Weekly review: global worries and Gladys resignation send Australian market sharply lower
WEEKLY MARKET REPORT
Global worries and the surprise resignation of NSW Premier Gladys Berejiklian took a heavy toll on the Australian share market, starting the month of October with an unwelcome fall of 2%.
That accounted for most of the weekly fall of 2.1% which saw the ASX200 index finish the week at 7185.5 points.
Poorly timed political crisis
The surprise resignation of NSW Premier Gladys Berejiklian due to an ICAC investigation added to the uncertainty, with a new Premier to arrive to see Australia’s most populous state through the crucial re-opening phase of the COVID-19 pandemic.
There was also the announcement from the Federal Government that international travel would begin earlier than planned in November.
However, US uncertainty seemed to be the main culprit dragging down the market with September a poor month for US stocks which ended at a low point on Thursday, providing a soft entree for Australian trading.
US avoids shutdown but puts off infrastructure vote
There were some positives with the US Congress finally managing to pass a bill to avoid a government shutdown but there is plenty of uncertainty still with a planned vote on a $1 trillion infrastructure bill another can that got kicked down the road.
Rising bond yields are also throwing a sharp focus on company valuations and causing some weakness.
Banks and miners bear the pain
Banks copped the brunt of the damage with the biggest of them all, Commonwealth (ASX: CBA), threatening to break below the $100 mark after it fell 4.1% to $100.08.
Where it led, the other banks followed with ANZ (ASX: ANZ) off 2.5% to $27.44, NAB (ASX: NAB) down 2% to $27.27 and Westpac (ASX: WBC) 2.3% lower to $25.41.
Even the charging run of Macquarie (ASX: MQG) was ended, with the stock down 2.9% to $176.70 on Friday, a fall of 1.4% for the week.
The big miners were also weaker, with BHP (ASX: BHP) dipping 2% to $36.85, Rio Tinto (ASX: RIO) down 2.9% to $97.28 and Fortescue Metals (ASX: FMG) falling 2.6% to $14.57.
Blood products and biotechnology giant CSL (ASX: CSL) also weighed on the ASX 200, falling 1.5% to $288.87.
Gold and travel stocks swim against the tide
There were some bright points among the gloom with the traditional safe haven of gold stocks doing well and the reopening of Australia to international travel helping travel stocks as well.
Among the gold stocks, Northern Star Resources (ASX: NST) added a healthy 2.5% to $8.71, Evolution Mining (ASX: EVN) was up 2.3% to $3.57 and Newcrest Mining (ASX: NCM) added 0.8% to $22.82.
A big energy shortage in China helped to push up thermal coal prices to record levels, with Whitehaven Coal (ASX: WHC) shares adding a handy 4% to $3.36.
Helloworld Travel (ASX: HLO) was the best of the travel stocks, up 5.5% to $2.20, while Qantas (ASX: QAN) added 0.7% to $5.71 and Webjet (ASX: WEB) was up 2% to $6.47.
Despite the bad ending to the week, a rally to end September on Thursday saw the ASX 200 outperform the US S&P 500 market for the same month.
The ASX 200 has also posted a 2% gain for the September quarter, although a big question mark hovers over where we go from here, given the uncertainties around a reopening economy, rising vaccination rates and the ongoing COVID-19 pandemic.
Small cap stock action
The Small Ords index fell 2.11% to close the week on 3419.9 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Invex Therapeutics (ASX: IXC)
Clinical stage biopharmaceutical company Invex Therapeutics has inked a long-term collaboration with Korean-listed Peptron, which is a biopharmaceutical company developing sustained-release peptide-based medicines.
Invex has repurposed Exenatide as Presendin, which it is advancing to treat neurological conditions relating to intracranial pressure.
Invex is currently studying its effect in treating idiopathic intracranial hypertension (IIH).
Under the deal, Invex gains access to Peptron’s IP including its preclinical and clinical data packages, proprietary manufacturing expertise and GMP-compliant Presendin for its clinical trials as well as commercial use once it is approved.
