Weekly review: Chinese recovery hopes drive market higher
WEEKLY MARKET REPORT
After three days of losses the ASX 200 ended Friday 37.7 points or 0.5% higher as investors reacted positively to the chances of revived Chinese demand.
However, the recovery was not enough to overwhelm a poor week, with the main index still ending down 1.21% – well away from the six-month record hit earlier in the month.
As you would expect the big iron ore miners had a strong day with BHP (ASX: BHP) shares up 2.7% to $47.48, Fortescue Metals (ASX: FMG) shares up 2.8% to $21.39 and Rio Tinto (ASX: RIO) shares rose 2.3% to $117.16.
Lithium miners fall
It was far from a unanimous vote by all mining stocks though with a negative call on the future prospects for lithium stocks by Goldman Sachs sending some wobbles through the listed stocks that mine the battery metal.
Allkem (ASX: AKE) shares dropped 1.4%, Pilbara Minerals (ASX: PLS) shares lost 0.2% and Liontown Resources (ASX: LTR) shares fell 0.3%.
Gina Rinehart has a good day
In good news for billionaire Gina Rinehart, Beach Energy (ASX: BPT) finally conceded defeat in the takeover race for Warrego Energy (ASX: WGO), deciding to redouble its efforts in its onshore gas projects in the Perth Basin instead of pursuing extra growth.
Relief that Beach would not be chewing through the cash led to its shares rising 0.9% to $1.66 but unless a new bidder arrives, it now seems that Gina Rinehart’s Hancock Prospecting will be successful in grabbing Warrego.
Warrego shares fell 3.3% as news of a probable end to the takeover competition spread.
Bluescope rises but Downer bombs
In other stock specific news, shares in Bluescope Steel (ASX: BSL) actually rose 0.4% to $18.22 after a Federal Court judge found the company and former executive, Jason Ellis, had tried to engage in cartel conduct and price-fixing in the supply of flat steel.
Not so lucky were shareholders in Downer EDI (ASX: DOW) with its shares down 25.6% over the week after it reported some unwanted ‘accounting irregularities’.
By the end of the day seven of the 11 market sectors were up rise with materials strongest as the big iron ore miners rose 2.3-2.8 per cent on iron ore price gains following lower production guidance from Vale.
Small cap stock action
The Small Ords index fell 2.72% this week to close at 2865.9 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Spenda (ASX: SPX)
Australian flooring franchise Carpet Court is set to integrate Spenda’s payments platform into its network, after a pilot program proved the system could deliver accounts and business efficiencies.
Spenda has confirmed it will receive revenue streams from monthly software-as-a-service (SaaS) charges and transaction-related fees, calculated by way of payment volumes processed.
It will also make a working capital facility available to Carpet Court members to enable increased payment flexibility and extended credit services.
Sarytogan Graphite (ASX: SGA)
Ongoing metallurgical test work on ore samples from Sarytogan Graphite’s namesake graphite deposit in central Kazakhstan has improved purities to up to 99.87% total graphitic carbon – moving the project closer to global battery anode specifications.
Low temperature alkaline roasting boosted recoveries to 99.7% TGC, while an alternative chemical purification process separately achieved 99.7% TGC.
Meanwhile, a combination of both processes generated 99.87% TGC.
Sarytogan said the high-purity product could become a potential answer to the world’s projected battery anode material shortage.
On Friday, Sarytogan announced drilling had extended known mineralisation up to 1km outside of the project’s existing resource of 209Mt at 28.5% TGC.
A highlight intercept was 75.1m at 34.6% TGC from 2m, including 51.1m at 36.8% TGC.
Aguia Resources (ASX: AGR)
Testing of Aguia Resources’ organic phosphate fertiliser Pampafos on wheat crops in Brazil has shown the product can exceed productivity rates of conventional chemical fertilisers.
Wheat grain yield after treatment with Pampafos was found to be either equal to or more than that of the conventional single superphosphate.
Pampafos has now been tested on soybean, rice, corn, oats, pasture and wheat crops in Brazil, with all tests being effective in providing phosphorus to plants.
The latest results have been considered significant as wheat is one of the nation’s most important winter crops.
Echo IQ (ASX: EIQ)
Sydney-based medical tech company Echo IQ this week launched its cloud-based EchoSolv heart disease screening platform to the US market.
The system has been developed in consultation with leading cardiologists and is designed to support the identification of aortic stenosis, which is one of the most common and serious types of heart valve disease.
EchoSolv enables bulk assessments to be completed at a rate of up to 48,000 per minute.
It will be available to registered customers on a “price per assessment” basis or via a monthly SaaS fee.
The week ahead
While the year is winding down with Christmas around the corner, there are still some big announcements to come with the main ones in the coming week being interest rate decisions in the US and Europe.
Most analysts think the US Federal Reserve will scale back its ambitions with a 0.5% rate rise rather than the 0.75% rises it has favoured until now.
If that pivot eventuates it should be favourable for markets while another 75-pointer could put a dampener on things.
The European central bank is also expected to go for a 50-basis point rise in interest rates.
Locally, the big news will be the November labour force figures which will be released on Thursday with most expectations being that unemployment will remain very low at 3.4% but there will be more interest in job creation, which is tipped to be around 15,000 jobs being created in November.
Other than that consumer confidence figures both locally and offshore will be interesting and a speech by RBA Governor Dr Philip Lowe could also be of interest.