Weekly review: market weakens but still heading closer to a record high

Stock market April 2022
WEEKLY MARKET REPORT

The Australian share market took a breather on the first day of April but remains on course to hit a record high this year after a particularly strong March.

The 0.1% or 6 point fall to 7494 points on Friday still left the market up an amazing 6.4% for March as it recovered quickly from Russia’s invasion of the Ukraine and on the back of higher energy and materials companies.

BHP (ASX: BHP) is a great example, powering up 1.2% to $52.39 on Friday, putting it well on the way to reclaiming its record high levels from last year.

Commodity prices rising strongly

Iron ore prices have been on the rise as China moves to stimulate its economy after the continuing effects of the pandemic and the Ukraine crisis.

Plus, there has been a generalised rise in commodity prices which saw the energy and materials sector add around 10% for the month.

Companies that mine critical minerals were also much stronger after US President Biden announced it would be investing to boost production of rare earth minerals.

That was a big help for stocks such as Lynas (ASX: LYC), which rose 3.07% to $11.09 on the back of an existing relationship with the US Department of Defence.

The announcement also buoyed lithium explorers like AVZ Minerals (ASX: AVZ) which hit a record high of $1.31 on Friday before closing up 5.26% at $1.30 – a far cry from the $0.15 levels it was at less than a year ago.

Lithium giant Allkem (ASX: AKE) added a lazy 8.5% for the day to close at $12.40 after hitting a record high of $12.47 during trade.

Star troubles will force board changes

It wasn’t all great news with the Star Entertainment Group (ASX: SGR) shares down 0.31% to $3.24 as the troubled casino company announced chairman John O’Neill would take over the chief executive officer duties while the casino operator finds a replacement for departed Matt Bekier.

Star has also announced that it needs an “accelerated board change” after a forest of allegations of dodgy behaviour at a probity inquiry that led Mr Bekier to resign.

Shares in online property marketplace Domain Holdings (ASX: DHG) are in a trading halt ahead of a $180 million capital raising following the acquisition of Realbase, a real estate technology platform, for $180 million and a contingent consideration.

Domain said the buy will more than double its Agent Solutions’ revenue for the 2022 financial year and increases its market coverage from 35% to about 50% of all Australian property transactions.

Corporate Travel Management (ASX: CTD) also finalised the acquisition of Helloworld Travel’s (ASX: HLO) corporate and entertainment travel businesses in Australia and New Zealand which will see the company be the travel management provider for more than a quarter of ASX 200 companies.

Small cap stock action

The Small Ords index gained 0.5% this week to close on 3346.9 points.

April 2020 ASX 200 chart Small Ords
ASX 200 vs Small Ords

Small cap companies making headlines this week were:

Recharge Metals (ASX: REC)

At its Brandy Hill South project, Recharge Metals has unearthed sulphide mineralisation, including visible copper during diamond drilling.

The sulphides, brecciated zones and visible copper were observed from 92m to end of hole, which reached 393m.

Following a maiden reverse circulation drilling program, Recharge selected three holes to extend with diamond tails to gather valuable structural and lithological information. This drill core will be sent for analysis with results to be reported once received.

Assays from the first four holes of the maiden RC program returned 12m at 1.2% copper from 74m, including 4m at 2.87% copper from 74m; and 1m at 5.92% copper from 147m.

Culpeo Minerals (ASX: CPO)

Another small cap to impress investors this week with visible copper in a drill intercept was Culpeo Minerals, which uncovered copper sulphides in the first hole of its maiden drilling program at Lana Corina in Chile.

Visible copper was noted from 50m to 250m.

Drilling at Lana Corina aimed to confirm the presence of copper in near-surface breccia pipes and verify historical results.

In the maiden program at Lana Corina, Culpeo will drill eight holes totalling 4,000m.

InhaleRx (ASX: IRX)

The Victorian Government’s Department of Health and Human Services has awarded InhaleRx its licence to store and sell controlled substances, including medicinal cannabis.

InhaleRx executive director Darryl Davies said securing the licence was an “important milestone” for the company – enabling it to store and distribute scheduled medications.

He said it opens the door for InhaleRx to create new products and build additional revenue streams.

Respiri (ASX: RSH)

In a bid to accelerate its expansion into the North American market, Respiri has secured New York-based EAS Advisors LLC to guide its efforts.

EAS principal and founder Edward Sugar said he was looking forward to working with Respiri as it rolls-out its wheezo asthma monitoring device and technology in the US.

“We have seen the impressive work EAS has done with other ASX-listed companies in bringing them to a wider US audience and we are delighted to be working with the firm as we continue our growth in that market,” Respiri chief executive officer and managing director Marjan Mikel said.

Respiri launched its wheezo device in the US in December last year under a remote patient monitoring program, and it has received a positive initial response.

ioneer (ASX: INR)

US-based NexTech Batteries has agreed to purchase lithium carbonate and/or lithium hydroxide from ioneer’s Rhyolite Ridge lithium-boron project in Nevada.

NextTech plans to use the lithium chemicals from Rhyolite Ridge to manufacture next generation solid-state batteries, which are expected to “revolutionise the automotive industry”, as well as renewables, portable electronics, and drone applications.

“NexTech is pleased to work with a supplier that is aligned with our mission of making batteries more affordable, more sustainable and safer through patented lithium-sulphur science that’s poised to disrupt multiple industries,” NexTech chief executive officer Bill Burger said.

ioneer intends to produce upwards of 22,000t of lithium chemicals a year for US’ domestic battery supply chain.

Vintage Energy (ASX: VEN)

Spudding of the Cervantes-1 oil exploration well has occurred for Vintage Energy and joint venture partners Metgasco and RCMA Australia.

The well is expected to take about 16 days to reach its desired depth of 2,370m.

Vintage is paying 50% of the well’s costs to earn a 30% stake in the well, and wider Cervantes prospect, which are located in the onshore Perth Basin in Western Australia.

Over in Queensland’s Cooper Basin, Vintage and its partners have acquired their respective shares from Beach Energy’s 15% interest in PRL 211, which contains the Odin and Vali gas fields.

Vintage officially owns 50% of PRL 211 and is operator. The company’s share of the 2C contingent resource now totals 17.5 billion cubic feet of gas.

Tempest Minerals (ASX: TEM)

Another small cap with a copper discovery this week was Tempest Minerals, which unearthed visible copper during maiden drilling at the Orion target within its Meleya project in WA’s Yalgoo region.

The first hole of a deep two-hole drilling program hit multiple zones of sulphide minerals, with copper minerals such as chalcopyrite observed throughout the core and supported by portable XRF readings.

Tempest managing director Don Smith said the presence of visible copper and sulphide minerals was a “spectacular outcome”.

“To make a new discovery on our very first hole in an entirely untested region has far exceeded our expectations,” he said.

The week ahead

The biggest event to watch out for by far in the coming week is the Reserve Bank of Australia board meeting, which will help to solidify the course of official interest rates for the rest of the year.

While rates are not expected to move from the current 0.1% level, there may be some movement on the forward guidance to fight growing inflationary pressures.

At the moment, the market is tipping a lot more rises for this year than the RBA itself so the meeting might bring the two parties closer together.

Other local releases to look out for include retail trade, job advertisements, inflation, consumer confidence, new car sales, international trade and the Reserve Bank financial stability review.

Overseas there are a few things to watch for, particularly in the US.

The US Federal Reserve meeting minutes will be interesting along with factory orders, balance of trade, consumer credit and wholesale inventories while Chinese numbers on services and electric vehicle sales will add context to the economic slowing in China.

This week’s top stocks

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