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Market wrap: ASX 200 dips slightly despite energy rally

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By John Beveridge - 



Despite a continuing rally for energy stocks on the back of a rising oil price, the Australian share market fell a little lower, following a volatile day on Wall Street.

The energy sector was up 0.5% following rising oil prices which spiked to US$79 a barrel after the US and UK launched airstrikes on Houthi rebel targets in Yemen.

By the close on Friday the ASX 200 fell only 0.1% or 7.7 points to 7498.3 points, in the process recording a minor 0.1% rise for the week.

The US market was also hit by a 3.4% rise in consumer prices in the year to December, which reduced the chances of the US Federal Reserve starting to cut official interest rates in March.

Seven of the ASX’s 11 industry groups closed in the red, with the defensive stocks down the most as shown by a 1.4% fall in utilities and a 1.2% fall in consumer staples.

Energy sector heats up

Among the energy rally, Beach Energy (ASX: BPT) shares were up 2.9% at $1.57 and Santos (ASX: STO) shares rose 1.55% to $7.55.

Uranium stocks also continued to extend their New Year rally on rising prices with Boss Energy (ASX: BOE) shares adding 5% to $5.09 and Paladin Energy (ASX: PDN) shares added 1.7% to $1.20 while the big iron ore stocks mainly rose on the back of higher prices, with Rio Tinto (ASX: RIO) shares up 0.6% and Fortescue (ASX: FMG) shares up 0.8%.

The airstrikes also led to a rise in many gold stocks as investors went for safety in the light of increasing global military tensions.

The lithium space continued its remarkable volatility with share in heavily shorted company Core Lithium (ASX: CXO) rallying hard after experiencing a 17% fall earlier in the week.

Core’s 7.7% rise to 21c made it the best performing share on the market on Friday, although a lot of the price action was likely to be futures related as short positions were covered.

Creasy’s legend keeps growing

Once again legendary billionaire prospector Mark Creasy has hit significant paydirt after CZR Resources (ASX: CZR) announced a deal to sell a long-stranded iron ore project to Chinese interests for $102 million.

That deal sent CZR shares soaring 18% to 35.5¢.

Some of the other notable movers included a big fall in the value of shares in Healius (ASX: HLS) which fell 7.6% to $1.46 after an underweight rating from Morgan Stanley.

Troubled Nuix (ASX: NXL) shares dived 13% to $1.83 after the software group said it now expected an earnings hit in the first half as legal costs continue to mount from its court battle with ASIC.

Small cap stock action

The Small Ords index rose 1.48% for the week to close at 2891.0 points.

ASX 200 vs Small Ords

Small cap companies making headlines this week were:

CZR Resources (ASX: CZR)

CZR Resources has signed a deal to sell its majority interest in the Robe Mesa iron ore project in Western Australia to a subsidiary of China’s Shenzhen Naao Jianglan Investment Company (SNIC) for $102 million.

The sale will provide CZR with financial flexibility and unlock substantial value for shareholders.

The transaction is subject to shareholder approval and other conditions, with the CZR board unanimously recommending shareholder support.

Miracle Iron Resources, the buyer, is closely linked to its parent company SNIC, which has provided a parent company guarantee. CZR will retain its Croydon gold project and Buddadoo vanadium-titanium project.

The Robe Mesa project has shown robust financial returns and strong free cash flow in a definitive feasibility study.

Gladiator Resources (ASX: GLA)

Gladiator Resources has confirmed the high-grade uranium potential at the Southwest Corner (SWC) target in its Mkuju project in Tanzania, causing a significant rise in its share price.

The company re-analysed trench samples from 2023 using advanced techniques after initial X-ray fluorescence analysis suggested uranium levels above 4,245 ppm, with some samples reaching as high as 7,139 ppm.

Their trenching program revealed considerable uranium mineralization, with grades varying significantly within different layers.

The findings suggest the presence of an extensive, gently dipping uraniferous sandstone layer.

Gladiator plans to drill-test these layers, aiming to uncover a significant sandstone-hosted uranium deposit similar to the nearby world-class Nyota deposit.

Biome Australia (ASX: BIO)

Live biotherapeutics specialist Biome Australia has raised its full-year revenue forecast to $12.5 million, marking a 74% increase from the previous year’s $7.2 million.

The revision follows stronger-than-expected sales, with unaudited half-year sales of about $6 million and second-quarter growth of 83.3%.

The company has shown rapid revenue growth over recent years, increasing from $866,000 in FY20 to $7.2 million in FY23.

Biome’s partnerships in developing unique probiotic strains and products, such as the new Biome Cholesterol Probiotic aimed at lowering cholesterol levels, are key to its growth strategy.

This new product, targeting cardiovascular disease, is set for release in Q4 FY24.

Kali Metals (ASX: KM1)

Kali Metals has hit the ground running following a successful listing on the ASX on Monday.

The company is exploring the Higginsville lithium district, spanning 1,571 km² with eight distinct project areas.

Spodumene was identified at multiple sites within the district, particularly at the Spargoville project.

Rock chip samples from this area have shown promising lithium concentrations, with some assays returning up to 3.69% lithium.

A comprehensive soil sampling program has been completed at Spargoville and Widgiemooltha projects, with further sampling across all projects planned for the year.

The company has scheduled a reverse circulation drilling program at Spargoville in the first half of 2024, marking the first lithium-focused drilling in the region.

Mineral Resources (ASX: MIN), led by Chris Ellison, was unable to participate in a joint venture or IPO with Kali Metals and consequently bought a nearly 10% stake in Kali Metals immediately after its listing, using a private company and collaborating with friends and acquaintances.

The company completed its IPO at 25c raising the maximum $15 million with ease. Share in Kali hit 89c high during its first week on the bourse to close out the week at 60.5c.

The week ahead

A New Year rush of economic data will produce plenty for investors to chew on in the coming week.

The US profit reporting season is kicking off while here in Australia the December jobs report on Thursday is the main feature, with employment growth, the unemployment rate, participation rate and hours worked being the main measures to watch.

It would not be a surprise if December was no match for the stellar 61,500 lift in the November job numbers and the jobless rate of 3.9% should only face pressure on the upside.

Chinese figures are also being released with December quarter economic growth figures out on Wednesday along with monthly figures on retail sales, production, investment and unemployment.

US figures during the week include retail sales and production data, with housing measures including housing starts data and existing home sales figures.

Some of the US companies reporting profits during the week include Goldman Sachs, Morgan Stanley, Hancock Whitney, Interactive Brokers, Pinnacle, Progress Software, Charles Schwab, US Bancorp, Alcoa, Taiwan Semiconductor Manufacturing, First Horizon, KeyCorp, Northern Trust and FNB Corp, State Street, Travelers and Huntington Banc.