Australian markets have opened with a dip this morning, following Wall Street’s iffy performance on Friday that saw all three major indices head into the red on Friday.

It’s all been a little bit volatile as the morning progressed, however – the benchmark briefly stuck its head above the trenches to hit +0.13% but has since regressed back under break-even as we head into lunch.

The big news for the market this morning (for some of our Small Cap heroes, at least) is the  decision from the Australian Therapeutic Goods Administration to greenlight down-scheduling MDMA and psilocybin to Schedule 8 “Controlled Medicines” from July 1st 2023.

The change will see Australia become the first market in the world to recognise psychedelics as medicines and paves the way for the use of psilocybin for the treatment of treatment resistant depression and MDMA for PTSD outside of a clinical trial environment.

The two substances are currently Schedule 9 “Prohibited Substances”, because they are (I’m told) enormous amounts of fun to consume, and having fun in any capacity is a Terrible Thing so you’re not allowed to do it. #JustSayNo.

Our man Eddy Sunarto has all the details in this excellent explainer – but for the tl;dr crowd, here are the basics: Both substances will need to be prescribed by a qualified psychiatrist, and “used therapeutically in a controlled medical setting”.

It should be noted that neither nightclubs or “on a beanbag in your cousin’s basement with a worn copy of Phish’s seminal 1989 release Junta on the turntable” are considered controlled medical settings. Just so we’re clear.

That said, while supporters of the move are no doubt naturally stoked, those who are opposed to the idea of such drugs making their way into mainstream medicine can rest assured that the controls around them mean that regulators will be keeping a very tight lid on how and when they’re prescribed.

And that means Australia is still years away from seeing MDMA or magic mushrooms available to every tie-dyed doof Wookiee who wants to get loved up and wander the streets with pupils the size of dinner plates, forcing inappropriately long, foul-smelling hugs to absolute strangers.

 

TO MARKETS

The benchmark has a serious case of the wanders this morning, meandering around the break-even mark but heading into the lunch break on the wrong side of happy, down 0.12%.

Leading the charge this morning is the Materials sector, adding 0.93% with Energy hard on its heels on +0.64%, however Real Estate (-1.35%), Industrials (-0.74%) and Consumer Discretionary (-0. 67%) are weighing on the market.

And despite solid gains from a handful of psychedelic pharma companies, Health Care is also lagging, down 0.35%.

The Materials sector has received a big boost from major miner Newcrest (ASX:NCM) this morning, with the $22 billion market capper surging more than 11% today on news that it’s received a conditional and non-binding indicative proposal from Newmont Corporation to acquire 100% of the issued shares of Newcrest by way of a scheme of arrangement.

The updated offer from Newmont would have shareholders receive 0.363 Newmont shares for each Newcrest share – an improvement on an earlier offer which the Newcrest board roundly rejected.

 

NOT THE ASX

In the US, markets took a downward turn despite previously buoyant sentiment in the wake of US Fed chief Jerome Powell’s post-interest rate hike comments.

Wall Street headed south when US job numbers shocked everyone by being much stronger than expected, which investors took to be a sign that despite the Fed’s more dovish outlook, interest rates will once again continue to rise.

As Earlybird Eddy Sunarto reports, despite the seemingly endless announcements of Big Tech mass layoffs, Americans haven’t been this employed in more than half a century. The unemployment rate fell to 3.4%, the lowest since 1969.

“Everyone was expecting the economy to start to feel the impact of those earlier rate increases, but right now that doesn’t seem to be the case,” said OANDA analyst, Edward Moya.

Stocks began to dip after the data were released, with the S&P 500 eventually closing lower by 1% and tech-heavy Nasdaq by 1.6%.

For the S&P 500, it was its fourth weekly gain in five weeks as investors recalibrated their positions for a peak inflation world.

As the US took the weekend to digest the implications of America’s chronic employment problem, trouble between Washington and Beijing reached a sudden peak when the US sent an F-22 into the skies over US territory to shoot down a Chinese “weather balloon”.

