Market wrap: ASX manages a heroic flat day after losing heavily at the open

After trading as much as 1.5% lower, the ASX 200 posted a heroic comeback on Friday to close the ledger virtually flat.

Early losses following on from sharp falls on Wall Street based on prospects that US interest rates will stay higher for longer but there was a strong comeback which saw the ASX 200 close up 3.6 points at 7,068.8 points.

The US Fed has now indicated that it could raise interest rates one more time this year, and then cut it by only half a percentage point from there through 2024 – a much tougher forecast than previous predictions of a full percentage point cut in 2025.

Not even a heroic market comeback was enough to rescue what turned into a fairly poor week as the index shed 2.9% – the worst performance since late August in 2022.

Energy stocks ride to the rescue

The main heroes in the comeback were rebounding energy and mining stocks which overcame a weak lead because of rising oil prices.

Concerns that Russia’s ban on fuel exports could pressure global supply led to Brent futures rising 0.6% to $US93.87 a barrel and a 0.8% rise in West Texas Intermediate crude futures to $US90.34.

Oil had been on track for a small weekly drop after gaining more than 10% over the previous three weeks as volatility resulted from worries about tight global supply due to production cuts.

Some of the local market beneficiaries from the rising oil price included shares in Santos (ASX: STO), which rose 0.7% to $7.64.

Shares in Woodside Energy (ASX: WDS) also jumped 0.6% to $36.25 and Beach Energy (ASX: BPT) shares added 0.3 % to $1.625.

Takeover target Origin Energy (ASX: ORG) saw its shares rally 1.8% to $8.86 after large shareholder AustralianSuper revealed it had increased its stake, making a higher offer from suitor Brookfield and EIG Partners likely if it wants to snap up the company.

AustralianSuper spent about $150 million upping its stake by 1% to 13.7%.

The other big news in the energy sector was that labour unions and Chevron jave finally agreed to a deal, which brought to an end two weeks of work stoppages that threatened to disrupt LNG exports from Western Australia.

Of the 11 sectors on the ASX 200, five retreated with technology and property leading the losses due to fears that high-interest rates would remain for many months to come.

Mining rallies too

Mainly in the positive were the big miners after iron ore prices in Singapore jumped almost 2%, although Rio Tinto (ASX: RIO) went against the tide with a 1.1% share price fall to $114.57, potentially due to continuing negotiations over the destruction of an ancient rock shelter.

Rio Tinto said it was working with traditional owners in WA’s Pilbara region after a blast at one of its operations caused some damage to an ancient rock shelter.

The incident happened near the Nammuldi iron ore mine, about 60 kilometres north-west of Tom Price.

BHP shares (ASX: BHP) headed in the other direction, up 0.5% to $44.34 while Fortescue Metals (ASX: FMG) shares added 1.5% to $20.81.

One of the surprise top performers was fruit and vegetable processor Costa Group (ASX: CGC), with shares rallying by 6.6% to $3.09 after it accepted a $3.20 cash-per-share takeover offer by US buyout company Paine Schwartz Partners.

Shareholders in media giant News Corp (ASX: NWS) also rallied by 2.2% to $32.36 after an announcement that Rupert Murdoch will step aside as chairman.

There were some other stock specific share price moves with shares in pathology group Australian Clinical Labs (ASX: ACL) up 0.7% to $2.81 despite the competition watchdog asking for more information about its planned merger with Healius.

Healius (ASX: HLS) shares closed steady at $2.37.

Treasury Wine Estates (ASX: TWE) enjoyed a strong day with shares up 2.6% to $12.05 after positive broking reports based on Chinese reports of a possible resolution to the Chinese tariffs on Australian wine.

Small cap stock action

The Small Ords index shed 2.95% for the week to close at 2,728.1 points.

Small cap companies making headlines this week were:

Alderan Resources (ASX: AL8)

Alderan Resources has acquired seven lithium exploration projects in Brazil’s resource-rich Minas Gerais state, an area known as “Lithium Valley.”

These projects are situated in favourable geological settings with the presence of pegmatites and lithium indicators like spodumene.

The company has raised $1.75 million to finance further exploration and will be assisted by an experienced technical team from the project’s vendor.

The acquisition is noteworthy because Minas Gerais is a significant mining hub in Brazil, and recent discoveries in the area have shown promising lithium resources.

Nordic Nickel (ASX: NNL)

Recent diamond drilling at Nordic Nickel’s flagship Pulju project in Finland has expanded the mineralised footprint of the Hotinvaara prospect, intersecting disseminated sulphides over a width of 123.8 meters.

The drilling took place 500m south of the previous mineral resource estimate and is said to enhance the prospectivity of the area.

Managing director Todd Ross noted that these findings reinforce the large scale and untapped potential of the Pulju project.

An updated mineral resource estimate is expected by the end of the year, and assays for 20 of the recently drilled holes are still pending.

Micro-X (ASX: MX1)

Micro-X, a specialist in innovative X-ray technology, has secured a $1.5 million contract with the Australian government for its Micro-X Rover systems.

This comes after a major overhaul of the company’s marketing strategy aimed at driving sales and reducing existing inventory.

Micro-X chief executive officer Kingsley Hall announced that the new purchase order brings the total sales for the quarter to $2.8 million.

In addition to healthcare markets, the company is exploring niche opportunities such as elite sports, where its Rover units are already being used by Major League Baseball and National Hockey League teams in the US.

Wildcat Resources (ASX: WC8)

Wildcat Resources believes it has made a significant lithium discovery at its Tabba Tabba lithium-tantalum project in Western Australia, based on promising initial assay results.

The data from the first 21 holes confirm significant lithium mineralization in pegmatite bodies, leading Managing Director Samuel Ekins to express confidence in the “early stages of a major discovery.”

The project is strategically located near major global lithium projects like Pilgangoora and Wodgina, and has shown potential for large-scale lithium deposits across its 3.2 km trending pegmatite system.

Wildcat plans to bring a third rig in early October to accelerate the evaluation of its lithium discoveries.

Astral Resources (ASX: AAR)

Astral Resources has released a positive scoping study for its flagship Mandilla gold project in Western Australia, projecting an average annual production of 100,000 ounces of gold over the first 7.4 years of an 11-year life-of-mine.

Financial projections based on a $2750/oz gold price include a free cash flow of $740 million and a net present value of $442 million.

The operation plans to employ a 2.5 million tonnes per annum carbon-in-leach processing plant, with total pre-production capital estimated at $191 million.

Managing director Marc Ducler stated that the study confirms Mandilla’s potential as a highly profitable, standalone gold operation with compelling financial metrics.

The week ahead

Locally, some of the things to watch out for include the inflation figures due on Wednesday and figures on job vacancies, retail sales and private sector credit.

Internationally, the biggest news is again likely to come out of the US, with releases for the week including house prices, consumer confidence, economic growth, personal income and spending plus a speech by US Fed Chair Jerome Powell.

Chinese PMI figures on manufacturing and services should give a good picture on any small improvements in the Chinese economy as it continues to struggle through a very difficult reopening after COVID lockdowns.

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