Weekly review: market enjoys some sunshine and surges into Easter but the weather could quickly change

WEEKLY MARKET REPORT

The Australian share market surged its way into Easter with an impressive 3.5% rise but the welcome rally could be as fleeting as good Autumn weather.

While Thursday was a great day to bask in the sun as every sector of the market rose with hard hit property trusts (REITS) and energy stocks particularly strong, there is still plenty of potential pain out there as the COVID-19 pandemic continues to wreak havoc around the world.

Still the ASX 200 enjoyed its moment in the sunshine, jumping up 180.4 points on Thursday or 3.5% to 5387.3 points – the highest close since the depths of March 13.

Rebound now 22.4 % off lows

In the holiday shortened Easter week the index was up 6.3%, which means the rebound since March is an impressive 22.4%.

Solid improvements in the big four banks was the big contributor, adding about a third of the market’s gains as the shock of potentially cancelled or reduced dividends after regulator APRA warned that banks should hoard capital was overwhelmed by some solid buying.

Oil meetings vital for price direction

Still, anything could happen during the long Easter break the major oil producing nations get ready to meet to discuss potential reductions in oil supply.

That should result in a fairly binary outcome.

If the warring parties of Russia and Saudi Arabia come to an agreement to cut output, oil prices could bounce from their current very low levels.

However, should the talks collapse, we could literally be scraping the bottom of the barrel with prices once again threatening to slump towards the 18-year lows they reached last week.

CSL shows the path higher

Heavyweight CSL Limited (ASX: CSL) was another really strong performer, up an impressive 5.5% or $17.06 to $329 after it reaffirmed its FY20 profit guidance – a feat not too many other companies will accomplish.

Industrials were also much stronger, up more than 5%, as many of the hardest hit sectors in the rout began to find favour with buyers who are scouting through the market looking for bargains.

Action aplenty in media

There were even some signs of corporate activity as oOh!media (ASX: OML) shares jumped 19.7% or 12c to 76c after media company HT&E bought at least 11 million shares in the outdoor advertiser.

That 1.8% buy sparked rumours of a takeover bid and traders were quick to jump on the rumour.

There was some other action in the media space Seven West Media (ASX: SWM) agreeing to delay the $40 million sale of its Pacific Magazines business to Bauer Media’s May 1, with all other details of the deal remaining the same.

There has been constant speculation that Bauer has gone cold on the deal due to the advertising collapse that came with the COVID-19 pandemic and Seven has taken legal action to ensure the deal completes.

Pacific Magazines includes titles such as New Idea, Better Homes & Gardens and Marie Claire.

Southern Cross Media (ASX: SXL) was another media stock to recover, up 18.2 % to $0.13.

Small cap stock action

The Small Ords index rallied 7.44% this week to close on 2255.1 points.

ASX200 Easter 2020 chart
ASX 200 vs Small Ords

Small cap companies making headlines this week were:

AssetOwl (ASX: AO1)

Real estate management technology company AssetOwl impressed investors this week after it revealed it was including a virtual tour add-on to its inspector360 property management platform.

COVID-19 related distancing regulations have created a challenge to real estate agents who need to manage or display properties with minimal visitation.

To assist with managing the situation, AssetOwl has fast-tracked development of an add-on to inspector360, which enables photographic records within the platform to be used as a virtual tour of properties.

The add-on now enables a real estate agent to perform virtual tours with a 360-degree lens camera. A recording can then be uploaded to online sales platforms.

AssetOwl chairman Simon Trevisan said the changes caused by COVID-19 were likely to last long after the pandemic was over and that virtual house tours would become increasingly the norm.

“AssetOwl is uniquely placed in Australia to provide managers with a tool to allow virtual inspections and provide a qualitatively better product more efficiently than via the old processes.”

“We will now be able to help our sales agent customers and their clients by providing the tools they need to conduct successful virtual house tours,” he added.

G Medical Innovations Holdings (ASX: GMV)

The US FDA has granted G Medical Innovations over-the-counter authorisation for its Prizma medical smartphone case – enabling the device to be sold in the US without a prescription.

Fast-tracking the device’s FDA authorisation was the US’ COVID-19 publish health emergency policy.

G Medical’s Prizma device enables people to turn their smartphone into a mobile medical unit that monitors vital signs including temperature, heart rate, stress levels and blood oxygen saturation – detecting symptoms associated with infection and chronic illness.

Users then store their medical data in the cloud, which can be shared with healthcare providers and family.

G Medical Innovations chief executive officer Dr Yacov Geva heralded the over-the-counter approval as a significant achievement for the company.

“This is a monumental development which provides us with direct access to consumers, physicians and healthcare providers who are currently in need of our solutions,” he said.

“We are confident the product will be well-received and can hopefully assist in reducing the burden on the [US] healthcare system, which is undergoing capacity challenges directly related to the COVID-19 public health emergency,” Dr Geva added.

Commercial negotiations to fast-track market entry for Prizma are underway.

