Weekly review: Aussie market finally decides to chase US markets higher

Aussie market US ASX April 2021 record high
WEEKLY MARKET REPORT

The Australian share market is officially on the move upwards after a solid month in which it tentatively chased record closes in the United States to record its fourth straight weekly rise of 1%.

Initially the market wasn’t totally convinced by the US moves and fell at open but as the day wore on it added 0.1% or a skinny 4.9 points on Friday to hit a post-pandemic high of 7063.5.

Continuing positive news on the economy as it bounces back from the pandemic slump is finally convincing even the most sceptical, along with ultra-dovish interest rate settings which have produced a strong market for shares and promising higher than cash returns.

All-time record now a possibility in short term

The next target, of course, is the all-time record of 7192 points reached way back in 20 February 2020 and that is certainly a short-term possibility now.

It was a great week for technology companies which regained some upward momentum, with Afterpay (ASX: APT) up 4.9%, Zip Co (ASX: Z1P) 12.9% higher, Xero (ASX: XRO) rising 5.9%, Altium (ASX: ALU) gaining 8.4% and NEXTDC (ASX: NXT) up 4.5%.

Investors seem to have become more sanguine about the outlook for inflation and interest rates, with a week of strong data that might have prompted concerns earlier now being accepted readily and priced in, as evidenced by softening government bond yields.

Not even Australia’s poor vaccine rollout seemed to cause much pause as the strong start to the US earnings season was seen as a bullish sign.

Energy still on the nose

Not everything was positive though, with Origin Energy (ASX: ORG) shares down more than 8% to a five-month low after it lost an arbitration on the price of gas it buys from Beach Energy (ASX: BPT), which added 4.6%.

Energy stocks other than Beach were generally lower, with the index down 1.48%.

Financials and utilities were also lower but property rose strongly, up 1.52%.

James Packer strikes a deal

James Packer’s Consolidated Press Holdings struck a deal with the NSW Independent Liquor & Gaming Authority, agreeing that it will play no role in how Crown Resorts (ASX: CWN) is run for the next three-and-a-half years.

That decision not to appoint directors to Crown comes after the damaging Bergin Inquiry which found that Mr Packer’s influence was a reason Crown was unfit to run its new Sydney casino.

The good news for Packer is that he won’t be forced to sell down his 37% stake in Crown, which takes some of the pressure off.

Coca-Cola Amatil (ASX: CCL) shareholders voted in favour of the company’s takeover by Coca-Cola European Partners, which will now likely lead to Coca-Cola shares being suspended from trade after April 21.

Small cap stock action

The Small Ords index gained 1.44% this week to close on 3331.6 points.

ASX 200 April 2021 Small Ords chart
ASX 200 vs Small Ords

Small cap companies making headlines this week were:

Galan Lithium (ASX: GLN)

This week, Galan Lithium revealed a review of historic CSIRO and exploration data for the Greenbushes South project has enhanced its prospectivity.

The data includes laterite geochemistry and other studies and has led to the identification of anomalies across the project.

To build on this information, Galan will undertake mapping, soil and rock chip sampling with the objective of confirming historical data and firming up drill targets.

3D Metalforge (ASX: 3MF)

Recent ASX debutant 3D Metalforge has successfully tested and commissioned its latest hybrid wire arc printer for metal.

The company says the printer is capable of faster, larger and metal printing including multiple parts simultaneously.

Metalforge said these capabilities enable “significant flexibility” to produce larger and high strength parts in a range of materials at lower costs.

TNG Ltd (ASX: TNG)

Aspiring critical minerals producer TNG has teamed up with Singapore’s V-Flow Tech to commercialise vanadium redox flow batteries for remote sites in regional Australia.

Under the deal, TNG will supply high-purity vanadium electrolyte from its Mount Peake vanadium-titanium-iron project in the Northern Territory.

V-Flow will produce the battery systems comprising TNG’s vanadium chemicals with both parties planning to become a commercial VRFB supplier across Australia.

Medlab (ASX: MDC)

It was more positive news this week for Medlab with its NanaBis cannabinoid treatment for cancer-induced bone pain.

An interim analysis of the first cohort of 119 patients who have completed at least six months of taking NanaBis reported a 55% decrease in pain.

The patient cohort also described significant quality of life improvements and better sleep, mood and general activities.

All up, Medlab has now recruited 801 people for the observational study out of a planned 2,000 participants.

Fatfish Group (ASX: FFG)

Ahead of its planned BNPL rollout in South East Asia, Fatfish group has entered into a binding agreement to acquire 85% of Malaysian company Forever Pay Sdn Bhd for $870,000.

Fatfish said the deal will allow it to utilise Forever Pay’s lending licence to shoulder into the region’s retail BNPL business.

Using this licence, Fatfish will launch a retail BNPL service as well as other digital financing solutions. Additionally, Fatfish will use its existing technology to enhance Forever Pay’s operational ability.

Impact Minerals (ASX: IPT)

It was a big news week for Impact Minerals that finished with the company revealing its target generation strategy for its three WA projects – Arkun, Beau and Doonia.

The three greenfield assets are believed prospective for PGE-nickel-copper and gold, with field work due to begin next month at Arkun and Beau to gather more data and assist with defining drill targets.

At the start of the week, Impact revealed drilling was advancing at the Aspley target within the Commonwealth project in NSW’s Lachlan Fold Belt. At Aspley, nine RC holes have been completed to test a number of anomalies.

Then, over at the company’s Broken Hill project, assays from the Little Broken Hill Gabbro target have confirmed its prospectivity.

The week ahead

There are plenty of data points to look forward to in the coming week both in Australia and overseas, with most set to reinforce the bullish trend of improving corporate performance and potential.

Underpinning the week will be US corporate results, which brokers expect to increase around 25% for the March quarter.

Some of the heavyweights that will release their results include Coca-Cola, Kaiser Aluminium, Snap-On, United Airlines, Harley-Davidson, Johnson & Johnson, Lockheed Martin, Moelis, Netflix, Procter & Gamble, Halliburton, Whirlpool, AT&T, Intel, Mattel, Southwest Airlines and Kimberly-Clark to name a few.

The real-life performance of these household names will play a big part in setting the tone for the booming US markets and, by proxy, those markets caught in that updraft including Australia.

Locally, Australian Reserve Bank board meeting minutes and retail spending will be a major influence, given the importance of dovish monetary policy and the recovery in retail spending patterns.

Other things to watch out for include measures of purchasing manager and factory activity, consumer confidence, provisional travel statistics for March, and household spending intentions.

This week’s top stocks

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