Market wrap: Aussie market shows resilience after terrible week
WEEKLY MARKET REPORT
The Australian share market showed a little bit of resilience after closing flat by the end of trading on Friday, offering some consolation after the worst weekly performance for almost a year.
By the close of trade, the ASX 200 was just 2.1 points higher at 7148.1 points, a rise of just 0.03% as strength in the share prices of miners, property trusts, healthcare and technology overcame weakness in other sectors.
Seven of the 11 sectors were down with the worst being communications, discretionary, financials and energy with Telstra (ASX: TLS) shares down 3.2%, Super Retail Group (ASX: SUL) shares off 6.9% and Wesfarmers (ASX: WES) shares down 0.5%.
Miners rise against the tide
Miners The big miners struck back with BHP (ASX: BHP) shares up 1.4%, Fortescue Metals (ASX: FMG) shares up 1% and Rio Tinto (ASX: RIO) shares up 0.9% as the price of iron ore rose.
Some of the property trusts were stronger with Goodman Group (ASX: GMG) shares rising 7.3% on broker upgrades while Dexus (ASX: DXS) shares were up 2.8% after announcing a property sale.
Other blue chips to show some positive signs included Cochlear (ASX: COH) shares up 4.3% and Qantas (ASX: QAN) shares up 0.6%.
Magellan jumps hard
One of the more impressive performers was local fund manager Magellan (ASX: MFG), with shares spiking an extraordinary 13% after it outlined a special dividend, better fund performance and cost cuts to show it has a strong future after instability at the top and falling assets under management led to share price losses in 2022 and 2023.
The small amount of Australian market resilience and recovery followed on from a fall in the US market accompanied by a rise in US bond yields and significant concern about China’s economy and financial system.
While once China came to the rescue of the Australian market in tough times as a big customer of our minerals, it is now acting as an anchor, with the Australian dollar weakening against most currencies as a result and reaching US64c.
Ten-year US bond yields rose 12bps to 4.24% after trading as high as 4.32% this week, adding to headwinds to global share markets.
Small cap stock action
The Small Ords index fell 2.21% for the week to close at 2807.3 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Orexplore Technologies (ASX: OXT)
Orexplore Technologies secured a $1.55 million contract to implement its mineral scanning technology at the Carrapateena mine in South Australia, recently acquired by BHP from OZ Minerals.
The technology, called Orebody Knowledge, enhances mining results by addressing rock mass characterisation, smart domaining and geometallurgical issues, which improves mining outcomes.
The deal with BHP involves digitising drill core and samples at Carrapateena to boost mining and processing efficiency.
Orexplore is a global mineral technology firm, with labs in Stockholm, Perth, and Santiago, focusing on enhancing the mining value chain through innovative tech solutions.
Surefire Resources (ASX: SRN)
Surefire Resources has entered into an agreement with Saudi Arabia’s Ministry of Investment to process high-grade ore from its Victory Bore project in Western Australia.
The memorandum outlines the transportation of high-grade vanadium concentrate from Victory Bore to Saudi Arabia for downstream processing into high-value products.
Under the agreement, the Ministry will assist Surefire with the import and processing of mineral concentrates and will help identify suitable plant locations and funding.
Barton Gold (ASX: BGD)
Barton Gold has completed a regional seismic program at its historic Tarcoola gold project in South Australia, with contractor HiSeis laying over 40km of geophones.
The program’s goal was to identify mineralised structures similar to the Perseverance Mine at Tarcoola.
The exploration, backed by a $4.73 million funding, aims to produce a high-resolution image of sub-surface structures, enhancing the understanding of the historically under-explored area.
Historical data and recent tests suggest significant untapped potential at Tarcoola, with Barton looking forward to drilling results later in 2023 and into 2024.
The company’s shares also started trading in the United States on the OTCQB (OTCQB: BGDFF) and the German Frankfurt exchange under code (FRA:BGD3).
Mayur Resources (ASX: MRL)
Mayur Resources has secured a US$40 million investment from British company Vision Blue Resources for a 49% equity stake in its Central lime project in Papua New Guinea.
The project, located near PNG’s capital, will establish a new manufacturing sector in the country, offering hundreds of jobs and making PNG self-sufficient in lime production.
Additionally, the Central Lime project aims to be the first carbon-neutral lime producer in the Asia-Pacific region, catering to the increasing demand from the critical minerals and battery metals sectors.
Post-investment, the project is expected to start generating revenues in 2024 and have a 30-year life span, with an estimated total revenue of over A$1.16 billion.
Classic Minerals (ASX: CLZ)
Classic Minerals poured its first gold bar from the Kat Gap project in Western Australia, marking a transformative step for the company.
The accomplishment follows the recent commissioning of the Kat Gap plant, which utilises Gekko Systems’ advanced gravity separation circuit, a system the company invested in to optimally process high gravity gold concentration ore.
Additionally, the company set up a 2 MW power plant and obtained a second water bore license to support the Kat Gap project’s operations.
Classic owns all gold rights on the Kat Gap tenements and plans to further develop its processing facility, aiming to achieve an increased throughput in the upcoming stages.
The week ahead
There is little doubt that central bankers have strongly asserted their dominance in economic affairs after the phase of slashing interest rates to incredible lows and then ramping them up in record time.
This week on Thursday they gather in large numbers for the Federal Reserve’s Economic Policy Symposium in Jackson Hole, Wyoming, with the global interest rate outlook looking decidedly interesting.
Last year, you might remember, Fed Chair Jerome Powell put on his best sour face and warned of economic pain ahead as higher interest rates slowed growth and brought down inflation.
This year the outlook is quite different, with inflation trending down in the US but the economy still fairly strong so it will be interesting to see if Powell keeps up his stern countenance or lets out an occasional smile.
He is unlikely to foreshadow another interest rate rise for September but is unlikely to park the threat of further rate rises yet, even if the Fed is much closer to the end of rate rises than the beginning.
It is difficult to understate the global significance of this gathering with central bankers around the world likely to take their cue from the world’s leading economy.
Otherwise, we are in for a fairly quiet week of economic data or central bank commentary with consumer confidence, new business numbers and jobs data the main local features.
In the US, Japan, Europe and Australia there are purchasing manager surveys across the manufacturing and services sectors.
There are also US readings on new and existing home sales, manufacturing activity and durable goods orders.
It is a massive week in prospect for the local company profit reporting season with 285 companies reporting including a string of heavyweights such as IAG, BlueScope, Ampol, BHP, Coles, Woodside Energy, Woolworths, Domino’s, Qantas, Nine Entertainment, Medibank, Whitehaven Coal, South32, Wesfarmers and Pilbara Minerals.
Once again, a range of companies will start to trade ex-dividend which can help to supress the overall market.
In the US the profit reports are starting to wind down with the main feature this week being a string of results from retailers such as Macy’s, Lowes, Foot Locker, Kohl’s, Abercrombie & Fitch, Nordstrom and Gap.