Market wrap: Aussie market falls down the Jackson Hole

For this entire week the Australian share market has been trading in an information vacuum.

We all knew that the world’s most important central banker, Jerome Powell, would be giving an internationally vital speech at the Jackson Hole symposium for central bankers but we also knew that the Australian share market would be safely tucked into bed for the weekend by the time the US Fed chief got to his feet in Wyoming.

So, the market was left to trade up and down on the latest gossip about what might be said – following hopeful rises on Wall Street with half-hearted enthusiasm but then selling off as ten-year US Bond yields rose as high as 4.33%.

Wall street inspires negativity

Thursday trade on Wall Street was particularly gloomy despite an impressive profit report from chip maker Nvidia, with the S&P 500 down 1.3% – its biggest fall for three weeks that nearly wiped out the week’s gain.

Adding to the weak lead was a 1.1% fall in the Dow Jones and a 1.9% plunge on the Nasdaq, leaving Australian investors little choice but to follow them down what could well be called the “Jackson Hole’’.

Australian investors will need to wait until next week to get a chance to react to the Jackson Hole speech but by then the US reaction will be crystal clear and following the US lead either up out of the hole or further down it will be the only logical move.

Another weekly drop

Trading in a vacuum on Friday, the Australian market did the only logical thing and followed the US lead down, although by the close the ASX 200 hadn’t fallen quite as hard, shedding 66.9 points or 0.9% to 7115.2 points and it is highly likely to follow the same lead on Monday.

As you would expect with such a solid drop – the lowest close for six weeks – the only positive sectors were in the defensive consumer staples and consumer discretionary stocks, with information technology stocks slumping a heavy 2.5%, followed by the materials (1.55%), Energy (1.44%) and utilities (1.25%).

Even amid such a downward plunge which brought up a 0.4% fall for the week there were signs of individual positivity with the diversified Wesfarmers (ASX: WES) shares impressing with a 3.2% rise.

Wesfarmers impresses

The rise was hard won, with the group’s retail arms largely performing well, particularly Kmart and Officeworks but also the slowing Bunnings and to some extent the troubled Target.

Overall revenues rose 18.2% to $43.6 billion while profits were up 4.8% to $2.47 billion, with Kmart and Officeworks delivering strong returns for the year.

Bunning’s post-pandemic growth has slowed to just 1.2% but that is still some feat after the hardware and home improvement giant grew sales by a stellar 40% during the time of global uncertainty.

Other large cap stocks to swim upwards against the tide included Qube Holdings (ASX: QUB), Endeavour Group (ASX: EDV), Medibank Private (ASX: MPL) and Woolworths (ASX: WOW), although they were rare beams of light among a sea of red.

Caught up in the slide were most of the energy stocks, with the sector falling 2.2% for the week, while the tech stocks ended the week just 1.2% higher after rallying hard early in the week but enduring a hefty 2% fall on Friday alone.

Pilbara plunges despite massive profit rise

Shares in Pilbara Minerals (ASX: PLS) had a bad day, down 8%, despite the company’s impressive full-year net profit, which jumped fivefold to $3.4 billion.

Accent Group (ASX: AX1) shares rose an impressive 17.1% after the company reported a 24% boost in full-year sales while shares in Ardent Leisure also rose 4.7% after it reduced its full-year loss by 71% to $17 million.

Insurer IAG (ASX: IAG) was in the wars, with its shares down 1.8% after two of its subsidiaries have been targeted for legal action by the Australian Securities and Investments Commission (ASIC) for having misled customers about the loyalty discounts available for some home insurance products.

Small cap stock action

The Small Ords index was steady this week, adding 0.06% to close at 2809.0 points.

Small cap companies making headlines this week were:

4DS Memory (ASX: 4DS)

Semiconductor company 4DS Memory announced positive results from tests on its Fourth Platform Lot wafer, developed in collaboration with imec, a leader in nanoelectronics and digital technologies.

