Market Wraps

Evening Wrap: ASX 200 flatlines as investors enjoy the long weekend + The bull case for iron ore

Mon 02 Oct 23, 4:56pm (AEDT)

The S&P/ASX 200 closed 15 points lower, down -0.22%. 

Stocks do very little when there's no one there to trade them, Chinese iron ore inventories hit near 7-year lows, a small cap biotech company scores an FDA approval and Morgan Staley's take on tomorrow's RBA interest rate decision.

Let's dive in.


Today in Review

Mon 02 Oct 23, 4:33pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 7,033.2 -0.22%
All Ords 7,235.5 -0.20%
Small Ords 2,707.8 -0.20%
All Tech 2,459.5 -0.32%
Emerging Companies 1,946.9 +0.31%
Currency
AUD/USD 0.6404 -0.42%
US Futures
S&P 500 $4,345.0 +0.45%
Dow Jones $33,866.0 +0.42%
Nasdaq $14,963.0 +0.65%
Name Value % Chg
Sector
Utilities 8,497.2 +0.64%
Materials 17,313.8 +0.55%
Real Estate 2,936.4 +0.34%
Information Technology 1,719.1 -0.14%
Financials 6,284.7 -0.31%
Industrials 6,509.3 -0.33%
Energy 11,658.0 -0.35%
Communication Services 1,481.2 -0.36%
Consumer Discretionary 3,035.2 -0.90%
Consumer Staples 12,190.7 -1.05%
Health Care 36,953.3 -1.34%

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ASX 200 Session Chart

ASX 200 intraday
ASX 200 chopped around to finish the session slightly lower (Source: Market Index)

Markets

Monday one liner: Most large cap stocks moved ~1% higher or lower as there was no one there to trade them.

It was a bit of a nothing-burger session, with the Index drifting lower after a relatively weak lead from Wall Street. There's honestly not much to look at. I hope you're all enjoying (or have enjoyed) the long weekend :)

Economy

No major economic announcements.


Latest news


An Interesting Small Cap

Back in May, I wrote a piece about Cyclopharm (ASX: CYC) – an Australian radiopharmaceutical company that develops and commercialises products for the diagnosis and treatment of cancer and other diseases.

The company was loss making (FY22: $6.6m net loss) but announced an on-market buy-back of approximately 23.5 million shares (or 25% of its outstanding shares).

The stock is extremely illiquid, which means that:

  • There were large bid and offer spreads

  • The bid and offers often only amounted to a few thousand dollars

  • The stock would have an average daily turnover of around 22,000 shares back in May

So overall, a very interesting scenario to have a pre-profit company seeking to buy so many of its illiquid shares on-market.

Fundamentally speaking, it's top line was growing relatively fast, with revenues in FY22 up 31.1% to $23.2 million. It was also seeking to receive FDA approval to sell its flagship Technegas product in the US. So the on-market buyback might've been a vote of confidence from management for FDA approval.

And today was the day.

The FDA approved the use of Technegas in the US, which the company says opens an anticipated US$180 million addressable market for the diagnosis and management of Pulmonary Embolism (the blockage of arteries in lungs).

Cyclopharm Ltd (ASX CYC) Share Price - Market Index
Cyclopharm 12-month price chart (Source: Market Index)

Monday was a rather sell the news session, where the stock finished just 1.4% higher from a session high of 11.3%.

Still, it's up around 20% in the past month and 145% year-to-date. Maybe price really does lead news.

The Bull Case for Iron Ore

Iron ore prices have held up relatively well, all things considered. But there could be a catalyst on the horizon that sends prices higher.

IO
Singapore iron ore futures (Source: TradingView)

Chinese iron ore inventories at ports are close to 7 year lows. Could restocking activities send prices higher?

Iron ore inventory
China iron ore inventories (Source: MacroMicro)

It's worth noting that the lows (and subsequent restocking) in November 2015 and June 2020 coincide with some neat runs for iron ore. (Notwithstanding other factors)

FEF2! 2023-10-02 15-17-07
Singapore iron ore futures (Source: TradingView)

Interesting news and movers

Trading higher

  • +39.0% Galileo Mining (GAL) – Maiden MRE for Callisto

  • +16.8% Catalyst Metals (CYL) – Appoints Chairman

  • +14.8% Symbio (SYM) – Takeover offer from ABB

  • +7.8% Syrah Resources (SYR) – Opposes AFR article re graphite sales

  • +1.4% Cyclopharm (CYC) – FDA approves Technegas 

Trading lower

  • -12.0% Pacific Edge (PEB) – FDA signals intent to regulate LDTs

  • -10.2% Nova Minerals (NVA) – Drill results (Fri)

  • -4.6% Kingsgate Consolidated (KCN) – Cashflow management measures

  • -4.4% Coronado Global (CRN) – FY23 guidance 


Broker notes

Morgan Stanley’s take on tomorrow’s RBA decision:

  • “We expect the RBA will keep the cash rate on hold at 4.1% at its October meeting, its fourth consecutive on hold decision.”

  • “We expect a rate hike will be debated, and tightening bias retained in the statement, but that like the past few meetings an on hold decision will be assessed to be "the stronger one".

  • “We expect that the RBA will still keep its reference that "The recent data are consistent with inflation returning to the 2–3 per cent target range over the forecast horizon" however there is some risk this could be softened.”

  • “While we think the RBA Board's preference is to keep rates on hold (given the uncertain outlook and stated preference to preserve labour market strength), we do think this will be challenging heading into the November forecast meeting.”

  • “We see a final rate hike at the forecast update meeting in November.”


Scans 

Top Gainers

Code Company Last % Chg
GAL Galileo Mining Ltd $0.405 +37.29%
IMI Infinity Mining Ltd $0.145 +31.82%
BIT Biotron Ltd $0.088 +29.41%
LM1 Leeuwin Metals Ltd $0.315 +26.00%
TAR Taruga Minerals Ltd $0.011 +22.22%
View all top gainers

Top Fallers

Code Company Last % Chg
S3N Sensore Ltd $0.16 -23.81%
BXN Bioxyne Ltd $0.011 -21.43%
ICR Intelicare Holdin... $0.012 -20.00%
GMR Golden Rim Resour... $0.021 -19.23%
MEK Meeka Metals Ltd $0.038 -17.39%
View all top fallers

52 Week Highs

Code Company Last % Chg
BIT Biotron Ltd $0.088 +29.41%
LV1 Live Verdure Ltd $0.40 +17.65%
ATP Atlas Pearls Ltd $0.088 +12.82%
WC8 Wildcat Resources... $0.485 +8.99%
TRA Turners Automotiv... $3.43 +5.54%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
S3N Sensore Ltd $0.16 -23.81%
BXN Bioxyne Ltd $0.011 -21.43%
LEX Lefroy Exploratio... $0.175 -12.50%
STM Sunstone Metals Ltd $0.015 -11.77%
HAL Halo Technologies... $0.053 -11.67%
View all 52 week lows

Near Highs

Code Company Last % Chg
GCI Gryphon Capital I... $2.03 +1.50%
VVLU Vanguard Global V... $63.81 -1.10%
VLUE Vaneck MSCI Inter... $24.16 +0.92%
LV1 Live Verdure Ltd $0.40 +17.65%
KOV Korvest Ltd $8.26 -2.25%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
URW Unibail-Rodamco-W... $3.84 +4.92%
VAP Vanguard Australi... $73.80 -0.77%
IKO Ishares MSCI Sout... $93.52 +0.37%
WVOL Ishares Edge MSCI... $35.94 +0.45%
GT1 Green Technology ... $0.455 +8.33%
View all RSI oversold

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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