The ASX 200 Index was up at the start of the first full week of trading in the new financial year, gaining 1.11% on lower-than-normal volume across all 11 sectors, with energy leading the charge, up 2.62%.
Small-cap winners included biotech Imugene Ltd (ASX:IMU, OTC:IUGNF), which continued its upward trajectory following positive data and supply news last week (up 12.82%); Valor Resources Ltd (ASX:VAL) (up 16.67%) and Ora Banda Mining Ltd (ASX:OBM) (up 23.33%), which appointed a new CEO today.
What’s in the news
Rate-rise eve sets hands a-wringing
Most economists surveyed by the Australian Financial Review expect the RBA to lift rates by an eye-watering half a percentage point, taking the cash rate to 1.35% from a low of 0.10% in April, though that seems like a lifetime ago now.
The more hawkish among these analysts are tipping that a 75-basis-point rise is more likely – and necessary. T.Rowe Price now says it wouldn’t be surprised if the hike goes as far as 65 basis points.
Some commentators, such as Saul Eslake, believe that aggressive rises will hurt the economy and cause significant household stress.
With the cash rate somewhere between 2 and 2.5%, the average variable mortgage rate would be between 6.4 and 6.9%.
“Given that no major economy central bank can be sure how far they need to raise rates in order to bring inflation down,” Eslake told the AFR, “ … there has to be a non-trivial risk that they will end up doing enough to precipitate a recession.”
“With a 200bp increase in variable rates, the share of borrowers with a debt service ratio of over 30% would increase from around 10% to just under 20%,” Eslake continued in his weekly update.
Of the forecasters surveyed by the AFR, the median predicts the cash rate to reach 2.35% by the end of the year and peak at 2.85%.
The commodity-linked Aussie dollar is being buffeted by the prevailing winds of a peaking US dollar and a potential recession on the horizon. In the near term, this means gains.
It starts the new financial year below 70 US cents, but some tip it will end it around 74 US cents, and several analysts – AMP Capital, Bank of America, Morgans and UBS – bet that the currency will reach 80 US cents by the middle of next year or sooner.
Here’s a look at five of today's top small-cap stories.
AdAlta modifies AD-214 development program timeline to maximise partner opportunities and extend cash runway
AdAlta Ltd (ASX:1AD) is working to a new timeline that better aligns it with partnership opportunities and allows it to extend its cash runway as it moves towards development of an inhaled version of its asset AD-214, targeting idiopathic pulmonary fibrosis.
Highfield Resources shares rise after signing indicative term sheet for €23.3 million facility with Macquarie for Muga Potash Mine
Shares are up in Highfield Resources Ltd (ASX:HFR) after it signed a project financing mandate letter with a group of experienced European mining finance lenders for a €312.5 million senior secured project financing package.
Poseidon Nickel boosts Black Swan nickel resource and grade with updated estimate
Poseidon Nickel Ltd (ASX:POS, OTC:PSDNF) has lifted nickel resources as well as grades in an updated mineral resource estimate (MRE) for the Black Swan Project in Western Australia.
Firefinch accelerates new mine plan for Morila Gold Mine in Mali
“Morila is a world-class gold deposit with extensive operational infrastructure and which has produced over 7.5 million ounces of gold and has a current resource of 2.5 million ounces,” said Firefinch Ltd (ASX:FFX) chairman Alistair Cowden.
Andromeda Metals highlights several milestones as it looks to move into an operational company
Andromeda Metals Ltd (ASX:ADN)'s James March speaks with Proactive’s Elisha Newell about its pending milestone in moving from explorer to an operational company, which only a small amount of ASX listed small caps achieve.
On your six
ASX adds a benchmark for listed agricultural companies by launching S&P/ASX Agribusiness Index
ASX head of strategic delivery, capital markets, Ken Chapman said: “By creating the AgBiz Index, ASX is supporting agribusinesses to grow and meet the Delivering Ag2030 goal of becoming a $100 billion industry by 2030."
And one for good luck
Why investors should be selective when looking for opportunities in retail stocks
Wealth Within's Dale Gillham explains why for investors, the broader retail sector is unlikely to do well in the coming months, so be selective.