Weekly review: dovish Reserve Bank and flying miners send market higher
WEEKLY MARKET REPORT
A combination of stronger mining stocks and a more dovish Reserve Bank helped the Australian share market to a 1% rise for the week.
Investors largely ignored the death of Queen Elizabeth II and pushed up the ASX 200 by 0.7% on Friday or 45.5 points to help the market to a second consecutive gain and the highest close of the month at 6894.2 points.
Mining stocks did most of the heavy lifting with the materials sector lifting a hefty 3.3%, helped by heavyweights such as BHP (ASX: BHP), up 3.1% to $38, Rio Tinto (ASX: RIO), up 2.7% to $94.36, and Fortescue Metals (ASX: FMG), up 6.1% to $17.81.
Much stronger prices for some miners
Some of the more impressive rises among the miners included shares in De Grey Mining (ASX: DEG) which jumped 11.9% and Sandfire Resources (ASX: SFR) which rose 8%.
Also helping matters was a healthy 13.6% jump in Mineral Resources (ASX: MIN) to $71.51 after discussions around it spinning off its lithium business.
Shares in fellow lithium producer Pilbara Minerals (ASX: PLS) also added a hefty 5.9% as the battery material remained in vogue.
The energy sector was also stronger, up 1% with Whitehaven Coal (ASX: WHC) and Yancoal (ASX: YAL) adding 3.1% and 5.3% respectively.
Interest rate rises could slow down
The gains from miners added to the 1.8% gain on Thursday after the Reserve Bank governor, Dr Philip Lowe, dropped some broad hints that the bank might reduce the pace of interest rate rises.
While most sectors were higher, there were some laggards with consumer staples down 1.2%, due to share falls by both major supermarkets Coles (ASX: COL) and Woolworths (ASX: WOW).
Takeover target Ramsay Health Care (ASX: RHC) saw its shares fall by 1.3% to $70.15 after it announced the end of discussions with IHH Healthcare over the latter’s bid to buy all of Ramsay Sime Darby, a 50:50 joint venture in Asia.
Tyro Payments (ASX: TYR) shares added another 9.5% on the back of a takeover bid that arrived on Thursday.
Small cap stock action
The Small Ords index rallied 2.57% for the week to close on 2936.3 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Investigator Resources (ASX: IVR)
South Australian explorer Investigator Resources this week announced it had hit rare earths mineralisation at the Apollo prospect within its flagship Paris silver project.
Results showed that 80% of holes drilled hit a distinct clay horizon with intersections above the cut-off grade of 1,000 parts per million total rare earth oxides (TREO).
Reported MREO (high value magnet rare earth oxides) are believed to be associated with neodymium and praseodymium.
Investigator has long been aware of elevated concentrations of rare earths including cerium and lanthanum in the Paris region.
The company is in the process of analysing samples using the “lithium borate fusion” technique to define total REE content.
Invion (ASX: IVX)
Life sciences company Invion has announced positive screening results from in vitro studies of its Photosoft technology on the inhibition of the Zika virus.
The photodynamic therapy was found to be more than 99% effective against the virus and more efficacious than veterinary antibiotic Monensin, which is known to have activity against Zika in in vitro lab tests and was used as a control in Invion’s study.
Monensin’s in vivo toxicity means it cannot be used in humans.
Zika virus is primarily transmitted by the Aedes Aegypti mosquito, which also transmits yellow fever and dengue.
It has been linked to birth defects and other neurological complications.
Invion holds the exclusive rights to Photosoft in Asia Pacific for the treatment of infectious diseases and atherosclerosis, through an agreement signed last year with technology licensor RMW Cho Group.
Gascoyne Resources (ASX: GCY)
Gold miner and explorer Gascoyne Resources has had a busy week at the newly-discovered Never Never lode within its Dalgaranga project in Western Australia.
News of an expansion to the Never Never resource envelope confirmed the company could be dealing with a “potentially very large” gold system which persists at depth at roughly the same thicknesses and grades.
The expansion was followed by the release of the Gascoyne’s annual resource statement which sits at 36.74Mt grading 1.16g/t gold for 1.37Moz.
It includes an initial resource estimate for the Gilbey’s North deposit and Never Never lode of 1.43Mt at 2.32g/t gold for 107,200oz – comprising 0.78Mt at 1.10g/t for 27,600oz (Gilbey’s North) and 0.66Mt at 3.78g/t for 79,600oz (Never Never).
Wide Open Agriculture (ASX: WOA)
The signing of two new agreements this week will cement Wide Open Agriculture’s presence in South East Asia and along Australia’s eastern seaboard.
The regenerative food producer has inked a non-exclusive deal with The GrowHub Innovations Company to distribute its Dirty Clean Food-branded oat milk across Indonesia and Malaysia.
Dirty Clean Food has also formalised a long-standing partnership with WA company My Foodie Box (ASX: MBX) to distribute “ready to eat” products to the eastern states market.
The agreements have been considered a significant milestone for Wide Open Agriculture and for the Dirty Clean Food brand.
Anson Resources (ASX: ASN)
Impressing investors this week was Anson Resources after it revealed “outstanding economics” in its definitive feasibility study for the phase one operational design of its Paradox lithium project in Utah.
The project is expected to cost US$495 million to develop and generate annual average EBITDA of US$153 million.
During phase one, revenues of US$5.08 billion are anticipated over its 23-year life.
Based on current spot lithium prices, the project has pre-tax net present value of almost US$5.15 billion.
Anson executive chairman Bruce Richardson said there remains “material upside” beyond the study revealed this week based on future mineral resource upgrades from recent drilling at other targets.
Classic Minerals (ASX: CLZ)
An agreement with Goldvalley Brown Stone will give Classic Minerals the $10 million it requires to bring its wholly-owned Kat Gap gold project into production.
Under the deal, Goldvalley will provide up to $10 million in non-recourse funding to Classic. In return, Goldvalley will receive 30% of the net profits from gold production.
Classic chairman John Lester said the deal provided the company with a low-capital way forward, while retaining a solid proportion of the expected profits from Kat Gap. He added it also avoided shareholder dilution.
Kat Gap hosts 93,000oz in inferred gold resources.
The week ahead
There are a few local economic releases to look out for this week with monthly jobs data and some different estimates of consumer and business sentiment some of the highlights.
The Labour Force figures on Thursday should give a fairly accurate picture of the state of the job market before interest rates started to rise given that employment is a bit of a lagging indicator.
The biggest market interest will probably be reserved for measures of economic activity in the US and China, with US inflation data also capable of moving markets.
US inflation has been moderating from very high levels so any further moderation due to falling petrol prices would be a cause for some greater optimism about the need for more interest rate rises.