:RMS) 7.9%.

Source: Market Index.

Is the iron ore rally sustainable?

Iron ore prices shot up to four-month highs overnight, hurdling the US$100 per tonne mark to sit at US$104.1 presently.

News of a new megaproject out of China was the core driver of the push higher – Beijing intends to invest 1.2 trillion yuan ($260 billion) in a hydropower dam on the Tibetan Plateau.

Iron ore miners are chomping at the bit to get a piece of the action. BHP (ASX:BHP) jumped 2.3%, Fortescue (ASX:FMG) 3%, and Rio Tinto (ASX:RIO) 3.3%.

Unfortunately, analysts are warning iron ore’s latest bullish run doesn’t reflect market fundamentals.

Market moguls at Citigroup and UBS reckon the iron market is trending toward oversupply.

Rio Tinto’s Simandour project is set to ramp up production to 48 million tonnes of iron ore per year by 2028, accounting for about 5% of global supply all on its lonesome.

UBS reckons the iron ore market will be in surplus by 100 million tonnes by 2027 at current rates.

"The sustainability of current prices depends largely on whether China's promised policy support materialises in the form of actual construction activity and steel demand," Westpac (ASX:WBC) acting chief sustainability officer and commodities strategist Michael Chen said.

"Without concrete demand increases, the fundamental case for $100+ iron ore becomes difficult to justify."

ASX SMALL CAP LEADERS

Today’s best performing small cap stocks:

Code	Name	Last	% Change	Volume	Market Cap
IS3	I Synergy Group Ltd	0.012	300%	7074192	$5,118,900
PAB	Patrys Limited	0.002	100%	1540555	$2,365,810
VR8	Vanadium Resources	0.041	78%	42838618	$12,978,713
MPA	Mad Paws	0.13	73%	36137123	$30,468,169
CUL	Cullen Resources	0.006	50%	247093	$2,773,607
AS2	Askarimetalslimited	0.016	45%	19518384	$4,445,878
LMG	Latrobe Magnesium	0.016	45%	17547486	$28,892,490
ALR	Altairminerals	0.004	33%	15049123	$12,890,233
FAU	First Au Ltd	0.004	33%	1206788	$6,228,874
SHP	South Harz Potash	0.004	33%	56178	$3,849,186
KGD	Kula Gold Limited	0.009	29%	16412263	$6,448,776
BIT	Biotron Limited	0.0025	25%	619581	$2,654,492
FHS	Freehill Mining Ltd.	0.005	25%	50000	$13,655,414
MMR	Mec Resources	0.005	25%	155000	$7,399,063
TMK	TMK Energy Limited	0.0025	25%	11279067	$20,444,766
GLL	Galilee Energy Ltd	0.011	22%	2306250	$6,364,736
AAU	Antilles Gold Ltd	0.006	20%	2098629	$11,895,340
AOK	Australian Oil.	0.003	20%	473088	$2,594,457
AON	Apollo Minerals Ltd	0.006	20%	12688298	$4,642,284
OLI	Oliver'S Real Food	0.006	20%	83366	$2,703,660
PRM	Prominence Energy	0.003	20%	200000	$1,216,176
SLZ	Sultan Resources Ltd	0.006	20%	1443673	$1,157,350
TFL	Tasfoods Ltd	0.006	20%	334313	$2,185,478
NTI	Neurotech Intl	0.025	19%	3221353	$22,042,060
WMG	Western Mines	0.285	19%	297333	$23,229,203

In the news…

The ASX has hit the emergency breaks on iSynergy Group (ASX:IS3), slapping the marketing platform with a “Please explain” and a trading halt after the company’s shares surged 300% intraday.

Management says it’s working on a response to the ASX’s query and expects to be out of suspension by Thursday, but no other details were forthcoming.

Vanadium Resources (ASX:VR8) has locked in a two-year DSO offtake deal with China Precious Asia Limited for vanadium-rich magnetite, agreeing to supply 100,000 metric tonnes of direct shipping ore per month.

