Surrounded by a sea of uncertainty, the Australian share market has been an oasis of calm, chalking up a really solid week of price gains.
It didn’t seem to matter if Australia was headed for a trillion dollars of Government debt and a record Budget deficit.
Or even if the White House was full of COVID-19 infections, including President Trump, or if efforts to get some fresh stimulus payments to US citizens failed or not.
Through it all, the Australian market managed an excellent five day run to add $95 billion of market capitalisation with a 5.4% rise in the ASX 200 to 6102.2 points.
There was a little bit a caution creeping in by the end of the week with an essentially steady day on Friday but still it was one of the more buoyant weeks for shareholders since the COVID-19 rebound rally back in April.
Trump still talking stimulus
It was backtracking by US President Donald Trump on the stimulus negotiations that produced a strong offshore lead from Wall Street which Australia tentatively followed on Friday.
Earlier in the week Australia’s big spending Federal Budget was very well received by the market, particularly because much of the stimulus will be delivered through employment and other business concessions that will benefit companies.
Tax cuts for Australian workers also buoyed the market, with the potential for a consumer recovery pushing up retail stocks and the banks.
As you might expect for no real change on Friday, individual stock prices were mixed after some heavy rises earlier in the week.
Gold stocks enjoy merger talks
The mining stocks were a good example with the big, diversified miners falling but the gold stocks still flying following the momentum caused by the proposed merger between Saracen and Northern Star.
Rio Tinto (ASX: RIO) shed 0.47% to $97.50, BHP (ASX: BHP) shaved off 0.2% to $36.58 and Fortescue (ASX: FMG) was down 0.29% to $16.95 but all three had enjoyed a fantastic week of gains, so it was not a time for complaints.
In the gold space Newcrest (ASX: NCM) added 3.2% to $32.26 after announcing it would be expanding its Cadia mine and improving operations at its high grade but troublesome Lihir project in Papua New Guinea.
Energy stocks applaud a hurricane
The best gains for the week though were the energy stocks, which added 9% on rising oil prices as Hurricane Delta approached the important US oil production hub in the Gulf of Mexico.
Many of the offshore rigs in the gulf will shut off production until the hurricane threat is over.
There would not have been any complaints from bank investors though after the sector put on an excellent collective 7% rise for the week – several times better than any term deposit rates on offer inside the bank’s doors.
Macquarie Group (ASX: MQG) was up 0.3% to $129.77 and it was a good day for some of the fund managers with Netwealth (ASX: NWL) continuing its great form to rise 3.7% to $17.91 while Janus Henderson Group (ASX: JHG) improved by 5.9% to $37.27.
Big blood products group CSL (ASX: CSL) was a bit of a drag, closing down 1.2% to $295.32.
Small cap stock action
The Small Ords index rose a massive 6.4% for the week to close at 2877.5 points.
Small cap companies making headlines this week were:
Incannex (ASX: IHL)
Medicinal cannabis company Incannex achieved its highest quarterly sales for the September period, which beat the previous June quarter record.
During the September quarter, Incannex received $695,000 in cash sales for its medicinal cannabis products sold under Australia’s special access scheme.
This was the company’s first quarter where cash inflows came purely from its cannabinoid products.
As Incannex grows sales of its medicinal cannabis products, it also continues advancing new therapeutics for treating other conditions including COVID-19 induced sepsis associated acute respiratory distress syndrome.
Nova Minerals (ASX: NVA)
Earlier this week Nova Minerals unveiled an interim gold resource for its flagship Estelle project in Alaska’s Tintina gold province.
The resource was underpinned by 7,200m of drilling, which is part of a 40,000m program for this year.
Resources at Estelle are for the Korbel deposit and now total 290Mt at 0.4g/t gold for 3.3Moz.
As assays continue flowing in, Nova plans to update the resource with an additional 80,000m of drilling planned for 2021.
In addition to updating the resource, Nova has also confirmed more potential at the project with drilling at the Block D target within Korbel intercepting “encouraging” mineralisation at the target.
Impact Minerals (ASX: IPT)
Multi-commodity explorer Impact Minerals has made what it describes as a technical breakthrough at its Broken Hill nickel, copper and platinum group element project in NSW.
The company has undertaken considerable in-house research and compiled multi-element assay data and identified a geochemical vector that increases towards higher-grade nickel, copper and PGE.
This vector has uncovered two prospective corridors within the Platinum Springs prospect at the project.
Drilling is underway to test these targets after several delays due to “excessive” and unseasonal wet weather.
Vection Technologies (ASX: VR1)
Vection Technologies has qualified for Facebook’s Oculus Independent Software Vendor program, which aims to accelerate adoption of virtual reality solutions built for Oculus’ products.
The company joined the program through its Mindesk North America division. It will advance the ISV by boosting go-to-market and adoption from the Oculus user base.
Vection has also launched its Mindesk 2020.4 Network Multi-User virtual reality platform in two of the most wide-spread CAD software on the market.
The company also revealed it has been accepted into Autodesk’s global Outsight Network Residency program as part of the Microsoft Hololens 2 Autodesk Request for Proposal.
