Weekly review: late Friday rally fails to wipe out losses
WEEKLY MARKET REPORT
Once again, the Australian share market showed signs of life on Friday but not quite enough to prevent it from recording a fourth consecutive lower weekly result.
By the end of trade on Friday, the ASX 200 was up 0.4% at 7283.6 points but was still down by 0.3% for the week.
It wasn’t hard to see where the rise came from, with the local market taking a leaf out of moves on Wall Street where the S&P 500, Dow Jones and Nasdaq were all up firmly.
Market leaders have a good day
Rises in Australia were across the board with 10 of the 11 market sectors up, with real estate the only one suffering a marginal fall.
Some of the stronger sectors included Communications, Health Care, Financials and Materials as many of the big stocks including Telstra (ASX: TLS), CSL (ASX: CSL), Commonwealth Bank (ASX:CBA), Rio Tinto (ASX: RIO) and BHP (ASX: BHP) all made good gains.
Lithium stocks flying
One of the more notable rises was experienced by Liontown Resources (ASX: LTR), with its shares flying up by 13.2% or 19c for the day to $1.63 on heavy volumes despite no news being announced by the company.
Other lithium stocks were also rising but not by nearly as much, with Allkem (ASX: AKE) up 2.2% to $12.36 and Pilbara Minerals (ASX: PLS) gaining 2.1% to $12.36 after China’s Contemporary Amerex Technology confirmed it ceased to be a substantial shareholder of the company.
Small cap stock action
The Small Ords index fell 0.56% lower for the week to close on 2860.6 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Venus Metals (ASX: VMC) and Rox Resources (ASX: RXL)
Joint venture partners Venus Metals and Rox Resources reported several bonanza-grade gold hits from drilling at the Youanmi South gold project in Western Australia.
Results comprised a best intercept of 28m grading 34.81g/t gold.
These results have opened up an area of largely untested mafic volcanic rocks at depth for potential resource growth, and identified a number of near-mine exploration targets at the Midway structure.
True widths are currently unconstrained, and follow-up drilling has been planned to determine the direction of the discovery.
Galan Lithium (ASX: GLN)
A maiden diamond drill hole has generated positive results at Galan Lithium’s Santa Barbara concession within its Hombre Muerto West project in Argentina.
It yielded an average extracted brine grade of 829 milligrams per litre lithium.
New geophysical survey work has shown evidence of brine continuity over the entire Santa Barbara tenure.
Over in Western Australia, Galan began drilling at its Greenbushes South lithium project this week. The initial campaign will involve around 2,500m of drilling to test several key targets identified within the tenement area.
The company has completed construction of the requisite drill pads, and results from ground geophysics conducted earlier this month are expected later this quarter.
Norfolk Metals (ASX: NFL)
Uranium has been confirmed at three target zones within Norfolk Metals’ Orroroo project in South Australia’s Walloway Basin.
Norfolk says it marks the potential of a new uranium province, with the area never having been explored before for the commodity.
The company used a new approach to reviewing gamma anomalies in historical wells drilled by the oil and gas industry, which had previously been overlooked by the minerals industry. Geophysical survey results confirmed uranium occurrences in all three target zones, leading Norfolk to plan further exploration at the project.
Incannex Healthcare (ASX: IHL)
Incannex Healthcare has engaged Catalent to formulate and manufacture a pharmaceutical-grade psilocybin drug for use in clinical trials and wider commercialisation. Under the agreement, Catalent will create a scalable manufacturing process for the psilocybin drug in accordance with cGMP regulations.
Incannex will initially use the product in its proprietary psilocybin-assisted psychotherapy development program.
Incannex’s chief executive officer Joel Latham said the deal with Catalent would provide the company with its own source of pharmaceutical-grade psilocybin for clinical trials and a range of commercial opportunities. Incannex is conducting an ongoing psilocybin-assisted psychotherapy clinical trial program to treat generalised anxiety disorder.
Radiopharm Theranostics (ASX: RAD)
Radiopharm Theranostics is set to acquire New York-based Pharma15 for US$4 million (A$5.9 million).
It’s a deal that will add two renowned experts, Professor David Ulmert and Professor Ken Herrmann, to Radiopharm’s scientific advisory board.
Pharma15 is developing therapies that aim to overcome resistance to treatments for prostate cancer that target the prostate-specific membrane antigen, with the goal of creating the next generation of radiopharmaceuticals.
The acquired assets are currently at the preclinical stage.
Radiopharm will pay US$4 million in cash and scrip to acquire all of Pharma15’s shares. Half of the cash component will be paid now, with the remainder in one year’s time, with the shares issued in two equal instalments.
The week ahead
There is little doubt that the Reserve Bank of Australia’s decision on Tuesday is the pivot around which the week will turn.
While it is close to a dead certainty that the official interest rate will be increased by another 25 basis points to an 11 year high of 3.6%, it is another thing entirely for the decision to be announced.
Adding to the intrigue from the RBA is the fact that the Governor Philip Lowe should add some context and commentary around the decision when he delivers a speech at the AFR Business Summit in Sydney on Wednesday morning.
Will the RBA overshoot and deliver a recession?
The current situation is a crucial one for central bankers with the danger being that if the RBA persists with too many rises it could usher in a recession that could bring a lot of misery and unemployment in its wake.
However, if the bank blinks and waits for more data the risk is that inflation gets a second wind.
Having started the raising sequence late and an active review into its operation, there is extra pressure on the RBA to make the right decision at the right time.
Other than the RBA, the big local statistical releases include the monthly inflation numbers, international trade and detailed retail trade figures.
There is a fair bit of action in China this week with the 14th National People’s Congress which starts on Sunday and discuss the country’s economic and social development, along with February international trade and inflation data.
In the US, Federal Reserve chair Jerome Powell is scheduled to talk at the Senate Banking Committee, with his comments on the strength of the US economy and the direction of inflation and interest of global market interest.
Other releases on nonfarm payroll data will give a bit of an indication of how employment is tracking in the US and also how wages and the jobless rate are travelling.