Market Highlights: Diggers in focus after Budget boost; Anglo fends off BHP by selling assets

ASX to open higher after a rally on Wall Street
Market brushes aside strong US PPI
Winners in last night’s Budget include quantum computing

Aussie shares are poised to open higher on Wednesday as local traders parse through details of last night’s Budget. At 8am AEST, the ASX200 futures contract was pointing up by +0.5%.

While there were many winners from the Budget, critical minerals companies could benefit the most after the government splashed the industry with a $7b production tax credit.

This could see 10% of operating costs for downstream processing in critical minerals like nickel, vanadium, lithium and rare earths returned to miners as a tax credit.

The government has also pledged $1.5 billion to support the manufacturing of clean energy technologies.

In the health sector, the prices of medicines covered under the Pharmaceutical Benefits Scheme (PBS), which are typically adjusted according to inflation, will be frozen until 2026 for the general population, and extend until 2030 for pensioners and concession cardholders.

There will also be economic relief in the form of tax cuts and cost-of-living assistance to Australian households through the stage 3 tax cuts, which are scheduled to start on 1 July 2024. The average tax cut from 2024-25 will be $1,888.

Back to markets, and overnight the S&P 500 rose by +0.48%, the blue chips Dow Jones index was up by +0.32%, and the tech-heavy Nasdaq lifted by +0.75% to a record high.

The rally came as the US Bureau of Labor Statistics said that PPI (producer inflation) in the US climbed to 2.2% on a yearly basis in April, as expected.

The US dollar fell against major currencies after the report, while the gold price lifted around +1%.

“The dollar is down and I think that’s giving a bit of a lift to the gold market,” Marex analyst Edward Meir told Reuters.

To stocks, BHP’s US shares rose by 2.8%, while Anglo American’s shares in London jumped 1.4% after Anglo announced a divestment plan.

Anglo said it will sell its diamond business De Beers, its South African company Anglo American Platinum (Amplats) and its steelmaking coal assets. The move is said to fend off current and future bids from BHP.

Meme stocks soared again, with Gamestop up another +60% and AMC Entertainment up +32%.

Amazon rose slightly as the company announced the CEO of its cloud computing business, Adam Selipsky, is stepping down next month.

Quantum computing gets major boost from Budget

The Fed Budget announced last night it will boost investment in innovative industries and accelerate digital transformation.

Quantum computing is one area that has received a substantial government funding of $466 million.

“This is an area where we have huge potential to create a multibillion-dollar industry and thousands of jobs,” said Tech Council of Australia’s acting CEO, Ryan Black.

“Following the significant investment in this Budget, we urge the Government to move quickly to inject more direct funding in Australia’s quantum businesses and research organisations to take advantage of our world-leading quantum capabilities.”

The government recently pledged around $940 million to PsiQuantum, a Silicon Valley-based quantum computing start-up.

Half of the funding will come from the Queensland government. In return, PsiQuantum will set up its planned quantum computer in Brisbane and establish a regional headquarters at Brisbane Airport.

PsiQuantum aims to build the world’s first “useful” quantum computer, which could do tasks like cracking codes, discovering new materials and drugs, and modelling climate and weather.

In other markets …

Gold price rose by +0.8% to US$2,357.29 an ounce.

Oil prices fell by -0.84%, with Brent crude now trading at US$82.77 a barrel.

The benchmark 10-year US Treasury yield fell by 4 basis points (bond prices higher) to 4.44%.

The Aussie dollar rose by +0.3% to US66.27 cents.

The iron ore price fell by -1.6% to US$115.15 a tonne.

Bitcoin meanwhile was down by -2% in the last 24 hours to US$61,643.

5 ASX small caps to watch today

Sovereign Metals (ASX:SVM)
Sovereign announced the results of downstream testwork conducted at leading, independent consultancy ProGraphite GmbH (ProGraphite) in Germany. Sovereign provided Kasiya graphite concentrate to ProGraphite to produce and characterise. The initial steps of shaping and purification to produce SPG (spherical purified graphite) have now been completed with the results showing Kasiya SPG has world-leading specifications. This SPG material is now undergoing coating and electrochemical testing to characterise coated SPG active anode material for lithium-ion batteries.

Raiden Resources (ASX:RDN)
Final heritage report has been received for Andover South and confirmed that the key target areas, where drilling is planned, are clear of any culturally sensitive areas.The Final Heritage Report at Andover North expected shortly, with planning ongoing for exploration programs over that area. Drilling contractor discussions are on-going, with the company expected to appoint a drill contractor once the final Andover North heritage report is received and the full drilling works program is finalised.

Marmota (ASX:MEU)
Marmota iannounced it has completed the drill program design for the Bridget area at its 100% owned Junction Dam Uranium Project immediately adjacent to Boss Energy’s Honeymoon Uranium Mine. The Bridget area shows enormous uranium potential featuring two distinct uranium-bearing formations from two distinct geological ages. Most excitingly, one of the Namba channels has what appears to be a 20-metre high stacked uranium roll-front, similar to what is seen at the Four-Mile Uranium Deposits.

Argenica Therapeutics (ASX:AGN)
Argenica says its drug ARG-007 significantly reduced damage to brain cells in a ferret animal model of mild to moderate traumatic brain injury (modTBI), a model that closely resembles the gross anatomy of the human brain. The observed therapeutic effects of ARG-007 in the modTBI model included a significant reduction in the accumulation of key proteins, and a significant reduction in the level of inflammation markers GFAP and Iba1.

Golden Deeps (ASX:GED)
Drilling is set to commence at the company’s 100%-owned Havilah Project to test a series of priority porphyry/volcanics hosted copper-gold (Cu-Au) targets in the Lachlan Fold Belt of NSW. An initial 6-10 reverse circulation and diamond holes (up to 2,500m) will be drilled to test large copper-gold sulphide targets associated with strong sub-surface Induced Polarisation (IP) geophysical anomalies.

At Stockhead we tell it like it is. While Sovereign Metals and Raiden Resources are Stockhead advertisers, they did not sponsor this article.