Weekly wrap: gold shines amid growth fears

Gold shone brightly as fears of weaker than expected growth sent the share market down on Friday.

Following on from a weaker lead from the US market and some higher-than-expected US consumer inflation data for September, the Australian share market meekly followed and lost ground.

The ASX 200 Index fell 0.1% or 8.5 points, to 8214.5 points at the close, with the index finishing the week 0.8% lower, as optimistic hopes of a rebound in the Chinese economy stalled amid scepticism that the Chinese Government was serious about stimulus.

The local exchange almost exactly mirrored a 0.1% fall on the Dow Jones and a 0.2% fall on the S&P 500 after monthly US consumer price data rose 0.3% month-on-month in September.

That rekindled fears that the US labour market was still weakening while inflation continued to stay stubbornly high.

Iron miners weaken as gold rallies

With an announcement due from the Chinese finance ministry on Saturday which might herald more stimulus measures, shares in the big miners weakened with BHP (ASX: BHP) down 1.1% to $43.43, Rio Tinto (ASX: RIO) off 0.2% to $119.58 and shares in Fortescue Metals (ASX: FMG) down 1.3% to $19.47.

Gold shares blossomed in the uncertain environment, with Regis Resources (ASX: RRL) up 4.4%, Evolution Mining (ASX: EVN) up 1.8%, Northern Star (ASX: NST) up 1.1%, Newmont (ASX: NEM) up 2.1% and Gold Road Resources (ASX: GOR) up 2.3%.

That followed from a 1% bump in the gold price to US$2633 an ounce following the renewed pessimism flowing from the US inflation and jobs numbers.

Founder share sales lead to drop

There were plenty of moves on the market in response to individual stock news, with the sale of about $60 million of shares by billionaire WiseTech (ASX: WTC) founder Richard White being accompanied by a 1.3% fall to $132.67.

Mr White is a frequent seller of WiseTech shares but news that the he had been involved in legal action against a former girlfriend added to scrutiny of the logistics software provider.

WiseTech executive director Maree Isaacs also offloaded abound $5 million in shares.

Heading in the opposite direction were shares in hotel software provider SiteMinder (ASX: SDR) which jumped an impressive 5.3% to $6.74 after the stock was upgraded from “overweight” to “buy” by analysts at Jarden.

The success story of the week though was Arcadium Lithium (ASX: LTM), with its shares almost doubling, with a more than 90% rise to $8.18 following on from confirmation of a $9.9 billion bid for the lithium miner by Rio Tinto.

Small cap stock action

The Small Ords index rallied 2.46% to close at 3178.7 points for the week.

Small cap companies making headlines this week were:

IRIS Metals (ASX: IR1)

IRIS Metals is set to begin a demonstration-scale trial after successfully converting spodumene concentrate into 99.5% battery-grade lithium carbonate using ore from its Beecher project in South Dakota.

This was achieved in collaboration with US refining specialist ReElement, with whom IRIS is now negotiating a potential investment to strengthen domestic lithium carbonate supply.

IRIS has also signed an agreement for further bulk testing with ReElement, aiming to develop a commercial-scale supply solution in the US, with plans to explore lithium hydroxide production.

The Beecher project is advancing towards its maiden mineral resource estimate in 2025, positioning IRIS to benefit from US-government funding under the Inflation Reduction Act.

HyTerra (ASX: HYT)

HyTerra has expanded its Nemaha project in Kansas by 13,000 acres, bringing its total holdings to approximately 52,000 acres in its search for natural hydrogen.

The newly acquired area has significant seismic coverage, boosting confidence in its hydrogen potential as HyTerra prepares for a drilling campaign supported by a major investment from Andrew Forrest’s Fortescue.

The drilling campaign will focus on hydrogen and helium prospects identified from reprocessed seismic data, with new leases secured based on promising subsurface evaluations.

An extraordinary general meeting (EGM) to approve Fortescue’s strategic investment has been delayed until December, pending an independent expert’s report.

GreenX Metals (ASX: GRX)

GreenX Metals has been awarded approximately $490 million in compensation by an international tribunal following arbitration claims against the Republic of Poland.

The dispute, dating back to 2019, involved Poland blocking the development of GreenX’s Jan Karski and Dębieńsko projects, breaching the Australia-Poland Bilateral Investment Treaty (BIT) and the Energy Charter Treaty (ECT).

The tribunal found Poland violated its obligations regarding the Jan Karski project, awarding GreenX compensation under the BIT, while the ECT award, though substantial, will not result in double compensation.

The awards are binding, and Poland has a limited window to apply for a set-aside of the decision.

Pilot Energy (ASX: PGY)

Pilot Energy has received an $11.5 million offer from EDP Renewables APAC to acquire its 376-megawatt Three Springs solar farm in Western Australia.

The solar farm was intended to support Pilot’s Mid West Clean Energy Project (MWCEP), but the team has identified opportunities to source renewable energy closer to the project site.

Proceeds from the sale will help fund Pilot’s Cliff Head carbon storage project, which aims to capture over 1 million tonnes of carbon per year from third-party emissions.

The sale, subject to conditions, is expected to close by year-end and will support both the carbon storage initiative and the acquisition of Triangle Energy’s share in the project.

Terra Uranium (ASX: T92)

Terra Uranium and ATHA Energy have formalised agreements to advance three Canadian uranium projects, including Terra’s Pasfield Lake and ATHA’s Spire and Horizon projects.

ATHA has the option to acquire up to 60% of Pasfield Lake, while Terra can acquire up to 70% of Spire and Horizon.

These agreements expand Terra’s footprint in the Athabasca Basin by 60,965 hectares, with fieldwork planned for the Yurkowski and HawkRock projects later this year.

Exploration efforts will focus on shallower uranium targets at Spire and Horizon, while ATHA may begin drilling at Pasfield in 2025, supported by Terra’s exploration infrastructure.

The week ahead

Just as weakness in the labour market was a harbinger of stimulus from the central bank in the US, it might be a contributing factor here too with the labour force survey on Thursday highly anticipated.

Analysts are expecting a mixed result with about 15,000 jobs to be added in September even as the unemployment rate is expected to tick up 0.1% to 4.3%.

Also important in the Australian context will be a slew of data out of China including third quarter GDP, home prices, production, retail sales, trade and inflation.

Chinese data to reveal slowing growth

Despite announcements about stimulus measures, the GDP data is expected to show that Chinese growth slowed to just 4.6%, which is positively glacial for a country that for many years posted double digit growth numbers.

The European Central Bank is announcing an interest rate decision on Thursday and expectations are for a 0.25% cut in the deposit rate to combat anaemic economic growth.

Locally the annual general meeting season kicks off with some of the companies briefing their shareholders including Telstra, Commonwealth Bank and Origin Energy.

There will also be a brace of quarterly sales and production updates from miners including Rio Tinto, Alcoa, Woodside Energy, BHP and Santos.

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