Weekly review: Aussie shares hit new heights on hopes of strong US growth

Aussie shares new high strong US growth ASX May 2021
WEEKLY MARKET REPORT

Australian shares finally surged to fresh highs, virtually erasing all of the hefty losses of the COVID-19 wobbles to hit a new 15-month record close.

Rises were broad based across most sectors as investors parked their worries about inflation for now and instead celebrated the record amounts of stimulus that look set to be pumped into the United States.

The new closing high saw the ASX 200 finish up 1.2% to 7179.5 points as the two big barbell sectors of the Australian market – resources and banks – both fired at the same time.

The ASX 200’s absolute all-time high of 7199.79 points was hit back in February of 2020, which is now very much in the target zone.

Miners and banks lead the way

BHP (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue (ASX: FMG) were all up very strongly while the big banks, CBA (ASX: CBA), Westpac (ASX: WBC), ANZ (ASX: ANZ) and NAB (ASX: NAB) also jumped, with Commonwealth breaking through the $100 barrier to close up 1.6% at $100.56.

One particularly notable large cap stock was BHP spinoff South32 (ASX: S32) which leapt an impressive 5.6% to $3.00.

At the close, the financials sector was up 1.34% and the materials sector 1.8% which was instrumental in the record-breaking performance.

The only sector to fall on Friday was information technology.

$4 billion bid for Tabcorp bookmaking and media arm

The market leaders weren’t the only ones helping out, with a $4 billion cash and scrip offer for Tabcorp’s (ASX: TAH) bookmaking and media arm being lobbed by the Matthew Tripp-backed wagering technology group BetMakers.

If successful, the bid would add a global focus for the Australian gambling group.

The bid follows on from cash bids of $3.5 billion from Ladbrokes’ owner Entain and private equity group Apollo.

BetMakers said the bid would consist of $1 billion in cash to Tabcorp which it would raise through debt and $3 billion worth of its own shares.

If successful the bid would leave Tabcorp investors owning 65% of the shares in BetMakers, which sells back-end technology to wagering operators globally and is experiencing significant growth in the US, having tripled its market value in the past year.

The Tabcorp board said it had not yet formed a view on BetMakers’ proposal but the company is running a strategic review of TAB which is set to finish at the end of June.

Shareholders have been pressuring the TAB board to sell or demerge the TAB wagering business from its booming lotteries arm due to increasing pressure from online rivals such as Sportsbet and Ladbrokes.

Tabcorp shares rose 2.2% to $5.17.

The strong market came despite the Victorian seven-day circuit breaker lockdown to contain a COVID-19 outbreak, showing that investors are becoming more relaxed about outbreaks.

Small cap stock action

The Small Ords index rose a stellar 3% to close the week at 3293.4 points.

May 2021 ASX 200 chart Small Ords
ASX 200 vs Small Ords

Small cap companies making headlines this week were:

Kleos Space (ASX: KSS)

Under a new deal, Netherlands-based Innovative Solutions in Space (ISISPACE) will build and support a cluster of four nanosatellites for Kleos Space, with the cluster due to launch before the end of the year.

The satellites will form Kleos’ Polar Patrol Mission (KSF2) and will be the company’s third cluster to be launched into space.

It is expected KSF2 will double Kleos’ data-as-a-service coverage over both poles and build revenue.

Kin Mining (ASX: KIN)

A maiden drilling program at Kin Mining’s Mount Flora prospect has uncovered “spectacular” gold intersections, with the company now focused on the prospect’s potential due to its proximity to the flagship Cardinia gold project in WA.

Drilling returned a better intercept of 22m at 8.96g/t gold from 24m, including 8m at 21g/t gold from 32m.

At Cardinia, the company also hit high-grade gold during an aircore program with “significant” gold assays returned at the Eagle and Crow prospects.

Lifespot Health (ASX: LSH)

It was an Australian first this week for Lifespot Health which launched its Medihale sealed pod medical cannabis inhaler to Australian patients under the Therapeutic Goods Administration’s Special Access Scheme.