The deal hinges on two things; the official start of mining operations at the Steelpoortdrift vanadium project and the two parties finalising pricing terms by the end of August.

Mad Paws (ASX:MPA) has entered a scheme implementation deed, agreeing to be acquired by Rover Group, Inc at $0.14 per share. The deal values Mad Paws at about $62m.

Separately, MPA is offloading its online e-commerce division under the Pet Chemist brand for about $13m in cash consideration.

Digital content provider Streamplay Studio (ASX:SP8) is climbing on some solid quarterly results that saw the gaming company achieve a cash flow positive quarter, operating on a surplus of $390k.

SP8 cashed customer receipts totalling $1.44m, maintaining cash reserves of $7.7m despite investments in its game development studio Noodlecake Studios, the studio behind mobile games Super Flappy Golf and Sacre Bleu.

ASX SMALL CAP LAGGARDS

Today’s worst performing small cap stocks:

Code	Name	Last	% Change	Volume	Market Cap
AUH	Austchina Holdings	0.001	-50%	37338	$6,050,767
MIOR	Macarthur Minerals	0.002	-33%	16728	$299,498
PFM	Platformo Ltd	0.055	-29%	33012	$7,307,939
GTR	Gti Energy Ltd	0.003	-25%	9682499	$14,835,762
PKO	Peako Limited	0.002	-20%	4801244	$3,719,355
PRX	Prodigy Gold NL	0.002	-20%	28500	$15,875,278
RLG	Roolife Group Ltd	0.004	-20%	4598095	$7,963,906
BEL	Bentley Capital Ltd	0.009	-18%	5658	$837,407
SFM	Santa Fe Minerals	0.285	-17%	115914	$25,122,482
ALY	Alchemy Resource Ltd	0.005	-17%	307081	$7,068,458
AMS	Atomos	0.005	-17%	179652	$7,290,111
SIS	Simble Solutions	0.005	-17%	525549	$6,493,982
SKK	Stakk Limited	0.005	-17%	548791	$12,450,478
UNT	Unith Ltd	0.005	-17%	8994656	$8,872,713
TOU	Tlou Energy Ltd	0.021	-16%	25000	$32,464,608
LOC	Locatetechnologies	0.11	-15%	1468361	$30,572,664
ANR	Anatara Ls Ltd	0.006	-14%	14000	$1,493,686
BLU	Blue Energy Limited	0.006	-14%	1053411	$12,956,815
BYH	Bryah Resources Ltd	0.006	-14%	7203753	$6,789,675
CMO	Cosmometalslimited	0.019	-14%	209990	$7,086,984
NWM	Norwest Minerals	0.013	-13%	25694	$14,525,378
FXG	Felix Gold Limited	0.17	-13%	1812100	$85,582,148
ATS	Australis Oil & Gas	0.007	-13%	110000	$10,544,500
NAE	New Age Exploration	0.0035	-13%	617716	$10,823,646
WEC	White Energy Company	0.035	-13%	94	$12,464,796

IN CASE YOU MISSED IT

Legacy Minerals (ASX:LGM) has kicked off a 10,000m diamond drilling campaign at its Fontenoy platinum group elements and copper-gold project in NSW.

QMines (ASX:QML) has increased the economic potential of its Queensland processing hub after open pit optimisation out of Mount Mackenzie.

Koonenberry Gold (ASX:KNB) continues to highlight the district-scale potential of its Enmore project in NSW after rock chip sampling returned high-grade assays with visible gold.

Trading Halts

American Rare Earths (ASX:ARR) – cap raise
I Synergy Group (ASX:IS3) – ASX price query
Octava Minerals (ASX:OCT) – cap raise
Sun Silver (ASX:SS1) – cap raise
West Coast Silver (ASX:WCE) – cap raise

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.