Weekly wrap: record close as investors bet on a soft landing

Continuing optimism that the world economy is heading for a soft landing helped to push the Australian share market to a fresh record high to close the week.

Despite some early indecision, the consensus on the US Federal Reserve’s bold move to cut a full 0.5% off official interest rates seems to be that it gives the best chance of the world’s biggest economy to achieve a soft landing,

Certainly, Wall Street eventually warmed to the news of lower rates and charged ahead, taking most other global markets along for the ride.

Despite a mid-afternoon fade out after an early rise, Australian shares recovered to produce another record high Friday close of 8209.5 points, up 17.6 points or 0.2%.

The intraday peak was even higher at 8246.2 points and the gain for the week was an impressive 1.3%.

With rises come valuation worries

Of course, rises are always accompanied by worries and there is no shortage of brokers pointing to overvalued shares such as Commonwealth Bank (ASX: CBA) as investors continue to reinvest their chunky dividends into a market that has been rewarding risk.

The coming week will be a big test of the continuing dividend trade with a peak of $14.4 billion of dividends set to flow into investor’s bank accounts.

Dividend trade will be a big test

The flow of dividends is a double test because 23 more companies will trade without their chunky dividends which will act as a brake on the market while the percentage of that dividend cash that finds its way back on to the market is a vital supply of fresh capital.

Despite hitting a record high, only eight of the 11 market sectors rose, led by consumer discretionary and technology names, with the defensive consumer staples, healthcare and real estate sectors losing ground.

Tech names power on

Some of the tech names powering ahead included family tracking app Life360 (ASX: 360) which zoomed up 5.2% to $18.09 while shares in buy now pay later player Zip (ASX: ZIP) jumped 2.7% to $2.67, continuing a stellar run.

Shares in the big banks were all higher, with National Australia Bank (ASX: NAB) shares a particular feature as they jumped 0.4% to $39.67 to hit a 17-year peak.

Westpac (ASX: WBC) shares were up 0.6% to $33.57, with the only banking disappointment being shares in Macquarie Group (ASX: MQG) which fell 0.2% to $231.17 after climbing as high as $233.91 earlier in the day.

Mining and retailers a mixed bag

Trade in the mining shares remained unconvincing and mixed with BHP (ASX: BHP) shares up 0.4% to $40.34 at the same time as Rio Tinto (ASX: RIO) fell 0.5% to $113.02.

Shares in fellow iron ore miner Fortescue (ASX: FMG) also dropped 0.1% to $17.63.

The retailing sector was also a bit confusing with shares in department store Myer Holdings (ASX: MYR) falling 0.6% to 87c, which was something of a recovery after a sharp slump after it announced a dividend cut and a profit slump for the June year.

Shares in fellow retailer Harvey Norman (ASX: HVN) headed in the opposite direction, up 1.6% to $4.96 despite news it would face another class action alleging “misleading and deceptive” conduct over selling extended warranties to customers.

There were some other share moves on individual company news with Regis Healthcare (ASX: REG) shares rising 1.7% to $5.93 as the market reacted to plans to buy two aged care homes for $35.5 million.

Shares in Namoi Cotton (ASX: NAM) jumped 2.1% to 73c after the company board unanimously recommended shareholders approve Olam Agri’s “fair and reasonable” takeover bid of 75c a share.

Small cap stock action

The Small Ords index rallied 1.78% for the week to close at 3054.5 points.

Small cap companies making headlines this week were:

BPM Minerals (ASX: BPM)

BPM Minerals’ Claw project in Western Australia has delivered high-grade gold results from its second phase of aircore drilling, including 30 metres at 1.84 g/t gold and 5 metres at 7.12 g/t gold.

Positioned near Capricorn Metals’ Mount Gibson gold project, Claw is seen as a promising greenfields discovery within a highly prospective gold corridor.

BPM’s focus is now on obtaining approvals for Phase 3 drilling, expected to begin in late 2024, with assays from the current phase guiding deeper exploration.

Over the past three years, BPM has advanced Claw from exploration application to active drilling, targeting anomalies similar to those at Mount Gibson.

Invion (ASX: IVX)

Invion has announced promising Phase II trial results for its lead cancer candidate INV043, used as a monotherapy with photodynamic technology (PDT) to treat prostate cancer.

The trial demonstrated a solid safety profile with mild side effects and efficacy signals, showing approximately 40% of participants responding positively and 10% achieving complete regression.

The study also revealed that 44% of participants with positive prostate-specific membrane antigen (PSMA) scans registered negative results three months post-treatment.

Invion’s CEO highlighted the potential for INV043 to offer a safer, less invasive treatment alternative to conventional prostate cancer therapies.

Bindi Metals (ASX: BIM)

Bindi Metals has acquired the Lisa and Mutnica antimony-gold-copper projects in Serbia‘s Tethyan magmatic belt from Apollo Minerals (ASX: AON).

Historical data from Lisa confirms high-grade antimony production, with approximately 60,000 tonnes of ore grading up to 20% antimony mined between 1932 and 1951, while Mutnica has shown assays of up to 4.5% antimony.

Bindi’s chair Eddie King highlighted the strategic importance of these antimony-rich assets for Europe’s supply chain, especially for defense and renewable energy technologies.

To support exploration and drilling, Bindi has raised $2 million through a capital placement with sophisticated investors.

Antipa Minerals (ASX: AZY)

Antipa Minerals has upgraded the mineral resource estimate (MRE) for its Minyari Dome gold-copper project in Western Australia’s Paterson Province to 47.6 million tonnes, containing 2.3 million ounces of gold and substantial copper, silver, and cobalt resources.

This represents a 33% increase in gold resources and a higher resource confidence, with 68% of the MRE now in the indicated category.

The project, comprising seven deposits, has enhanced standalone development potential, supported by a scoping study outlining scalable open-pit and underground operations.

Antipa’s managing director highlighted the project’s increased value amidst high gold prices and growing strategic importance within the Paterson Province.

Aurum Resources (ASX: AUE)

Aurum Resources has reported its best gold intercepts to date from a second round of diamond drilling at the BM Target 1 within the Boundiali project in Côte d’Ivoire, including a standout result of 11.46m at 6.67 grams per tonne gold.

Additional highlights include 45m at 0.93g/t gold and 10m at 2.84g/t gold, with mineralisation believed to remain open along strike and down dip.

The company is running an aggressive 10,000m per month drilling program, aiming to complete 45,000m this year.

Aurum is on track to deliver a maiden mineral resource estimate for Boundiali by year-end, supported by its $20 million cash balance.

The week ahead

This week should show comprehensively the great divide between the United States and Australia as the Reserve Bank Board meets on Monday and Tuesday.

RBA Governor Michele Bullock has made no secret of the fact that she wants to wait until next year to ensure inflation falls sustainably before cutting official interest rates and there is little chance that the 0.5% fall in US rates will change her mind.

That will leave our rates steady at the 12-year high of 4.35%, piling the pressure on to heavily indebted households and companies that have been enduring these rates since November 2023.

Good news on inflation?
There is likely to be some good news with the arrival of Australia’s inflation numbers on Wednesday with the monthly consumer price index likely to fall to 2.7% in August from a year earlier, lower than July’s 3.5% annual rate.

However, the RBA will want to continue to see CPI falls before it gathers the courage to flick the switch to a cutting cycle, something a host of other international central banks have already done.

There is also a forest of US economic news out this week with some of the highlights being home prices, consumer confidence, home sales, economic growth and income and spending all of which will hopefully confirm that the US Federal Reserve hasn’t left it too late to cut interest rates.

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