Weekly review: new COVID variant slams market for a true Black Friday

WEEKLY MARKET REPORT

A worrying new COVID-19 variant was enough to send the Australian share market into a Black Friday swoon, pushing the ASX 200 index down 1.7%.

It was the third week in a row of declines and the market was down 2% at one stage before recovering to close 128 points lower to 7,279.30.

Falls were fairly widespread with every sector down and only 14 stocks rising for the day, but it was the energy stocks that felt the most heat as the release of emergency oil reserves sent the price of crude down.

Energy cops the brunt

The energy sector was dropped 4.6%, with Woodside Petroleum (ASX: WPL) falling 5% to $21.60, while Santos (ASX: STO) shares shed 4.8%.

It was also another really bad day for the travel sector, with news that a concerning COVID-19 variant found in South Africa resulting in countries such as the UK slapping travel bans to try to prevent international spread.

Airlines hit

Flight Centre shares (ASX: FLT) shed 7.45% to $17.14, Webjet and Corporate Travel fell more than 5% and Qantas lost 5.5% to $5.

The Thanksgiving holiday in the US didn’t help with no meaningful offshore lead other than a futures market that was suggesting Wall Street would take a hit of around 1.3% when it reopened on Friday night local time.

Rising iron ore price slows mining falls

One minor bright spot for the Australian market is the returning strength in the iron ore price, although not even five days of price rises due to renewed optimism for the Chinese construction sector was enough to send the big miners higher.

Amid the general market rout, BHP (ASX: BHP) shares dropped 1.5%, Rio Tinto (ASX: RIO) lost 2.2% and Fortescue (ASX: FMG) shares fell 3.8%.

Banks lower but Macquarie crashes the big four

The big banks were also generally weaker with Commonwealth (ASX: CBA) down 1%, Westpac (ASX: WBC) 2.54% lower, NAB (ASX: NAB) dropping 2.37% and ANZ (ASX: ANZ) dipping just 0.73% despite ASIC announcing it will sue the bank over home loan referrals.

Macquarie (ASX: MQG) shares were down 3.22% in a week during which its market capitalisation passed that of ANZ and drew closer to Westpac’s, despite the fact that by raw profits it is the smallest.

That says a lot about the market’s confidence in Macquarie’s growth profile in the investment banking sphere, compared to the retail banking businesses of the big four.

AMP (ASX: AMP) again had a bad day on Friday, with its shares down 4.31% to $1 after it flagged a $234 million additional impairment charge for its fiscal 2021.

Appen (ASX: APX) shares also took a big hit, plunging 18.81% to $9.45 after Macquarie research raised the chance of a profit downgrade as Appen’s big customers become less reliant on its data services.

Dividends help to support the market

One thing that might provide some downside protection for the Australian market from here is the continuing rise in dividend payments.

The latest Janus Henderson Global Dividend Index recorded a 126% jump in Australian dividends in the third quarter to reach a record $41.9 billion, compared to 11.3% growth for the rest of the world.

The big miners and banks were central to the rising tide of dividends and given that they are now within 5% of pre-pandemic levels and have recovered faster than in other parts of the world, the payments will help to support the local market.

Small cap stock action

The Small Ords index fell 3.44% this week to close on 3,446.2 points.

Black Friday share market chart ASX 200
ASX 200 vs Small Ords

Small cap companies making headlines this week were:

Altech Chemicals (ASX: ATC)

Battery material technology developer Altech Chemicals says it has “cracked the silicon barrier” after developing a composite graphite-silicon anode with 30% higher energy retention than conventional lithium-ion battery materials.

The achievement comes after 12 months of research and development where specially-treated silicon particles were combined with regular battery-grade graphite to produce the lithium-ion electrode.

After testing, it was found the silicon-graphite material offered 30% higher retention capacity than graphite alone.

“A 30% higher energy capacity lithium-ion battery would translate to significant cost benefits and potentially increased range in the case of electric vehicles,” Altech managing director Iggy Tan explained.

Wide Open Agriculture (ASX: WOA)

It was a major milestone for Wide Open Agriculture this week after it revealed its OatUP oat milk would be sold throughout Woolworths’ supermarkets nationwide.

Wide Open’s OatUP will now sold at “approximately half” of the retail supermarket giant’s stores across Australia.

