Market wrap: miners lift but rally remains cautious
WEEKLY MARKET REPORT
A solid rise in the share prices of the big miners helped the Australian share market to lift on the last day of trade for the week.
However, there was plenty of caution shown even as big issues such as the US debt ceiling began to be resolved and fears of an imminent rise in official US interest rates receded.
By the close on Friday the ASX 200 was up 0.5% to 7145.10 points but still fell over the week for the second time in a row, this time down just 0.1%.
The Australian market continued to lag moves in the US, which had earlier put in a 1% rise on the S&P 500, a 1.3% rise on the Nasdaq Composite and a 0.5% rise on the Dow Jones index.
Rising wages could have held market back
One of the reasons for caution could have been the Fair Work Commission decision to deliver a significant 5.75% rise in the minimum award wage – well above the 4-5% range expected by most analysts – however a rise in the S&P 500 futures was enough to see our market firm.
Six of 11 sectors rose with the most impressive rises recorded by materials and energy after iron ore futures rose 1.6% to US$103.70 a tonne and oil prices firmed 1.1% before this weekend’s OPEC+ meeting.
Copper futures were also stronger, up 0.8% on increasing confidence that a tentative Chinese recovery could be underway.
Miners bulk up
The rise in commodity prices saw heavyweights such as BHP (ASX: BHP) shares rise 2.9%, Fortescue (ASX: FMG) shares up 1.7%, and Rio Tinto (ASX: RIO) up 2.6%.
It was also a strong day for the gold miners with Newcrest Mining (ASX: NCM) up 4.4%, Northern Star (ASX: NST) up 2.6% and Evolution Mining (ASX: EVN) rose 2.3%.
Even the lithium miners had a good day with Pilbara Minerals (ASX: PLS) up 3%, Liontown Resources (ASX: LTR) rose 1.5% and Allkem (ASX: AKE) up 3.4%.
AS you would expect with a rising oil price, local energy stocks were higher, with Woodside (ASX: WDS) up 1.3% and Santos (ASX: STO) shares firming 1.8%.
As always, there were patches of weakness, mainly reserved for defensive shares such as the consumer staples index which shed 1.3% and healthcare, which was down 0.6%.
Those sectoral falls were revealed by some heavyweight falls such as Woolworths (ASX: WOW) shares which fell 1.5% and rival supermarket chain Coles (ASX: COL), which saw its shares sag by 1.9%.
In the healthcare orbit, heavyweight CSL (ASX: CSL) shares shed 0.8% and Cochlear (ASX: COH) shares lost 1.4%.
Small cap stock action
The Small Ords index rose 0.84% for the week to close at 2831.6 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Aurora Labs (ASX: A3D)
3D printing specialist Aurora Labs signed a non-binding memorandum of understanding with Saudi Arabian Oil Company (Aramco), potentially for various 3D printing developments.
The agreement includes the interchange of information related to Aurora’s AL250 metal 3D printer and its patented multi-layer concurrent printing technology.
It also suggests potential joint development of 3D printing business opportunities in Saudi Arabia.
In May, Aurora Labs started a research project with Curtin University, exploring 3D printing within the Ausindustry Entrepreneurs Program.
NeuRizer (ASX: NRZ)
Emerging urea producer NeuRizer has signed a two-year deal with Meijin Energy Investment (Hainan) Co for hydrogen production in China.
The joint venture will initially develop hydrogen at two selected sites, with Meijin paying NeuRizer $38.32 million per site to access its knowledge and patents.
After site suitability assessments, Meijin will fund a Stage 1 demonstration facility construction, and commercial projects will be co-funded based on shareholding.
NeuRizer successfully produced large quantities of hydrogen during a pre-commercial demonstration phase at Leigh Creek and plans to replicate this in China.
The hydrogen produced can be traded on China’s first hydrogen energy trading platform and used in Meijin Energy’s operations.
Zelira Therapeutics (ASX: ZLD)
Zelira Therapeutics this week reported that its cannabinoid-based drug ZLT-L-007 has outperformed Pfizer’s Lyrica in a clinical trial for diabetic nerve pain.
The trial, involving 60 subjects, found ZLT-L-007 achieved a significant reduction in numerical rating scale pain scores, in some cases providing up to four times the pain relief of Lyrica. The results of the trial have encouraged Zelira to consider further progression of ZLT-L-007 into formal US Food and Drug Administration clinical trials.
Zelira’s chief executive officer Dr Oludare Odumosu emphasised the drug’s potential for managing pain and its alignment with the company’s strategy of developing scientifically rigorous, clinically validated, and patent-protected cannabinoid-based drugs.
The chairman, Osagie Imasogie, highlighted the market potential of the novel product, particularly as Lyrica is a multi-billion dollar revenue generator.
Aurelia Metals (ASX: AMI)
Aurelia Metals has appointed Bryan Quinn as its new managing director and chief executive officer.
Quinn brings significant experience to the role, including over 27 years with BHP and a recent leadership role at OZ Minerals.
Alongside Quinn’s appointment, Aurelia has also announced a $140 million funding plan for its Federation project.
This funding includes about $100 million of new senior secured financing facilities and a $40 million fully underwritten equity raising.
These funds will be used to reinvigorate the Federation development, repay a term loan, and replace an existing guarantee facility, thereby releasing $46 million of restricted cash.
Vulcan Energy Resources (ASX: VUL)
Vulcan Energy Resources and car manufacturer Stellantis NV have agreed to the first phase of a geothermal project aimed at decarbonising Stellantis’ industrial site in Mulhouse, France.
The project is the first of its kind in France to explore geothermal renewable energy for decarbonising and localising energy supply for Stellantis’ European operations.
The first phase involves a pre-feasibility study for constructing geothermal renewable energy assets and potential lithium production.
Stellantis will fund 50% of the project’s development, and both parties will seek public funding.
Subject to a positive pre-feasibility study, Vulcan and Stellantis plan to develop the project as a 50:50 joint venture.
The week ahead
It is not hard to see where the action lies in the coming week with the Reserve Bank board meeting on Tuesday to ponder what happens to official interest rates.
Most economists think this is not a live meeting because the economy has been slowing and inflation is easing but the stubbornly high Australian inflation numbers mean there will still be a lot of scrutiny of the RBA announcement and an interest rate rise is not out of the question.
Whatever happens there is plenty of monetary policy commentary around with the RBA Governor Dr Philip Lowe and deputy Governor Michele Bullock, both giving speeches on Wednesday.
Also out on Wednesday are economic growth figures which are expected to show that the local economy grew by 0.4% in the March quarter.
It is a fairly thin week for data in the US although market watchers will be keen to witness the actual resolution of the debt ceiling crisis which now only awaits passage in the US Senate.
Other than purchasing manager gauges the main focus will be stock specific as scores of large US companies hold shareholder meetings and drug giant Merck will hold an investor event on Tuesday.
Chinese inflation data is released on Friday which will be interesting because unlike the rest of the world, China has been struggling with falling prices, with deflation not out of the question.
Australian shareholder meetings include Silver Lake Resources (ASX: SLR) while investor strategy days for ASX Limited (ASX: ASX) and Boral (ASX: BLD) are worth keeping an eye on.