A welcome pause in the rate rising process by the U.S. central bank was initially greeted with glee until traders spotted the sting in the tail, rates could stay high for longer than was previously expected.

Extending the pain of high rates will have a dampening effect on confidence and add to the potential for Australia to slip into a recession later this year as happened to New Zealand this week.

For investors the threat of a “higher for longer” rate climate is an ironic variation of the “stronger for longer” bull market rallying cry which originally attracted investors to the mining and energy sectors.

The U.S. pause also came with a warning that the interest rate screws could be tightened further until Federal Reserve officials are convinced that they have throttled inflation. Australia’s Reserve Bank is almost certain to follow despite objections from the government.

The net result of these macro events was a week when the Australian market, as measured by the all-ordinaries, clawed back lost ground with a rise of 1.1% to be placed almost exactly where it was a month ago – and six months ago.

Far removed from the confusion of interest rate policy and macro-economics was the excitement of the battery metals sector where lithium, nickel and copper news drove share prices up, with a number of powerful moves which included:

  • Azure Minerals, up 49c (86%) to $1.06c after reporting one of the best assays yet recorded by an Australian lithium explorer, 22.8 metres at 3.57% lithium from a depth of 259m at its Andover project in the north of WA. That high-grade hit was inside a 105m section assaying 1.26% lithium.
  • Errawarra Resources played the nearology card with a report which simply said that exploration was continuing at its Andover West prospect which adjoins Azure’s Andover project, good enough to lift Errawarra by 10c (118%) to 19c.
  • Greentech Metals, up 24c (213%) to 34c after reporting assays up to 1.65% lithium from rock chip samples gathered at the Ruth Well project in WA.
  • Hawthorn Resources, up 3.5c (41%) at 12c after announcing that it had teamed up with Legacy Iron Ore to explore for lithium with iron ore billionaire Gina Rinehart. Legacy rose by 0.6c (40% to 2.1c.
  • Patriot Battery Metals, up 16c to $1.83 after reporting thick and high-grade drill results from its Corvette property in Canada with a best hit of 127m at 1.78% lithium.
  • Delta Lithium, up 5.5c to 75c after releasing the latest drill results from its Yinnetharra and Mt Ida projects with a best hit at Yinnetharra of 43m at 1.22% lithium. Delta also announced a deal to introduce the Japanese trading house Idemitsu as a major new shareholder via a 15% placement of its shares at 70.75c.
  • Recharge Metals, up 6c to 27c after announcing the acquisition of a new prospect in Canada’s James Bay area.
  • Cygnus, up 4c to 26c as interest grows in its Pontax lithium project in Canada and Bencubbin rare earths project in WA, and
  • Rio Tinto making its latest move into lithium via a deal over exploration acreage in the James Bay area.

As if those stock market performances were not enough to please lithium investors, there was a fresh burst of investment bank and stockbroker reports, some of which took enthusiasm to a new level.

Macquarie Bank got rather excited about a new Global Lithium Resources drilling project underway at Marble Bar in WA’s Pilbara, tipping the stock as a buy with a price target of $2.50, a handy 65% (99c) higher than last sales at $1.51.

Unfortunately for Macquarie it was displaced as this week’s biggest-bull-in-the-room by CG Capital Markets, the old Canaccord Genuity, which scored a trifecta of tips that featured:

  • Leo Lithium rising from last sales at 97c to reach $2.24, according to CG, a potential gain of 152%.
  • Green Technology Metals rising from last sales at 65c to $1.90, a potential gain of 192%, and
  • Galan Lithium rising from last sales at 93c to $3, a potential gain of 222%.

Optimism is a good thing, but it is possible for it to sometimes go a bit far, as happened in Australia’s original nickel boom of late 1969 when the first version of Poseidon ran from 80c to $280, a really serious gain of 34,900% — before falling off a cliff.

Nickel’s new-found status as a battery metal (it was only used for stainless steel back in the 60s) saw it catch a lift with lithium thanks to a 4% increase in the nickel price this week, taking it back to US$10.30 a pound.

That higher nickel price and the lithium frenzy helped the shrinking handful of local nickel stocks perform well, led by Golden Mile Resources which rose by 3c (125%) to 5.4c after reporting the best ever drill result from its Quicksilver project near Lake Grace in the south of WA including 4.14% nickel inside a 28m section grading 2.34% nickel and 0.109% cobalt.

NickelSearch followed up with its own drill result from nearby Carlingup which featured multiple sections of massive sulphide mineralisation (assays pending) over a 9.85m intersection, enough to lift the stock by 2.5c (44%) to 8.2c.

Panoramic Resources was the nickel stock left out of the game, slipping 0.5c to 8.7c after reporting problems with processing equipment, an issue which was largely discounted by Macquarie which sees the stock rising to 18c.

Copper stocks performed well thanks to another big investment bank joining the copper cheer squad. This time it was RBC Capital Markets which repeated an earlier warning from Citi that there’s a copper “crunch” coming which could send the metal into “hyperdrive”.

Sandfire was the best of the local copper plays with a rise of 23c to $6.06 while UBS dusted off a research report which sees the stock heading up to $7. Aeris added 3c to 50c.

Rare earths failed to join the latest surge of interest in battery metals, led by Lynas which fell by 43c to $7.38 and Hastings, which continues to pay a price for its Yangibana project cost blow out which rubbed another 25c off the stock to $1.20. Hastings was trading at $2.27 last month and $3.80 in January.

A measure of the rise (and rise) of lithium and other critical metals came during the week in a story carried by the Australian Financial Review newspaper which said the value of ASX-listed critical minerals stocks now exceeded the value of listed gold stocks.

The U.S. interest rates news, especially the prospect of two more increases in future months, took its toll of gold which slipped US$25 an ounce lower to US$1935/oz, dampening investor interest in a number of encouraging announcements such as:

  • De Grey Mining lifting the global gold resource at its Mallina project in WA by 1.1 million ounces to 11.7 million ounces, only to be sold down by 6.7c to $1.27.
  • Musgrave Minerals, a takeover target, lost 1.5c to 31c while its suitor, Westgold Resources fell 8.7c to $1.36, and Ramelius, another potential bidder for Musgrave, losing 4c to $1.45.

Kalium Lakes, one of the troubled potash hopefuls, said it would remain suspended from trading on the ASX while it tries to find “a clear pathway forward”.

The once heavily promoted potash sector has been devastated by operational problems and, most recently a sharp fall in the price of potash sold by Canada to China.

Other news and market moves this week included:

  • Kingsland adding 5c to 42c after reporting first assays from drilling at its Leliyn project in the Northern Territory with a best hit of 45m at 9% total graphitic carbon (graphite).
  • Fortescue Metals rising with recent moves in China to stimulate its economy, which spark increased demand for iron ore. Fortescue added $1.53 to $22.32.
  • Mount Gibson joined in the iron ore revival with a rise of 8.5c to 49c, backed up by a Macquarie price forecast of 60c, and
  • Coal stocks continued to defy doomsayers with New Hope adding 38c to $5.50 while Whitehaven put on 11c to $6.42.