An initial patient group has used the device, pod and third-party EC Pharma’s cannabidiol e-liquid formulation.

Chief executive officer Matthew Golden told Small Caps early patient feedback has been “very positive”.

Lifespot says its Medihale is the first sealed pod inhaler device of its kind available in Australia.

Meteoric Resources (ASX: MEI)

Gold and copper explorer Meteoric Resources has resumed drilling at the Palm Springs gold project in Western Australia’s Kimberley region.

The company plans to complete 10 holes and will also undertake geophysical surveys.

Over in Brazil, Meteoric is drilling an “exciting” copper target at the Juruena gold-copper project.

Managing director Dr Andrew Tunks saying he was “buoyed” by the geology seen from drilling the target so far.

Caravel Minerals (ASX: CVV)

Drilling at Caravel Minerals Bindi copper deposit continues to hit wide zones of copper mineralisation, with latest results coming from the Bindi East Limb.

Highlight intersections were 164m at 0.34% copper from 32m, and 62m at 0.37% copper from 148m, including 12m at 0.77% copper.

The company has built on its Bindi success with similarly broad zones at the Dasher deposit announced earlier in the week.

Highlight results from Dasher South were 56m at 0.34% copper from 192m, and 32m at 0.38% copper from 100m, including 4m at 0.4% copper.

TZ Limited (ASX: TZL)

Smart lock and self-service locker bank technology developer TZ Limited has continued its global expansion strategy after reporting it had secured a $1 million hosting and services upgrade agreement with global transport and logistics company DSV South Africa.

The agreement builds on an earlier deals where TZ has supplied $3 million in new locker banks to DVS in this fiscal year alone.

Under the new agreement, TZ will provide high availability hosted infrastructure, system monitoring, network management, software subscription and maintenance services for DSV’s 450 locker bank network.

In the US, TZ is experiencing growing demand for its technology – reporting it had received US$2.2 million in purchase orders from new and existing customers in the country since the start of April.

Sayona Mining (ASX: SYA) and Piedmont Lithium (ASX: PLL)

Sayona Mining and Piedmont Lithium are a step closer to lithium production in Quebec’s Abitibi-Temiscamingue region.

Via joint venture subsidiary Sayona Quebec, an agreement has been made with secured creditor Investissement Quebec, leaving the final go-ahead for the acquisition of North American Lithium’s production facilities in the hands of the Superior Court of Quebec.

If the Superior Court gives the greenlight, the duo will acquire the lithium production facilities in Abitibi-Temiscamingue region, with joint venture entity Sayona Quebec anticipating to begin generating lithium “as soon as possible” following completion of the transaction.

Envirosuite (ASX: EVS)

As part of a global expansion strategy, Envirosuite is raising $14 million via an accelerated non-renounceable entitlement offer and institutional placement.

Funds from the raising will assist Envirosuite in expanding its customer-base for its environmental management technology, which are offered as SaaS, and solution as a service products.

With its recently launched water solution product, Envirosuite is largely targeting with the water treatment market, which is believed to be valued at US$2.8 billion.

The week ahead

A blizzard of statistical data is released this week, including an impressive 15 data announcements from the Australian Bureau of Statistics alone and plenty of others offshore.

There is also news from the Reserve Bank which on Tuesday will release the findings of its monthly meeting, with no change to interest rates expected.

However, the RBA might also announce its expectation of the economic growth (GDP) figures which will be released on Wednesday and also give the market players some idea on its bond buying target and three-year yield curve target.

Another interesting release to watch out for will be the CoreLogic report on Australian home prices for May, with property prices likely to have lifted a further 2% in the month.

Other releases to watch out for include government finance, balance of payments, building approvals, purchasing managers figures, consumer sentiment, new car sales and international and retail trade and new lending figures.

The biggest international news is the US jobs data which is tipped to reveal a 620,000 lift in jobs with the jobless rate set to fall from 6.1% to 5.9%.

A swag of other US releases are expected including a range of purchasing manager estimates, payrolls and retail and new car sales but in terms of moving markets, the US labour market figures stand out as the main catalyst.

This week’s top stocks

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