Weekly review: Aussie market takes a step forward amid offshore woes

Aussie market ASX October 2021 offshore woes
WEEKLY MARKET REPORT

It was a tough battle but the Australian share market finally took a forward step despite a range of global worries.

By the end of the week the ASX 200 finished at 7320.1 points, up 1.9% for the week, after the US debt ceiling crisis was effectively kicked down the road until December. This followed the US Senate jacking up the nation’s borrowing limit just enough to stave off an imminent crisis.

It wasn’t was exactly the most positive news you could hope for but it was good enough to send the market up 0.9% on Friday.

Sydney reaching an important milestone in loosening COVID-19 restrictions also helped to put a spring in investor’s steps and hope for cyclical stocks as the prospect of economic activity resuming became more real.

BHP making a strong comeback

One of the best performers was mining giant BHP (ASX: BHP) which added 3% to $37.74, with Fortescue (ASX: FMG) shares also firming 2.4%.

While uncertainty still surrounds the iron ore price, surging coal and energy prices helped to push BHP shares higher, with met coal prices increasing strongly.

Energy stocks also finished up 1% on Friday. Morningstar analysts suggested this sector is the only segment of Australian equities which is currently undervalued.

With around $900 million in dividends paid out during the week, there is also an expectation that some of that money will come back in the form of new buying.

Woolworths (ASX: WOW) shares finished the session 0.6% stronger, and the business confirmed it would pay out another $50 million to address historical underpayments.

Metcash (ASX: MTS) fell 0.7% to $4.00 after confirming its chief executive Jeff Adams would be leaving next February.

Bad news for EML

Other individual stock news included a 14.6% Friday plunge in Fintech EML payments (ASX: EML) after it revealed that its growth in Ireland could be curbed due to regulatory orders from the Irish central bank.

Furniture retailer Nick Scali (ASX: NCK) had a great week with shares lifting by 22% after paying $103 million for sofa retailer Plush.

Collins Foods (ASX: CKF) shares also jumped by almost 10% after striking a deal to run the KFC business in the Netherlands, with plans to open as many as 130 new stores in the next 10 years.

Small cap stock action

The Small Ords index rose 1.19% for the week to close at 3460.6 points.

October 2021 ASX 200 chart small all ords
ASX 200 vs Small Ords

Small cap companies making headlines this week were:

SRJ Technologies (ASX: SRJ)

Engineering company SRJ Technologies secured a contract this week with the Abu Dhabi National Oil Company (ADNOC) to design, manufacture and install pipeline asset integrity solutions for pipeline, flange and valve systems on Das Island in the Persian Gulf.

The contract is part of a staged fast-track project. Under the first stage, SRJ will receive $160,000 for site survey and design engineering services.

SRJ expects a “significantly higher value” contract once this current phase one has been completed. Phase two of the project is expected to start early next month and will involve installation of about 25-30 of SRJ’s pipeline/flange/valve leak mitigation systems.

ADNOC made history this week with its drilling unit becoming the largest IPO on the Abu Dhabi Securities Exchange.

QMines (ASX: QML)

With a resource update due later this year, QMines has received further encouraging assays from drilling at the historic Mt Chalmers copper-gold mine in Queensland.

The latest assays came from outside of the known resource and comprised peak grades of 41.51g/t gold, 11.65% copper, 224g/t silver, 6.18% lead and 33.9% zinc – all within broader intersections.

A notable intersection was 60.8m at 2.59g/t gold, 0.74% copper, 11.1g/t silver, 1.81% zinc and 0.71% lead from 6.2m, including 12.6m at 12.01g/t gold, 0.79% copper, 43.0g/t silver, 8.42% zinc and 3.25% lead from 21.2m.

Another returned 38.5m at 1.22g/t gold, 0.76% copper and 2.3g/t silver from 63m, including 10.5m at 1.30g/t gold, 1.93% copper and 5.2g/t silver from 91m.