Vection will collaborate with Autodesk and the Microsoft mixed reality team to integrate its Mindesk XR software with Microsoft’s Hololens 2 device.
Estrella Resources (ASX: ESR)
Nickel-copper explorer Estrella Resources has expanded its T5 discovery further after hitting 2.9m of massive sulphide mineralisation south of the prospect.
T5 is located within Estrella’s Carr Boyd project, which is north of Kalgoorlie in WA.
The massive sulphide intercept is part of a broader 15m-wide zone of vein, stringer, matrix and disseminated nickel-copper mineralisation from 435.9m.
Estrella chief executive officer Chris Daws said its was a “highly significant discovery” based on modern science and technology as well as belief and persistence.
Gibb River Diamonds (ASX: GIB)
Maiden drilling at Gibb River Diamonds’ recently acquired Edjudina gold project has resulted in a “major” discovery.
The project is located in WA’s eastern goldfields and hosts multiple historic mines and workings including the Neta prospect.
Drilling at Neta returned 36m at 3.97g/t gold, 18m at 3.10g/t gold, 24m at 1.44g/t gold and 8m at 2.91g/t gold.
Mineralisation remains open to the north, south and at depth.
Gibb River has begun planning for a phase two drilling program, with this discovery being the focus.
Alice Queen (ASX: AQX)
Diamond drilling has begun ahead of schedule at Alice Queen’s Horn Island gold project where St Barbara is earning up to 70% of certain areas.
The 14-hole program will total 4,500m and was due to begin in October but kicked-off on Sunday 27 September.
Drilling is targeting “significant scale” anomalies at the project, which is located in Queensland’s Torres Strait.
A reverse circulation infill drilling program is due to begin “shortly” over Alice Queen’s wholly-owned area within the project.
Alice Queen also received assays from the upper 480m of the first hole drilled at its Boda East project in NSW’s Lachlan Fold Belt.
The company’s chief technical advisor John Holliday said the intersection indicated that Boda East hosts part of the mineralised system that Alkane Resources is drilling less than 2km away.
AVZ Minerals (ASX: AVZ)
COVID-19 restrictions have been lifted enabling AVZ Minerals to re-start diamond core resource drilling at the Roche Dure pit floor within its flagship Manono lithium-tin project.
The company revealed the DRC Government had lifted restrictions in mid-September – enabling AVZ to continue advancing the project.
This resource drilling program will comprise 10 holes for 1,700m and is expected to be completed in four weeks.
AVZ plans to use the drilling data to update resources to indicated status.
Tesoro Resources (ASX: TSO)
Tesoro Resources’ El Zorro project has continued to impress investors with the company revealing more wide and high grade gold assays from the project’s primary Ternera target.
Assays from another four diamond holes have now been received. These holes were designed as infill holes and provide further information for modelling and resource estimation.
All four holes returned gold mineralisation with highlight results comprising 28m at 1.22g/t from 40m, including 10m at 3.17g/t from 59m; 46m at 0.72g/t from 192m, including 9m at 2.59g/t 224; and 51m at 1.07g/t from 74m, including 7.7m at 5.05g/t from 88.3m.
Tesoro is awaiting assays for 19 holes with drilling continuing at the project 24 hours a day.
Tony Locantro, investment manager at Alto Capital, shares his views on what’s taking place in the stock market, where opportunity may lay and what might come next.
Mithril Resources (ASX: MTH) managing director John Skeet discusses the company’s Copalquin gold and silver project in Mexico.
Drilling at Copalquin recently returned bonanza grades of up to 3,129g/t silver and 34.72g/t gold.
The project hosts more than 32 historic silver and gold mines and workings.
In addition to Copalquin, Mithril has interests in several other WA assets prospective for zinc, nickel, lignum and limestone.
Alice Queen (ASX: AQX) managing director Andrew Buxton updates us on news the company is progressing the Horn Island gold project in north Queensland where drilling has commenced.
Miner St Barbara (ASX: SBM) is earning up to 70% of the joint venture areas by spending $4 million over three years.
Alice Queen is also advancing the Boda East gold-copper project, which is less than 1km east of Alkane Resources’ Boda discovery in NSW.
The company is looking for similar style mineralisation at its Mendooran project.
The week ahead
After a massive week in Australia last week with the Budget, this week promises to be a lot quieter with a Thursday speech from the Reserve Bank Governor Dr Philip Lowe and the October jobs report, which is released on the same day.
Both will probably focus on the same thing – the unemployment rate and also the prospects for economic recovery.
Other than this, the only statistical things to watch out for are consumer confidence readings, building activity, credit and debit card spending, and overseas travel numbers for a bit of light relief.
Of course, the continuing second global march of the COVID-19 virus through Europe and the US and many other countries will continue to be a major issue that will keep markets on their toes, as will the continuing US election campaign and negotiations on stimulus payments.
The main US release will be inflation numbers while international trade numbers out of China will also be worth checking out for evidence of the strength of the Chinese recovery.