But before anyone feels confident about a return to calmer market conditions, there is almost certainly more heavy weather to come, starting with another U.S. interest rate increase next week.

Australia will not be immune from the rate rise process with the Reserve Bank forced to follow the U.S. in an increasingly aggressive attempt to tame inflation, which rose in August at a sharper pace than expected.

It was the 8.3% annualised inflation rate in the U.S. which sent a shudder through global markets this week as it became a little clearer that inflation is running hotter than expected and more deep-seated than can be tolerated.

Next week’s U.S. rate increase is expected to be 0.75% but there is talk of a blockbuster 1% to reinforce the determination of the Federal Reserve to kill inflation expectations.

The good news, and there was a bit if you looked closely, was the continued upward march of lithium explorers and miners which led a buoyant battery and technology metals sector along with support for gold which fell, but not far.

Overall, it wasn’t such a bad week on the ASX, if you ignore the 2.8% drop in the all-ordinaries index on Wednesday. On either side of that fall, prices rose, leaving the index up 0.26% but looking fragile.

Mining sector leaders BHP and Rio Tinto made strong gains, aided by a surprise increase in the iron ore price which added US$4 a tonne to trade at US$106/t, perhaps a sign that concern about the health of the Chinese economy has been overdone.

BHP added $1.63 (4.3%) to $39.14. Rio Tinto rose by $2.94 (3.1%) to $95.75, while Fortescue Metals put on 66c (3.8%) to $18.03.

Macquarie Bank described iron ore market sentiment as soft amid reports of “struggling Chinese property developers.” Offsetting that negative view was news of increased steel production and a 2% fall in iron ore stocks at Chinese ports.

Lithium stocks easily delivered the best returns this week as the global rush into electric vehicles lifted demand for battery metals and reinforced a realisation that a significant shortfall in supply could be developing.

Mineral Resources was the lithium news maker and top performer with a rise of $2.19 to $72.01 thanks to reports of a plan to spin off its lithium assets into a separate New York-listed company. Macquarie Bank repeated its MinRes price tip of $100.

Among the other lithium stocks, Pilbara Minerals rose 33c over the week to $4.79. Allkem was up 57c to $16.02 but with Bell Potter setting a price target of $20.04, while Liontown went the other way with a fall of 11c to $1.76 with Bell Potter tipping a future price of $2.87.

Lithium exploration news was mixed, led by a 3.7c rise to 8.4c (78%) by Critical Resources which reported exceptional results from drilling at its Mavis Lake project in Canada with a best assay of 24.1 metres at 1.62% lithium from a depth of 53m.

Pantoro added 3c to 21c after reporting encouraging assays from the first round of drilling at the Buldania lithium joint venture near Norseman in WA with a best hit of 9m at 1.26% lithium from a depth of 30m. Joint venture partner, Tulla Resources, fell 2.5c to 50c, while the third party in the project, MinRes was mainly influenced by the New York listing speculation.

Copper stocks were mixed with two local leaders, Sandfire and 29Metals, performing well with rises of 18c to $4.25 and 25c to $2.17 respectively, aided by a report from Morgan Stanley that strong demand for both copper and aluminium is likely to drive big deficits in supply by 2030.

Citi, which sent a representative on a tour of Sandfire’s Spanish assets, found plenty of positives during the visit, refreshing a buy tip on the stock and setting a price target of $6, up 40% on last sales.

Copper discovery news was topped by KGL Resources reporting an upgraded resource at its Bluebird project in the Northern Territory which now stands at 129,000 tonnes of metal despite a decline in average grade from 1.97% to 1.93%. On the market, KGL added 7.5c (33%) to 30c.

Gold sector activity was dominated by news of Andrew Forrest’s latest move into the metal via a funding deal with London-listed Greatland Gold which controls the Havieron discovery close to Newcrest’s Telfer mine in WA.

As well as acquiring an 8.6% stake in Greatland ,Forrest’s Wyloo Metals has taken four board seats in a deal seen as a way of playing a key role in the development of the mineral-rich Paterson Province in the north-west of WA. In London, Greatland added 0.76 pence (9%) to 8.66p.

Other gold news included:

  • Bellevue de-risking its namesake project in WA by locking in major contracts, helping the stock add 2c to 80c but with Macquarie tipping a future price of $1.20.
  • De Grey continued to attract support from the release last week of a promising pre-feasibility study into its Mallina project in WA adding another 11c to $1.12 and with Macquarie tipping a rise to $1.65, topped by Bell Potter’s forecast of $1.97. De Grey is expected to attract strong interest at this week’s Denver gold conference in the U.S.
  • Gascoyne reported abundant visible gold from the latest drilling at its promising Never Never discovery but eased back by 1.5c to 34c.
  • North Stawell added 1.5c to 15c after reporting grades of up to 12.5g/t over a narrow zone of 1m from a depth of 36c at its Caledonia prospect in Victoria.
  • Navarre Minerals reported an encouraging drill hit of 22.7m at 22.7g/t from a depth of 96m at the Mt Carlton mine in Queensland. On the market, the stock added 0.4c to 4.9c, and
  • Breaker Resources put on 1c to 23c after reporting high grade assays from deep drilling into the Tura lode at its Bombora project with a best hit of 3m at 6.69g.t from 372m.

Lynas led a weaker rare earth sector after reporting an interruption to water supplies at its Malaysia processing facility, shedding 29c to $8.37 while Hastings Technology Metals was down 3c at $4.36.

RareX swam against the tide with a rise of 0.7c to 6.8c after reporting a positive outcome from a scoping study into its Cummins Range project in WA.

Other news and market moves this week included:

  • Kairos Minerals posting a strong rise of 1.5c (48%) to 4.6c thanks to interest in its lithium discovery at Mt York in the Pilbara region of WA, a move which earned the company a “speeding” inquiry from market regulators.
  • iTech Minerals added 12c (38%) to 43c after reporting the production of high purity spherical and flake graphite from its Campoona project in South Australia.
  • International Graphite added to the renewed interest in an important battery metal with a report that it has achieved first production from a graphite pilot project at Collie in WA. On the market, the low-key stock rose by 8.5c (25%) to 41c.
  • Kalium Lakes rose by 1c (22%) to 5.5c after reporting the re-start of production at its Beyondie sulphate of Potash project in WA, and
  • Heavy Minerals reported encouraging results from a study into garnet production at its Port Gregory project WA. The stock added 2.5c to 20c.