QMines executive chairman Andrew Sparke said the thick intersections and high-grades confirm the project’s “significant potential” for growth.

Global Energy Ventures (ASX: GEV)

It was a big news week for Global Energy Ventures which collared approval in principle from the American Bureau of Shipping for its proposed pilot 430t compressed hydrogen (CH-2) ship.

The AIP paves the way for Global Energy Ventures to apply for construction approval from the ABS and follows AIP for a 2,000t capacity CH-2 ship.

Global Energy Ventures says the AIP and accompanying road map to approval for construction has material de-risked the path forward.

While advancing its technology, the company is also shoring up its potential customers and has engaged three consultants to evaluate the viability of exporting green hydrogen from Province Resources’ HyEnergy project in WA.

The consultants are investigating using Global Energy Ventures’ CH-2 technology to export the green hydrogen produced at the project.

Wide Open Agriculture (ASX: WOA)

Regenerative food and farming company Wide Open Agriculture’s carbon neutral oat “milk” OatUP is about to be available in Singapore under a distribution deal with GrowHub International.

Under a two-year exclusive distribution agreement, Singapore-based GrowHub will sell OatUp throughout the region.

In the first 12 months, GrowHub must purchase at least $500,000 worth of OatUp to sell.

Meanwhile, Wide Open Agriculture’s modified lupin protein product has continued to advance with the company dispatching samples to leading food and ingredient groups across Europe, North America and Australia for evaluation.

The aim is to build partnerships for the lupin protein to be incorporated in plant-based food and drink products.

A pilot manufacturing facility for the protein is set to be established after Wide Open revealed it had selected a site in WA’s Kewdale industrial area.

Mako Gold (ASX: MKG)

West Africa focused Mako Gold has received its best assays to-date from the Gogbala gold prospect within its flagship Napié project in Côte d’Ivoire.

Assays from 14 RC holes at the prospect were received with all hitting “significant mineralisation”, with Mako managing director Peter Ledwidge saying they similar in style to the project’s nearby Tchaga target.

Better results were 20m at 3.41g/t from 19m, including 2m at 14.12g/t gold from 37m; 23m at 1.81g/t gold from 19m, including 1m at 5.73g/t from 24m; and 9m at 2.52g/t gold from 55m, including 1m at 11.84g/t gold from 55m.

According to Mr Ledwidge, the similarities between Gogbala and Tchaga have boosted the company’s optimism about more discoveries across Napié.

Western Mines Group (ASX: WMG)

A high powered moving loop electromagnetic survey is now underway at Western Mines Group’s flagship Mulga Tank project on WA’s Minigwal Greenstone Belt.

The survey will cover 28sq km of the project and focus on pinpointing potential nickel-copper-PGE deposits.

A former low-powered and less advanced survey in 2013 identified 10 anomalies. However, these were never drilled. Western Mines anticipates the newer survey data will assist with better target generation.

Over at the company’s Jasper Hill project in WA’s Merolia Greenstone Belt, it has acquired more prospective ground.

The new tenement is adjacent to the company’s existing licences and consolidates Western Mines’ position over 3km of mineralised trend in the underexplored belt.

Within the new tenement are large open pit workings that the vendors had mined themselves.

The week ahead

There are a few things to watch out for this week with a speech from Reserve Bank Deputy Governor Guy Debelle on climate risks and the Australian Financial System one of the highlights.

Other things to look out for are the September jobs data and business and consumer sentiment and inflation expectations.

Annual general meetings will also start in earnest, with Commonwealth, CSL and Telstra shareholders all meeting virtually.

Looking overseas, inflation will be the big news with numbers in China and the US eagerly awaited.

In the US there are some September quarter corporate earnings including some of the big banks and also the minutes of the US Fed meeting, unemployment numbers, retail sales and manufacturing numbers.

Chinese international trade data, consumer and producer prices data will give some added detail on how inflation is rising.

This week’s top stocks

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