The new memory system incorporates 4DS’s Interface Switching ReRAM technology and showed read and write speeds equivalent to DRAM, with an endurance of over 2 billion cycles.

These results validate 4DS’s strategy and its decision to duplicate imec’s custom testing hardware at its Fremont facility.

4DS’s board will consider these results in their upcoming strategic planning, and additional analyses are planned, including an early October meeting with imec to discuss future development options.

PharmAust (ASX: PAA)

PharmAust’s lead drug candidate, monepantel (MPL), has shown promising interim results in a Phase 1 clinical trial for treating motor neurone disease and amyotrophic lateral sclerosis (MND/ALS).

The study found that 11 out of 12 patients displayed no significant change in neurofilament light chain (Nfl) protein concentrations in their plasma, a marker associated with the progression of MND.

Executive chairman Dr Roger Aston stated that MPL has the potential to aid MND therapy development and could potentially receive orphan drug designation if the trial proves successful.

According to research, MND affects over 350,000 people worldwide and has a global addressable market of approximately $5.6 billion per year.

RareX (ASX: REE)

RareX has released an enhanced scoping study for a three-stage, phosphate-enabled rare earths development at Cummins Range in Western Australia.

The project outlines a low-risk, low-capital expenditure approach with an 18-year mine life, starting with direct shipping ore (DSO) as the initial stage.

Stage 2 involves a $304 million mid-sized flotation beneficiation plant to produce phosphate-rare earth mineral concentrate, which is essential for technology and clean energy sectors.

Chief executive officer James Durrant said the study exceeded expectations and revealed that the board has approved the start of definitive and pre-feasibility studies for the project’s next stages.

Raiden Resources (ASX: RDN)

Raiden Resources has finalised its due diligence for acquiring an 80% interest in Welcome Exploration Pty Ltd, which owns a portfolio of lithium-rich tenements near Azure Minerals (ASX: AZS)’s Andover lithium project in the Pilbara region.

The acquisition includes five tenements that are adjacent to both Raiden’s own Roebourne lithium project and Azure’s Andover discovery.

Shortly after completing the due diligence, Raiden reported promising preliminary results from new mapping and rock sampling programs in the Andover South project.

The company’s managing director Dusko Ljubojevic indicated that the widths of pegmatites found suggest the potential for a significant lithium discovery, with further mapping and sampling planned for other areas.

Neometals (ASX: NMT)

Primobius GmbH, a joint venture between Neometals and German firm SMS Group, has received a purchase order from Mercedes-Benz to supply a lithium-ion battery recycling plant capable of processing 10 tonnes per day.

The plant, to be installed at Mercedes’ new Kuppenheim facility in Germany, will recycle lithium-ion batteries into materials like lithium, cobalt, and nickel, which will then be reused in Mercedes’ electric vehicles.

This marks Mercedes-Benz’s entry into lithium-ion battery recycling, aligning with its commitment to carbon neutrality and focus on electric vehicles.

Neometals’ managing director, Chris Reed, described the purchase order as a milestone, stating that installation will begin later this year, with the facility expected to be operational by early 2024.

The week ahead

We are in for a week full of data releases with the RBA Governor-designate, Michele Bullock, giving a speech on Tuesday that will be carefully scrutinised.

Other data releases include retail trade figures, monthly inflation, business investment, home prices and lending indicators.

Overseas some of the data includes US economic growth, US personal income, spending and inflation and US nonfarm payrolls and Chinese purchasing manager surveys.

It is a big final week for the Australian company profit reporting season too, with some of the many companies reporting including Appen, Fortescue Metals, Lynas Rare Earths, Mesoblast, Adbri, Clinuvel Pharmaceutical, Silver Lake Resources, Star Entertainment, Brambles, Flight Centre, Atlas Arteria, Sandfire Resources and Harvey Norman.

Traditionally the tail end of the results season is when some companies try to reluctantly report disappointing news so it is worth keeping an eagle eye on the remaining results.

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