The US FDA approval follows licences received from Taiwan’s FDA and Italy’s Health Ministry earlier in the week.

MetalsTech (ASX: MTC)

MetalsTech has revealed a resource for its Sturec project in Slovakia of 21Mt at 1.5g/t gold and 11.6g/t silver for 1.026Moz of gold and 7.94Moz silver within an optimised open pit shell.

An additional underground resource has been defined of 388,000t at 3.45g/t gold and 21.6g/t silver for 43,000oz gold and 270,000oz silver.

MetalsTech chairman Russell Moran said the Sturec resource was positive progress for the project.

“A million ounces of gold is a great start, and we are particularly pleased the estimation was completed using gold and silver recovery rates taken from the thiosulphate testing,” he said.

The company is looking to process the gold using Clean Earth Technologies’ (CET) proprietary cyanide-free ammonium thiosulphate technology.

Australia’s CSIRO initially developed the technology over 10 years and collaborated in 2014 with Barrick Gold to implement it at the Goldstrike mine in Nevada, which now generates about 350,000oz gold annually.

Moving forward, MetalsTech plans to restart mining at the project’s Andrej adit with mined ore to undergo testing under a co-operation agreement with CET which now owns the rights to the processing technology.

Sienna Cancer Diagnostics (ASX: SDX) and Bard1 Life Sciences (ASX: BD1)

Bard1 Life Sciences has agreed to acquire all the outstanding issued capital in Sienna Cancer Diagnostics in a deal that has been labelled a “transformational transaction”.

The rationale behind the merger is to create a world-leading cancer company for early screening, diagnosis, prognosis, treatment and monitoring of various cancers.

Bard1 chief executive officer Dr Leearne Hinch said the merger would create an Australian medical technology company that is better positioned to raise capital, attract new investors and pursue growth options.

“Sienna’s in-market bladder cancer test and new molecular NETs technology combined with our strong cancer diagnostics pipeline and scientific expertise in tumour biology will create a larger and more diversified medtech company with a clear focus on delivering innovative cancer diagnostic products to help save patient lives,” Dr Hinch added.

Meanwhile, Sienna chairman De Geoff Cumming said the merger would combine a “deep pipeline of cancer diagnostic tests” and an “established market” for commercialisation.

Under the deal, Bard1 will acquire 100% of Sienna’s issued capital by offering Sienna holders 13 shares in Bard1 for every five Sienna shares held.

The offer is valued at around $23.7 million – equating to $0.06 per Sienna share, which is a 119% premium to Sienna’s one-month volume weighted average price of $0.027 per share.

Next Science (ASX: NXS)

Biotechnology company Next Science has secured registration approval for its non-toxic surface disinfectant LMN8 from the US Environmental Protection Agency.

LMN8 draws on Next Science’s Xbio technology to eliminate biofilm-based bacteria, with the product also cleared to include a claim for effectiveness against biofilm on its labelling.

Biofilms make bacteria stronger and more resistant and tolerant of current eradication methods including antimicrobial agents and disinfectants.

LMN8 uses the Xbio technology to break the strong metallic bonds that hold a biofilm matrix together. This exposes the bacteria within the biofilm – making it more vulnerable to eradication.

Next Science managing director Judith Mitchell has said the EPA registration was a “significant milestone” for the company.

“Receipt of EPA registration now gives us the opportunity to more widely assist hospitals and communities in the fight against infection,” she said.

Micro-X (ASX: MX1)

As COVID-19 creates ongoing demand for its mobile x-ray technology, Micro-X generated stronger than anticipated results for the March quarter.

The COVID-19 pandemic has created a “major shift in the global market for mobile x-rays” including Micro-X’s Carestream DRX Revolution Nano x-ray system (Nano).

For the March quarter, purchase orders for the units totalled $3 million – up from cash receipts of $800,000 achieved in the preceding December period.

Since February, Micro-X has received $3.6 million in orders for its technology, including $600,000 received earlier this week.

The company said COVID-19 has prompted government health agencies to use “emergency procurement processes quite different from the normal purchasing or tendering cycles of eight-to-12 week delivery.”

As part of this, Micro-X is attempting to shorten delivery times to within four weeks.

“These units are being progressively shipped and whilst new demand is difficult to estimate, the $600,000 of Nanos already ordered in the June quarter is highly encouraging,” Micro-X stated in its quarterly report.

The week ahead

Considering the Australian share market is shut for Good Friday and Easter Monday with trade only resuming on Tuesday, there is plenty of interesting data being released in the next week.

The main game, of course, is tracking the containment of COVID-19 but the employment report due out on Thursday will also be keenly watched in a bid to see how the close down of chunks of the Australian economy is being reflected on the ground.

It will show some of the effects of the layoffs in March with the numbers likely to have worsened further since then.

The quarterly US earnings season also kicks off next week and will shine a light on some of the initial effects of the shutdown on US businesses.

Other Australian stats to watch out for include a range of business and consumer confidence indicators that should give some idea of how severe the reaction to the shutdown has been.

This week’s top stocks

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