Weekly wrap: investors lose patience with Chinese stimulus

Australia’s share market fell to a one month low after investors ran out of patience with Chinese promises to stimulate their faltering economy.

That led to weakness among the miners, with even a rise in the gold price resulting in steep falls in the price of gold miners.

Nine of the 11 market sectors closed down and the ASX 200 closed down 0.4% or 34.3 points, to 8296 points.

The weekly fall of 1.5% was the biggest since early August and fell to the lowest level for four weeks.

Scepticism over Chinese stimulus hits miners

Heavy scepticism about Beijing’s promise to boost its economy saw iron ore prices in Singapore fall 2.4% to below US$104.

As you would expect that led to shares in BHP (ASX: BHP) slumping by 1.5% to $41.17.

Fellow iron ore exporter Rio Tinto (ASX: RIO) saw its shares fall 2.8% to $120.72, with investors underwhelmed by the company’s decision to spend $US2.5 billion to expand its lithium project in Argentina.

The worst hit of the Pilbara iron ore miners were shares in Fortescue (ASX: FMG) which fell 3.7% to $19.48 after some broker downgrades.

Gold miners moved in the opposite direction to the golf prices with the more than 7% fall in St Barbara (ASX: SBM) shares a great example.

The rare occurrence of a float, of data centre landlord DigiCo Infrastructure REIT (ASX: DGT), failed to turn around the sombre market moves with the company shares falling to $4.55 from the IPO subscription price of $5.

DigiCo’s former parent, HMC Capital (ASX: HMC) fell a hefty 7.2% to $11.26 after shedding its high growth sibling.

Pockets of optimism

There were some optimistic signs on the market with shares in software provider Iress (ASX: IRE) up a stellar 8.2%  to $9.38 after it reaffirmed earnings guidance of $126 million to $132 million for fiscal year 2024 and announced the reinstatement of dividends.

Another individual sign of hope was a 6.2% rise in the shares of financial services company Insignia Financial (ASX: IFL) to $3.61 per cent after it received a takeover bid from Bain Capital valued at $4 per share.

News that two employees of insurer Steadfast Group (ASX: SDF) were under investigation for insider trading saw shares in the group fall 0.5% to $5.77.

Even positive news was not always enough for a turnaround, particularly for miner South32 (ASX: S32) which despite receiving the backing of Western Australia’s environment minister to extend the life of its Worsley Alumina project, saw its shares fall by 1.2% to $3.40.

Small cap stock action

The Small Ords index slipped 2.34% this week to 3133.9 points.

Small cap companies making headlines this week were:

BrainChip (ASX: BRN)

BrainChip has secured a $2.7 million contract with the US Air Force Research Laboratory (AFRL) under the SBIR program to develop neuromorphic radar signal processing technology.

This project leverages BrainChip’s Akida 2.0 hardware and aTENNuate framework, which enable low-power, high-performance computing for SWaP-C (size, weight, power and cost) constrained platforms such as military and robotics systems.

The contract builds on the successful demonstration of BrainChip’s neuromorphic hardware and showcases its capability to enhance mission-critical radar applications.

BrainChip is collaborating with an aerospace and defence company to optimise algorithms for the AFRL project, supported by its strong financial position from a $25 million capital raising.

Viva Leisure (ASX: VVA)

Viva Leisure has acquired a 25% stake in World Gym Australia and three of its Queensland franchises for $16.7 million, adding 169,000 members and expanding its network to over 587,000 members across 450+ locations.

The deal, set to be finalised by February 2025, includes options to acquire the remaining 75% of World Gym Australia and form a joint venture to develop new locations, solidifying Viva as Australia’s largest and most diversified fitness network.

Viva plans to integrate its technology platforms, including VivaPay and The Hub, into World Gym’s operations, enhancing efficiency and revenue streams with $140 million in expected annual transactions.