The balloon was, presumably, sent by China to find answers to highly  important weather-related questions, like “How cold will a nuclear winter really be?”

The presence of the balloon in US skies had caused no small quantity of chagrin among some US residents, with local officials taking to social media to beg residents not to start taking matters into their own hands by trying to shoot the balloon down themselves.

The balloon was eventually brutally slain by the fighter jet, exploding in a rather desultory manner, like the world’s least amazing gender reveal.

“Congratulations! It’s an International Diplomatic Incident!”

Beijing was understandably quite miffed that their Glorious Weather Surveillance Inflatable was shot down, probably because firing a missile at a balloon seems to be a slightly disproportionate response, and also because that balloon was probably really, really expensive.

Chinese markets have reacted badly, tracking the weather balloon down – Shanghai has fallen 0.91% and the Hang Seng has slumped 2.17% in early trade.

Meanwhile, in Japan, the Nikkei has risen 0.85% in early trade, on news that Domino’s Pizza Japan has released a pizza that tastes just like a McDonald’s Big Mac, lowering the average life expectancy in Japan by about 5.7 years because everyone there is apparently going to die of a heart attack.

In crypto, the market retreated a bit over the course of the past 24 hours, with the majors down around 2.0% and the overall market cap dipping to US$1.11 trillion.

But there’s been an interesting development late last week in the form of a Federal Government consultation paper, asking for input from interested parties on how to shape any regulatory plans for crypto in Australia.

As always, Rob “Regulation is for Wimps” Badman has that topic, and more, covered in today’s Mooners & Shakers, which you should probably check out because it’s pretty cool.

 

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for February 6 [intraday]:

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The morning’s biggest climber Emyria (ASX:EMD) says the company is well-placed to capitalise on the announcement, having identified “numerous suppliers of GMP-MDMA  which is ‘patient-ready’, and developed a comprehensive Phase 2B clinical trial protocol for MDMA-assisted therapy.”

The company has secured the rights to a University of Western Australia (UWA)’s library of more than 100 novel MDMA analogues, and have together launched an MDMA-inspired drug discovery program.

Investors are most definitely feeling the love, and Emyria is up 57.9% in early trade this morning.

Little Green Pharma (ASX:LGP) is also swinging higher on the down-scheduling news, announcing that it is also well-placed to make a serious play in that particular pharmaceutical space through its psychedelics focused subsidiary Reset Mind Sciences.

“The announcement by the TGA is truly ground-breaking in the field of psychedelics and I welcome their decision,” Reset Mind Sciences CEO Shaun Duffy said.

“There is a significant body of research emerging in Australia and globally for the use of psychedelics to treat mental health conditions and this decision allows the use of these drugs for the mental health conditions that have demonstrated the most potential in the research.”

LGP is up nearly 25% so far today.

And finally, one last health stock on the rise is Imagion Biosystems (ASX: IBX), which has had some great news from an independent blinded review by a panel of expert breast cancer radiologists which has corroborated previously reported positive findings for the company’s MagSense diagnostic tech.

The company says that the radiologists confirmed that the “MagSense HER2 imaging agent produces a change in image contrast and that the contrast in nodes highly suspicious for tumour is distinctly different from the MR image contrast seen in non-involved nodes”.

“The outcome of the independent review is welcome news, indeed,” Imagion Biosystems CEO Bob Proulx said.

“We now have a clear indication that our MagSense magnetic nanoparticle technology could work with the existing medical imaging infrastructure to provide the clinical benefit to breast cancer patients we have been aiming for.

“This takes a lot of the technical risk out of the future and will significantly facilitate market entry by eliminating the need to design, make, sell, and support new machinery.”

As lunchtime approaches, Imagion Biosystems is trading 37.5% higher.

 

ASX SMALL CAP LOSERS

Here are the most-worst performing ASX small cap stocks for February 6 [intraday]:

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