Weekly review: climate is great even though the weather could be better
WEEKLY MARKET REPORT
As we all now know from even elementary knowledge of climate change, there is a big difference between the weather and the climate.
So, while the climate in share markets remains highly favourable, there have been occasional “weather” events that have changed the narrative.
That is exactly what happened on Friday as the Australian stock exchange shed as much as 1%, before finishing down 0.8% for the day.
However, while the short-term weather had momentarily turned, the overall climate remained balmy, with shares as measured by the ASX 200 still up 3.5% for the month even after two weekly drops.
That means April was the best month since last November, with the overall trend being onwards and upwards.
Even in the mid of an April storm there were glimpses of sunlight with industrials and utilities pushing higher even as the vast bulk of the market fell, led by the big miners, the banks, health, energy and even the hardy technology sector.
A couple of examples of stocks that bucked the downwards trend include toll road company Transurban (ASX: TCL) which rose 0.9% to $14.17 while international packaging giant Amcor (ASX: AMC) also rose 1.3% to $15.15.
However, they were minor triumphs in a sea of red ink with falls recorded for the big miners, the banks, health stocks and the perennially disappointing energy stocks with even the hardy technology sector ending up lower.
US futures weaker despite market records and strong profit results
Weaker US futures didn’t help, adding to the usual pressures to take some profits off the table after a strong month – allowing a chance to take a breath and consult the temperature chart before once again committing funds back to the market.
The weaker signs for the US market are also against what has been a very strong set of indicators, including good jobs and GDP figures and generally positive company profit results.
Despite all of the positive climate news that led to a post-pandemic record high in Australia and an all-time high on US markets this month, the short-term weather was still poor, with the ASX 200 index closing down 0.8% on Friday at 7025.8 points, marking the second consecutive weekly fall.
At last AMP gets its own way
In company news, beleaguered fund manager AMP (ASX: AMP) finally enjoyed some positive news with the company avoiding a second strike against executive pay with 75.8% of shareholders voting for the company’s remuneration report.
That only just made the cut, with 75% required but it was a rare spot of good news for the hapless company, even though the share price headed in a familiar direction, down 1.8%.
ANZ Bank (ASX: ANZ) shareholders also digested some bad news with the Melbourne based bank expecting an $817 million hit to its first half cash profit results which are set to be released on 5 May.
That sent ANZ shares down 0.7%.
The Federal Government’s finances were a little better than had been expected with the underlying cash balance for the 2020-21 financial year to the end of March a deficit of $133.3 billion against a forecast of $162.7 billion.
Small cap stock action
The Small Ords index fell 0.85% this week to close at 3285.5 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
PharmAust (ASX: PAA)
Interim analysis of PharmAust’s phase IIb trial assessing the impact of its lead drug monepantel (MPL) on canine B-cell lymphoma has provided supportive evidence of a therapeutic window.
Blood plasma levels were assessed in six dogs and demonstrated an optimal plasma level and target therapeutic dose for MPL.
The company has been progressing MPL trials and research to measure its effectiveness in both canine and human cancers.
During the March quarter, PharmAust also investigated the drug’s potential antiviral benefits in preclinical models of SARS-CoV-2, the virus that causes COVID-19.
Sultan Resources (ASX: SLZ)
Next month, Sultan Resources expects to begin drilling an IP anomaly it has identified at the Big Hill porphyry copper-gold prosect.
The company has defined a “classic” east Lachlan porphyry drill target following final evaluation of an IP survey undertaken earlier this year.
Sultan managing director Steve Groves said the magnetic IP anomaly was a “standout” undrilled copper-gold target in the central Lachlan Fold Belt.
Alice Queen (ASX: AQX)
German ore sorting technology has proved beneficial during test work on ore from Alice Queen’s flagship Horn Island project in Queensland.
Samples from the project’s historic waste dump and of drill core were used in the test work, with results showing a significant uplift in gold grades.
Also during the March quarter, Alice Queen advanced other scoping study work for Horn Island with the study starting in March.
Meanwhile, acquisition of the Fijian gold projects is expected to be completed in two months, with Alice already carrying out desk top review and database consolidation of the assets.
Golden Deeps (ASX: GED)
Exploration at Golden Deeps’ historic Khusib Springs mine in Namibia has returned promising results.
The company began drilling less than a week ago and the first two holes have intersected copper carbonate mineralisation.
These holes were drilled into the up extension of the deposit near shallow surface workings.
RooLife Group (ASX: RLG)
RooLife achieved another positive quarter for the three months ending March 2021 with the company revealing a new record quarterly revenue.
The March quarter revenue came in at $3.4 million which was 145% higher than the December 2020 period’s $1.35 million and an increase of 340% on the $775,000 generated in the March 2020 quarter.
FY 2021 year-to-date revenue is up 68% to $5.7 million on the entire FY 2020 revenue of $3.4 million.
RooLife expects the strong sales performance will continue throughout 2021 and 2022.
The week ahead
The coming week once again is set to continue the supremacy of central banks with the Reserve Bank holding its monthly meeting to determine the direction of interest rates.
While there is virtually no chance of a change in the current 0.1% cash rate setting, the announcement may include a preview of the upgraded economic forecasts that will be outlines in the Statement of Monetary Policy on Friday.
Other economic events to watch out for include manufacturing purchasing managers indexes, inflation estimates, job advertisements, consumer confidence, home values and new car sales to name a few.
On Thursday, Reserve Bank Deputy Governor Guy Debelle will also deliver a speech outlining how the bank set monetary policy during the COVID-19 pandemic.
The biggest influences on markets will likely remain events in China and the US though, with the US company profit reporting season entering its final stretch and job number to be released on Friday expected to see about 900,000 extra jobs in April as the unemployment rate falls to 5.8%.
China is expected to affirm its excellent trading performance with international trade data for April expected to show a continuation of a strong import and export performance in the realm of 30% or more.