Weekly review: market ponders the future without Trump

Market without Trump January 2021 ASX Afterpay commodities
WEEKLY MARKET REPORT

Share markets are still struggling to come to terms with what a post-Trump world will look like, resulting in a fairly flat end to the week for the Australian market.

The ASX 200 shed 0.6% for the week as the incoming Joe Biden Presidency looks set to be overshadowed by continuing moves to impeach outgoing Donald Trump for a second time well after he has left the top job.

Investors were also reacting to President-elect Joe Biden’s lower than expected US$1.3 trillion (A$1.68 trillion) coronavirus plan that includes US$20 billion in a national vaccination program, US$1,400 stimulus payments plus a boost to unemployment insurance supplements to US$400 a week.

Afterpay hits a new peak

While US events have been dominating the Australian market with lower US futures causing a fade late in the day, there have been some local standouts including buy now pay later pioneer Afterpay (ASX: APT), which set a new price record on Friday even as the index rose just 0.1% for the day to close at 6715.4 points.

Afterpay closed at a stunning $133.15 after rising an impressive 10% for the day after US rival Affirm almost doubled on its first day of trading on Nasdaq.

Miners up on rising commodities

It was also a great day for mining giant BHP (ASX: BHP) which added 1.65% to hit an all-time record of $46.82 as stronger commodity prices pushed it higher.

It was a better day for the other iron ore players too with Rio Tinto (ASX: RIO) up 0.7% to $120.52 and Fortescue Metals (ASX: FMG) up was 1.7% to $25.18.

Most of the banks were higher too with Commonwealth Bank (ASX: CBA) running against the tide by falling 1.1% to $85.38 even as NAB (ASX: NAB) and Westpac (ASX: WBC) each added 1.5% and ANZ (ASX: ANZ) rose by 0.2%.

Those individual stock victories are also a reminder that despite a flat week, the market is not far off an 11-month high despite a lot of political machinations out of the US causing plenty of uncertainty.

That underlying strength was shown by early trade which saw the ASX 200 rise by as much as 0.6% on Friday but the market fell in line with US futures as the day wore on.

Pro Medicus (ASX: PME) continued its stellar run following another US deal, up 4.5% to $38.19 but payments company Tyro (ASX: TYR) was down 11.8% before entering a trading halt as it battles EFTPOS terminal outages and short sellers.

Tyro shares fell 29% for the week amid unhappy small business customers that struggled to process transactions.

In other market news, shareholders in Saracen Minerals (ASX: SAQ) voted solidly in favour of a merger with Northern Star (ASX: NST), removing another barrier to the union.

Small cap stock action

The Small Ords index fell 1.48% for the week to close on 3087.2 points.

2021 ASX 200 chart Small Ords January
ASX 200 vs Small Ords

Small cap companies making headlines this week were:

Piedmont Lithium (ASX: PLL) and Sayona Mining (ASX: SYA)

Aspiring integrated lithium producer Piedmont Lithium took a 19.9% stake in Sayona and a 25% interest in Sayona’s wholly owned subsidiary Sayona Quebec for a total of US$12 million (A$15.5 million).

As part of the deal, Piedmont has also signed a binding contract to take 60,000tpa or 50% (whichever is greater) of Sayona Quebec’s planned spodumene concentrate production.

“The investments are additive to Piedmont from a resources and reserves perspective, and the spodumene supply agreement will offset our Tesla commitments in the near term and position us for longer term growth in lithium hydroxide production,” Piedmont president and chief executive officer Keith Phillips said of the deal.

AVZ Minerals (ASX: AVZ)

Over in the Democratic Republic of Congo, AVZ Minerals which owns the world’s largest hard rock lithium deposit, has received confirmation its proposed primary lithium sulphate product from Manono is suitable as battery feedstock.

Ontario-based Kingston Process Metallurgy conducted bench-scale tests on 1.5kg of PLS generated from the company’s flagship Manono spodumene asset.

Testing was based on AVZ’s proposed flow sheet and shows PLS containing more than 80% lithium can be produced from Manono ore.

Nanollose (ASX: NC6)

Impressing investors this week was Nanollose which filed a joint patent application with Grasim Industries for high tenacity lyocell fibre made from microbial cellulose.

The technology can produce a nullabor fibre that is “finer than silk” and “significantly stronger” than conventional lyocell, which is traditionally made from wood pulp.

According to Nanollose, the lyocell market is forecast to be worth US$1.5 billion by 2024, with the material popular due to its strength and comfort characteristics.

Galan Lithium (ASX: GLN) and Lithium Australia (ASX: LIT)

Lithium brine focused Galan Lithium has expanded its presence in the hard rock lithium space after entering an agreement to acquire 80% of Lithium Australia’s Greenbushes South project in WA.

The project spans 353sq km and is only 3km south of the world’s largest operating hard rock lithium mine.

Galan managing director Juan Pablo Vargas de la Vega said the project was “highly prospective” and located in a “world renowned lithium district”.

In return for the project equity, Galan will issue 1.2 million shares to Lithium Australia and fund exploration until completion of a PFS.

Sparc Technologies (ASX: SPN)

Recent test work in collaboration with the University of Adelaide has delivered a “significant” performance boost to coatings using Sparc Technologies’ graphene additives.

Test work evaluated the performance of a range of graphene-based additives in coatings using various raw materials, processing methods and graphene quantities.

It was found that Sparc’s graphene additives improved corrosion performance up to 73% and increased adhesion by 19%.

Blackstone Minerals (ASX: BSX)

Nickel explorer Blackstone Minerals will spin out its non-core gold projects into Codrus Minerals which will undertake a $5 million IPO next quarter.

Blackstone plans to retain a 50% interest in the spin out to maintain any upside to exploration across the projects.

“Codrus will provide an excellent platform and catalyst for both growth and monetisation of these assets,” Blackstone managing director Scott Williamson explained.

The spin out paves the way for Blackstone to completely focus on advancing its flagship Ta Khoa nickel, copper, and platinum group element project in Vietnam.

Respiri (ASX: RSH)

eHealth SaaS company Respiri has launched its wheezo devices throughout the SuperChem pharmacy network in Australia.

Originally from WA, SuperChem also has branches in NSW and South Australia – with a total of 14 pharmacies throughout the three states.

In addition to SuperChem, Respiri is in discussion with other pharmacy groups, which amount to more than 1,000 stores across Australia.

Since the December quarter last year, Respiri has onboarded three pharmacy groups, with wheezo currently available throughout 460 Australian stores.

The week ahead

While the US market will be closed on Monday for the Martin Luther King Jr holiday, there will be plenty of market shifting news around as Biden is inaugurated on Wednesday and police remain on alert for any signs of further demonstrations.

US companies will be reporting quarterly earnings all week so there will be plenty of company specific reaction happening as investors look for signs that profits are keeping up with rising valuations.

China will also come into focus on Monday with annual economic growth figures out and tipped to be around 6.2% while there will also be retail, production and investment figures released.

Here, in Australia, the main data to look out for is Thursday’s labour force survey for December which is set to show how many jobs were added as the economy slowly recovered from COVID-19 lockdowns and also a hopefully lower unemployment rate.

Other figures to watch for include consumer sentiment, card spending and building activity.

This week’s top stocks

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