This acquisition builds on Viva’s strategic growth trajectory following its $18 million Plus Fitness acquisition and recent investment in Boutique Fitness Studios, showcasing its ability to drive profitability across diverse fitness formats.

Aldoro Resources (ASX: ARN)

Aldoro Resources has reinforced the niobium potential of its Kameelburg project in Namibia, with new assay results identifying a 190m section averaging 0.70% niobium pentoxide and confirming mineralisation across 262m at 0.52%.

The company has expanded its sampling campaign from seven to 22 lines to refine drill targets and initiated a diamond drilling (DD) program aimed at assessing mineralisation depth and resource potential.

Seven DD holes, ranging from 200m to 400m deep, are being drilled with in-house rigs to reduce costs and improve efficiency.

Niobium, a strategic mineral used in various industries, is critical for advanced technologies like superconducting magnets and structural materials for pipelines, buildings, and aerospace applications.

Elevate Uranium (ASX: EL8)

Elevate Uranium is conducting metallurgical test work on six tonnes of ore from its Koppies project in Namibia to support the design of its U-pgrade demonstration plant, expected to be operational by late 2025.

Meanwhile, resource expansion and exploration are advancing at the Hirabeb, Namib IV, Capri, and Marenica projects, with promising intersections, including 3.5m at 2,053ppm eU3O8 at Namib IV and 4.5m at 942ppm eU3O8 at Capri.

These efforts aim to expand the Koppies resource base, potentially extending mine life or increasing production rates for future operations.

Elsewhere, Elevate’s JV partner Energy Metals reported an average 12% increase in high-grade uranium intersections at the Bigrlyi project in the Northern Territory, attributed to limitations of gamma logging in zones exceeding 1% uranium oxide.

Highlights from the 11,055m drilling campaign include an exceptional assay of 10.5m at 1.1% uranium oxide, with a high-grade core revised from 1.3m at 1.72% eU3O8 to 1m at 4.07%.

The results will support a revised mineral resource estimate for Bigrlyi, currently holding 21.3 million pounds of uranium oxide, expected in early 2025 as exploration progresses.

Barton Gold (ASX: BGD)

Barton Gold has completed its $5 million sale of 1,425 gold ounces from concentrates recovered during its December 2022 clean-out of the Central Gawler Mill, achieving a net profit margin of approximately $2,950 per ounce.

The proceeds contribute to Barton’s development funds, with over $10 million in non-dilutive cash raised since its June 2021 IPO, covering corporate overheads and supporting cost-efficient exploration without significant equity dilution.

Following the sale, Barton is advancing growth at its Tunkillia project, targeting resource expansion and enhanced project economics, while also progressing the Tarcoola gold project, where the recent Tolmer discovery highlights the potential for shallow, high-grade gold zones.

Barton also completed a 5,064m reverse circulation drilling campaign at its Tunkillia gold project in South Australia, targeting resource extensions to upgrade the 1.5 million-ounce estimate and optimise its scoping study.

The company is also advancing its Tarcoola project, where high-grade assays from the Tolmer discovery, including 4m at 24.6g/t gold, are being explored to support a potential Stage 1 operation leveraging the existing Central Gawler mill.

In addition, this week Barton secured a $380,000 grant to support its research and development work programs.

The week ahead

The coming week is one of those in which markets will be almost entirely in the hands of the interest rate decision by the US Federal Reserve.

The widespread speculation is for a 25-basis point cut to a range of 4.35% to 4.5% and if this eventuates, all should be reasonably well, depending on any indication about future cuts.

However, if the US Fed doesn’t perform as expected, then things could get ugly, with markets never enjoying a negative surprise.

Most other economic releases will be much less influential, with local ones including purchasing managers and consumer confidence surveys.

The mid-year economic and fiscal outlook (MYEFO) is expected at some stage during the week and may show some deterioration in Federal tax revenue.

The national accounts should also show that household wealth continues to sit around record highs.

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