Market wrap: Aussie dollar shines but share market slips
WEEKLY MARKET REPORT
Once again, the Australian share market marked time as the dominating miners and banks once again ignored positive offshore leads and lost value.
Admittedly there was trepidation about how the US jobs figures would play out after the market close but still the benchmark ASX 200 index finished the day down 0.1% or 9.5 points to 7822 points.
Over the week, however, the picture was much brighter with the index up 0.7%, with coal and gold stocks being two of the bright spots.
While none of the ASX’s 11 sectors moved more than 1% on Friday, the materials sector was the worst of them, down 0.5% after having lost 1.9% in the past month alone.
Fading iron prices cause miners to wilt
Once again, a 2% drop in iron ore futures was the culprit, sending shares in BHP (ASX: BHP) down 0.9% to $44.39 while Rio Tinto (ASX: RIO) shares dropped 1.1% to $122.87.
Even the big banks were mostly weaker, with National Australia Bank (ASX: NAB) shares shedding 1.2% to $35.33 while the big Kahuna and one of the past financial year’s top performers, Commonwealth Bank (ASX: CBA) saw its shares slide 0.6% to $127.10.
Defensive stocks shine
Defensive stocks continued to work well as a safe haven with the healthcare sector up 0.7% courtesy of solid gains from the heavy hitters such as CSL (ASX: CSL), Cochlear (ASX: COH) and ResMed (ASX: RMD).
Over the past month the healthcare index has added 2.5%, which has helped to push back against the falls from the big miners and banks.
If there is a silver lining to the possibility of the Reserve Bank considering another interest rate rise while much of the rest of the world is cutting official interest rates, it has arrived in the form of a rising Australian dollar with the currency rising to as much as US$0.674.
Santos speculation quelled
Among notable individual stock moves, denials out of Saudi Arabia that global oil giant Saudi Aramco was planning a bid for Santos (ASX: STO) acted like a dose of cold water, sending shares down 0.1% to $7.99 after they had jumped a hefty 4.2% on Thursday after news reports tipped a bid was imminent.
Shareholders in fund manager Magellan (ASX: MFG) enjoyed a rare day in the sun with shares rising 4.7% to $9.50 hot on the heels of a 6.1% rise on Thursday.
The exuberant reaction came not from any fantastic news except that flat July inflows showed that at last investor cash had stopped leaving the company as investors regained some faith.
Reaction to a $150 million share placement priced at $1.37 for West African Resources (ASX: WAF) turned around a little with a 12% slump on Thursday being replaced by a 5.1% rise on Friday.
Gold prices also continued to firm on speculation that US interest rates were set to start falling this year, making the yellow metal a better proposition.
Small cap stock action
The Small Ords index rose 0.49% for the week to close at 2987.5 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
iTech Minerals (ASX: ITM)
iTech Minerals revealed a 300% increase in the mineral resource estimate for its Eyre Peninsula graphite project in South Australia, now totalling 35.2 million tonnes at 6% total graphitic carbon (TGC).
The higher confidence measured and indicated category has risen to 22.9 million tonnes at 5.3% TGC, representing 65% of the new resource.
The upgrade follows 12 months of extensive drilling, with significant findings at the Lacroma target, and positions iTech to advance development and address anticipated global graphite shortages.
iTech achieved another milestone this week by producing 3.4 kilograms of 94% bulk graphite concentrate from the nearby Lacroma project using conventional flotation processes.
The Lacroma deposit, located near iTech’s proposed graphite processing plant, demonstrated excellent metallurgical properties consistent at larger scales.
At its Reynolds Range project in the Northern Territory expedited gold assays have returned up to 182 grams per tonne.
The results indicate great potential for high-grade, low-sulphide gold-style vein systems at the Sabre and Falchion prospects, as well as gold associated with copper mineralisation at Scimitar and Reward.
Waratah Minerals (ASX: WTM)
Waratah Minerals’ exploration strategy for the Lachlan Fold Belt in New South Wales has yielded high-grade results from its Spur project.
The Spur project is located near significant mining operations such as Newmont’s Cadia Valley and Evolution Mining’s Cowal gold project.
Waratah’s drilling program aims to uncover epithermal-porphyry mineralisation similar to nearby projects, with initial results from eighteen RC drill holes indicating a zone of shallow high-grade mineralisation.
Notably, hole 7 produced significant results, including 89m at 1.73 g/t gold and 0.08% copper from 115m depth. Additional drilling is planned to further explore these promising findings.
AML3D (ASX:AL3)
AML3D Limited has sold a 2600 Edition ARCEMY system to Laser Welding Solutions (LWS) for approximately $1.1 million.
The system, which has been under lease since September 2023, supports LWS’s Nickel Aluminium Bronze (NAB) alloy qualification program for the US Navy.
The purchase order from BlueForge Alliance includes a one-year service and maintenance contract, aligning with AML3D’s strategy to establish recurring revenue streams.
The sale marks a major progress in embedding AML3D’s technology within the US Navy supplier network and is part of a broader US ‘Scale-up’ strategy targeting the defence sector.
Mt Malcolm Mines (ASX: M2M)
Mt Malcolm Mines has reported high-grade assay returns, including 111 grams per tonne and 65.66g/t gold, from new grade control drilling at its Golden Crown prospect in Western Australia.
The drilling results have boosted confidence in the upcoming bulk sampling and the overall mineralisation at Golden Crown, according to managing director Trevor Dixon.
Historical mining activity at Golden Crown, which produced 1,720 ounces between 1899 and 1904, supports the project’s potential.
February’s 522-metre RC drilling program delineated a well-defined mineralised area, targeting a 50m by 15m corridor for bulk sampling.
Recent results indicate significant high-grade gold mineralisation, with an average gravity gold recovery of 63.4% from initial sample processing studies.
Peak Minerals (ASX: PUA)
Peak Minerals is expanding globally by acquiring an 80% interest in uranium and rutile projects in Cameroon, specifically the Kitongo and Lolo uranium projects and the Minta rutile project.
This acquisition is supported by a $1.7 million capital raising to fund the purchase of Minta Resources, African Future Minerals, and Rafia Mining.
These projects cover extensive exploration permits and have shown promising historical results. Peak plans to conduct thorough due diligence and initial exploration, including geological mapping and radiometric surveys, to define potential drill targets.
Additionally, Phillip Gallagher, with significant West African mineral exploration experience, will join Peak’s board as a non-executive director to provide local operational insights.
The week ahead
The coming week is a big one as US Federal Reserve chair Jerome Powell delivers the influential central bank’s semi-annual monetary policy report to the US Senate Banking and Housing Committee.
That appearance comes before the release of US consumer price data for June on Thursday.
The US Fed has appeared to become more certain that inflation is falling with the May numbers showing that the core consumer price index fell for the second month running.
While the Fed would like to see a few months of falls before moving interest rates lower, investors have become more confident that rates will fall thus year.
The Reserve Bank of New Zealand is expected to hold rates steady when it meets on Wednesday while inflation and international trade data emerging out of China will be closely monitored.
Here in Australia the main announcements to watch for are new housing finance commitments, with particular interest around the growth of investor approvals which have been rising recently.
Other releases include consumer and business confidence surveys which might also give some clues about whether prices are continuing to firm as sales and profits lose ground.