The first OatUp will be sold from Woolworths’ “The Kitchen” Double Bay store in Sydney in March next year.

This agreement represents the largest distribution deal for Wide Open which sells the product under its Dirty Clean Food brand.

It is anticipated the distribution agreement will bring in more than $750,000 worth of sales annually.

Wide Open expects the continued expansion of its OatUp distribution throughout Australia and Asia will eclipse 1,000 stores this financial year.

Odin Metals (ASX: ODM)

Odin Metals has intercepted copper sulphide mineralisation during the maiden drilling program at the Cymbric Vale prospect within its Koonenberry project in New South Wales.

The company completed 10 reverse circulation holes at the project and noted visible copper had been unearthed in most holes, which are close to a historic hole that returned 20m at 0.73% copper.

Odin executive chairman Jason Bontempo said the company was “delighted” to be hitting copper mineralisation in its first holes at the Cymbric Vale target.

“More importantly, the recent drilling shows the potential of the still open mineralised strike over 1km within a trend of heliTM targets that extend over a further 7km of strike at Cymbric Vale,” he added.

Any economic mineralisation at Cymbric Vale is expected complement the company’s mineral resource at the Grasmere deposit of 5.75Mt at 1.03% copper.

Vection Technologies (ASX: VR1)

Real-time software company Vection Technologies has unveiled its FrameS “metaverse” as part of its ambitions of becoming an embedded app within Cisco’s Webex in the second half of FY2022.

The company considers the FrameS release as a “critical milestone” that will allow organisations to autonomously build self-contained immersive metaverses.

Metaverses are enterprise focused, dynamic 3D worlds where people can participate equally from anywhere.

According to Vection, Webex by Cisco is the “leading enterprise solution” for video conferencing, online meetings, screen share and webinars with more than 590 million monthly participants.

Caravel Minerals (ASX: CVV)

Advanced copper explorer Caravel Minerals has revealed a 53% increase to the resource at its namesake project in Western Australia.

The updated resource now totals 1.18Bt at 0.24% copper and 48ppm molybdenum for 2.48Mt of contained copper.

Caravel says the updated resource now makes its namesake project the largest undeveloped copper deposit in Australia.

The resource is based on the Bindi deposit and more than 100Mt of the estimate has been classified as measured.

ECS Botanics (ASX: ECS)

Australian medicinal cannabis cultivator and producer ECS Botanics and Sun Pharma have executed a collaborative supply and toll processing agreement for cannabis biomass extraction and resin creation.

Under the deal, ECS Botanics will cultivate cannabis biomass and provide it to Sun Pharma, which will then extract medicinal cannabis biomass to produce a Good Manufacturing Practice certified resin.

Sun Pharma will supply the resin to ECS Botanics as part of an offset arrangement.

Meanwhile, ECS Botanics will provide further cannabis biomass to Sun Pharma to meet its commercial requirements.

Sun Pharma is the subsidiary of Sun Pharmaceutical Industries which is the fourth largest generic pharmaceutical company worldwide.

The week ahead

This week will finally answer the question of how fast the Australian economy is growing with the GDP figures released on Wednesday.

This time due to significant COVID-19 lockdowns in Sydney and Melbourne, the GDP numbers are likely to be negative, with most pundits predicting a fall of around 4.3% for the September quarter.

Surprises on the upside or downside in the National Accounts could certainly be a market moving event.

Other things to watch out for this week include business indicators, consumer confidence, credit and debit card spending data, purchasing managers, lending, retail trade, new car sales and the CoreLogic national Home Value index for November.

It is also a fairly busy week overseas, with a swag of US figures released including non-farm payrolls, purchasing manager surveys, home sales and prices, chain store sales, consumer confidence, private sector payrolls, new car sales, employment and unemployment and manufacturing figures.

One really significant global event will be the meeting of OPEC+ oil producers on Thursday, which is set to decide whether it will stay with its plan to add 400,000 barrels a day to production quotas in January 2022.

Oil has played a big part in the latest round of global inflation as the world swung from a glut to very tight conditions after many COVID-19 lockdowns ended and industry started up again.

There are some announcements to look out for in China as well, with the main features being official manufacturing and services sector reports and on Friday the Caixin purchasing manager index results for the services sector.

This week’s top stocks

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