Weekly review: bad vaccine news fails to shake share market recovery
WEEKLY MARKET REPORT
Not even bad news on the vaccine front was enough to totally shake confidence in the Australian share market, with the ASX 200 adding an impressive 2.4% for the week.
While the market started down as much as 0.5% on Friday after the Thursday night news that the Federal Government had decided to make Pfizer the preferred vaccine for Australians aged under 50, it rallied from there and in the end finished down just 3.6 points, or 0.1%, at 6995.2 points.
As you would expect, the news that the chance of rare blood clots had been linked to the Astra Zeneca vaccine hit a number of stocks, given that this might greatly slow the pace of Australia opening up to the rest of the world.
However, the market was not too concerned, with Australia’s good performance on containing the COVID-19 virus seen as offering some protection against a slower than expected vaccine rollout.
Travel stocks fall back on vaccine news
The travel stocks that rallied hard on exciting news of the New Zealand travel bubble reversed direction quickly with the vaccine news, with Flight Centre (ASX: FLT) down 2.7% to $18.42, Webjet (ASX: WEB) off by 2.5% to $5.40, Corporate Travel Management (ASX: CTD) down 3% to $18.77 and Helloworld (ASX: HLO) losing 2.3% to $2.13.
Blood product and vaccine group CSL (ASX: CSL) which is making the only local vaccine, Astra Zeneca, in Melbourne lost 1% to close at $263.40 as investors digested a much smaller role for this vaccine locally due to the over-50 age limit.
Despite these understandable setbacks the underlying tone of the market retained a lot of the strength that saw it rise strongly during the Easter shortened trading week, falling just short of the 7000-point mark which it briefly crested during the week, marking a post-COVID high.
Central banks remain supportive and tone remains strong
Technology stocks and the big miners were a positive influence and helped to propel the market out of the narrow range it had been trading in as global economic news looked more positive as well.
Central banks once again built a platform under share markets, with the Australian and US banks both declaring their intentions to keep the stimulus flowing.
The RBA, in keeping official rates at 0.1% reaffirmed its belief that bank credit standards were sound even as it admitted it was keeping a close eye on the booming property market.
In releasing its semi-annual Financial Stability Review, the RBA said the major risk to financial stability was an incomplete or uneven economic recovery but found that financial systems in Australia and globally have coped well with substantial shocks.
US indices hit record highs on Federal Reserve support
The big US share indices hit new records after the Federal Reserve chair Jerome Powell said he was more concerned with rising COVID cases than the rising inflation expectations.
Share market watchers interpreted that as a commitment to keep the economy growing and creating new jobs with no hint of backing off low rates at this stage.
In corporate news Air New Zealand (ASX: AIZ) said it had negotiated a NZ$600m increase to its credit facility with the NZ government to a total NZ$1.5 billion to ensure sufficient liquidity until its capital raising, which has been pushed back until at least the end of September following the announcement of the Australia – New Zealand travel bubble.
Small cap stock action
The Small Ords index rose a stunning 3.55% this week to close at 3284.4 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Tietto Minerals (ASX: TIE)
It was a huge news week for West Africa-focused gold explorer Tietto Minerals, which debuted a maiden ore reserve and “compelling” pre-feasibility study for its flagship Abujar project in Cote d’Ivoire.
The maiden reserve totalled 15.7Mt at 1.7g/t gold for 860,000oz, while the pre-feasibility study estimated 200,000oz per annum could be produced from the project after a capital outlay of $230 million.
Tietto followed up the positive PFS news with latest drill results from the project which included a 1m interval grading 180.86g/t gold from 57m.
Vintage Energy (ASX: VEN)
Ongoing gas production tests at Vintage Energy’s South Australian Nagwarry-1 well have continued to exceed the company’s expectations.
Testing has been underway at the Otway Basin well evaluating the Top Pretty Hill formation with flow rates of 10.5-10.8 million standard cubic feet per day, through a 48/64-inch choke, over a 36-hour period at a relatively stable wellhead pressure of 1,415 psi.
Over shorter periods, Vintage managing director Neil Gibbins noted flow rates reached as high as 22 MMscfd, with rates as little as 3 MMscfd only required to produce 150t per day of carbon dioxide.
Aurumin (ASX: AUN)
Aurumin has hit multiple quartz intersections during a 5,000m reverse circulation drilling program at its Mt Dimer project in WA.
The company started drilling at the project last month, with 59 holes now completed for 5,009m and assays anticipated from mid-month.
Aurumin managing director Brad Valiukas said he was “very pleased” with the drill samples he’s seen so far and that the project has “considerable upside potential” for multiple open pits.
PharmAust (ASX: PAA)
PharmAust’s pre-clinical research evaluating its monepantel (MPL) and monepantel sulphone (MPLS) drugs in cell models infected with SARS-CoV2 has continued to generate promising results.
The Leiden University Medical Centre has undertaken more tests that indicate both MPL and MPLS have antiviral activity in non-human primate cell cultures – paving the way for the drugs to be tested in human lung cells in the next stage.
PharmAust followed up the positive news with an announcement it had secured a $750,000 research and development tax incentive refund from the ATO, with the funds to be used towards progressing clinical trials.
Fatfish Group (ASX: FFG)
As part of Fatfish Group’s aim to increase its exposure to the eSports market, it has participated in a $8.4 million funding round in RightBridge Ventures along with its 50.1% owned Swedish subsidiary Abelco Investments.
Both Fatfish and Abelco contributed $150,000 each in the funding round with Fatfish to hold a direct 0.6% stake in RightBridge, while Abelco will own 53% of the company.
RightBridge is using the funds to finance its eSports strategy including securing a 10.7% holding in Swedish-based global eSports platform Esports Pulze.
Caravel Minerals (ASX: CVV)
Advanced copper explorer Caravel Minerals has shored up more confidence in the flagship Bindi deposit in WA with latest assays from drilling confirming visual estimates reported last month.
Highlights from the latest assay batch were 104m at 0.29% copper from 32m, including 20m at 0.5% copper from 68m; 64m at 0.32% copper from 28m; and 90m at 0.29% copper from 78m.
Meanwhile, an airborne electromagnetic survey was completed at Caravel’s Toolbrunup nickel-copper-platinum group element project has identified a number of conductors which are being reviewed to gauge if they are potentially related to sulphide mineralisation.
The week ahead
It is a fairly busy week in prospect for data watchers with the most anticipated being the March labour force survey which is out on Thursday.
Most economists are tipping the unemployment rate to ease to around 5.6% from 5.8% but given the variability in recent jobs numbers this will certainly be one release to watch out for.
Amid a forest of other announcements, measures of consumer confidence, jobs and wages data, business confidence, building activity and consumer inflation expectations will be the main ones to watch.
Overseas, it is a big week in the US with long awaited March inflation numbers due for the US Consumer prices index, with core inflation tipped to rise by 0.2%.
Rising inflationary and interest rate pressures have been holding the US market in check so any good news on this front would be welcome.
Other US data to watch out for includes retail spending and housing activity with both expected to rebound and the latest monthly budget deficit number which is tipped to hit a record US$315 billion.
In China, the biggest news will be their economic growth numbers with March quarter GDP tipped to rise by an impressive 0.5%.
Other Chinese data to watch includes numbers on retail sales, production, investment and international trade which are all expected to strengthen.