In return, Invex will pay for Presendin at a defined price per dose and give Peptron an exclusive licence to commercialise the drug for treating IIH in Korea.
TNG Ltd (ASX: TNG)
After a detailed review, TNG Ltd has elected to establish its TIVAN downstream processing facility at its Mount Peake project site 235km north of Alice Springs.
The decision comes after TNG and global engineering and technology company SMS Group evaluated alternative sites for the plant, which was originally planned to be constructed in Darwin.
TNG managing director and chief executive officer Paul Burton said the decision to develop an integrated mining and processing operation on the existing leases at Mount Peake would deliver a “host of strategic and logistical benefits”.
The company does not anticipate the relocation will extend its project development schedule and even noted it may shorten the environmental approval process for the plant.
Credit Clear (ASX: CCR)
In its first financial year trading on the ASX FY 2021, Credit Clear achieved revenue of $10.98 million which was 70% higher than FY 2020.
Contributing to the revenue was $3.48 million from its digital platform – up 147% on FY 2020’s figure of $1.41 million.
Credit Clear’s digital gross profit also rose 147% with $3.16 million achieved in FY 2021 compared to $1.28 million in FY 2020.
The company has developed an end-to-end digital communication payment platform which is seeing a high rate of clients onboarding as customers move away from traditional collection methods.
Red Dirt Metals (ASX: RDT)
Formerly TNT Mines, Red Dirt Metals has completed its acquisition of the Mt Ida gold project which comprises 19 tenements in the WA’s historic Mt Ida gold mining district.
The project is about 100km from Menzies and Red Dirt chief executive officer Matthew Boyes describes it as a “high quality acquisition”.
A reverse circulation rig has been secured and another is being sourced for the company’s planned 25,000m program which will follow up on high-priority gold and copper targets.
This week the company revealed the project is prospective for lithium after a review of historic drill results.
Previous drilling returned intersections of 24m at 1.84% lithium and 350ppm tantalum from 160m, and 26.2m at 1.84% lithium and 210ppm tantalum from 283m.
The RC program also aims to gauge the lithium potential at the project with drilling expected to begin next month.
New Century Resources (ASX: NCZ)
Zinc miner New Century Resources closed out the week with an announcement on Friday it was entering a period of suspension from official quotation as it “finalises a material strategic acquisition”.
The company is also using the one-month extension available for its annual 2021 financial statement so they can be released at the same time as the transaction.
New Century expects it will release its FY 2021 results along with the full details of the strategic acquisition on or before 11 October.
AssetOwl (ASX: AO1)
The roll-out of AssetOwl’s Pirsee property inspection platform is picking up speed with the company revealing it now has 25 licenced real estate clients officially signed up to the technology.
In the past two months alone, 11 new licenced real estate agencies have adopted the technology, with two of those coming from Victoria.
The 25 licenced real estate agencies using Pirsee manage a combined 9,000 properties – equating to about 6% of WA’s rental market.
Contributing to the higher uptake of Pirsee was a rising number of customers moving from a trial of the platform to a paid licence.
The week ahead
We are in for a really big week with the undoubted focus the meeting of the Reserve Bank board on Tuesday.
While no change is expected to the 0.1% target for official interest rates, there is still a lot of interest in the board’s view of the Australian economy as it deals with a gradual re-opening after a protracted period of lockdowns in the major population centres of Sydney and Melbourne.
There are some other data results to look for, with a continued improvement in weekly consumer confidence which has seen sentiment improve as vaccination rates rise.
Other things to watch out for include job advertisements, construction, trade, car sales, jobs and wages, services and the Reserve Bank’s semi-annual Financial Stability review.
It is a fairly big week for offshore releases as well with US job numbers for September being the focus.
Other US releases include factory orders, new car sales, chain store sales, international trade, purchasing manager surveys, mortgage applications, unemployment and non-farm payrolls.
In China, the survey of purchasing managers in the services sector will be interesting, coming after a dramatic drop last month which was blamed on a rise in COVID-19 infections because of the Delta variant.