Market wrap: plenty of underlying action as market moves sideways

At first glance, it appears not much happened on the Australian share market, which managed to eke out a 0.2% gain for the week after a 0.2% retreat on Friday.

That is almost the textbook definition of sideways trading but looking further beneath the 17.9 point fall to 7339.5 points on the ASX 200 there was plenty of action happening amid the fairly sedate overall market moves.

Lower taxes crown a new Star

One of the more extraordinary moves came from the NSW government which overhauled changes in casino taxes to ensure Star Entertainment’s (ASX: SGR) operation would not be unviable.

The change to a “transitional” levy over the next seven years put a rocket under Star’s share price, which jumped 18% to $1.15, making the stock one of the surest bets around on Friday.

That wasn’t enough to impact the broader market though, with the dominant story being a fall in the price of energy stocks as 8 of the 11 sectors slid into the red.

Lower energy share prices prevail

The energy sector fell 1.9% on Friday hot on the heels of a four-day rally on the back of elevated crude oil and gas prices.

Contributing to that easing was a 2% fall in the price of Woodside Energy (ASX: WDS) shares and a 3% fall in the share price of Whitehaven Coal (ASX: WHC).

Some dovish comments by the outgoing Reserve Bank governor Dr Philip Lowe saw the Australian dollar post a weekly loss on Friday, not helped by the fall in US inflation which came in lower than expected.

The Australian dollar was down 0.7% for the week – the fourth weekly fall in a row – even as the US Fed seems more likely to hold rates steady at its next meeting.

Retailers regain some favour

Retailers had a better day than they might have expected after shares in furniture retailer Nick Scali (ASX: NCK) surged 13.3% to $12.12 after the retailer reported a 34.9% jump in full-year net profit to $101.1 million.

That was well ahead of market expectations, although chief executive Anthony Scali made it clear that he was still bracing for a rugged year to come.

Shares in other retailers firmed on the news with JB Hi-Fi (ASX: JBH) up 2.5% in the lead up to its profit result this week and Harvey Norman (ASX: HVN) shares were also up 3.2%.

News Corp (ASX: NWS) shares managed to rise 2.6% to $32.61 despite Rupert Murdoch’s media conglomerate revealing a 75% fall in full year net profits.

Investors were apparently placated by a $US160 million ($245 million) cut in costs over the past six months and the wonders of Artificial Intelligence (AI) in producing masses of media content.

Vitamins giant Blackmores was also removed from the official list of the ASX after its $1.9 billion takeover by Japanese brewer Kirin.

Small cap stock action

The Small Ords index edged 0.71% higher for the to close at 2870.8 points.

Small cap companies making headlines this week were:

West Cobar Metals (ASX: WC1)

West Cobar Metals this week revealed a near fourfold increase in the resource base of the Salazar rare earth element (REE) project in Western Australia, following a Phase 1 aircore program.

The combined resource now totals 190 million tonnes of total rare earth oxide (TREO), with Newmont’s resource increasing to 83Mt and O’Connor having a maiden inferred mineral resource of 107Mt.

The project includes a high proportion of total magnet rare earth content and low levels of deleterious radioactive elements.

The Salazar project, located on non-agricultural and undeveloped state land, has been drilled since 2011, leading to the discovery of potentially economic concentrations of REEs, and is moving closer to becoming a significant producer of clay-hosted REEs in Australia.

Next Science (ASX: NSX)

Next Science conducted a pilot knee study using its Xbio products, led by Dr. Andrew Wickline, involving 60 patients who underwent total knee arthroplasty.

The study compared a traditional iodine lavage with Next Science’s surgical irrigation solution Xperience, measuring outcomes up to six weeks post-operation.

The results showed a 54% lower inflammation rate with Xperience, leading to a consistent increase in range of motion, up to 20% improvement in pain score, and significantly reduced opioid usage.

Next Science believes the findings present a commercially significant opportunity, positioning Xperience to become a standard in hip and knee replacement surgeries, especially as biofilm-based infections and antimicrobial resistance are increasing, with potential greater mortality rates than cancer by 2050.

Incannex Healthcare (ASX: IHL)

Incannex Healthcare’s subsidiary, Clarion Clinics Group, is accepting registrations for two new psychedelic-assisted therapy (PAT) treatments for treatment-resistant depression (TRD) and post-traumatic stress disorder (PTSD) in Australia.

The treatments, using psilocybin and MDMA, will be conducted in a specially designed clinic near Melbourne’s city centre, featuring seven treatment rooms and other facilities conducive to PAT.

The clinic’s team, comprising experienced psychiatrists and psychologists, has developed a nine-month treatment program, and the psychiatrists must be approved under the TGA’s Authorised Prescriber Scheme.

Clarion Clinics’ first model clinic in Melbourne is nearing completion, and the company plans to open more clinics across Australia, offering a new approach to treatment-resistant mental health cases.

Lithium Australia (ASX: LIT)

Lithium Australia announced a major development agreement with Mineral Resources (ASX: MIN) for its patented LieNA lithium extraction technology.

The multi-million dollar deal will see MinRes fund the next stage of development, including the operation of a pilot plant and an engineering study for a demonstration plant, with a total budgeted cost of up to $4.5 million.

Upon completion, a 50/50 joint venture between MinRes and Lithium Australia will be formed, aiming to license the LieNA technology to third parties at a target royalty rate of 8%.

Lithium Australia’s LieNA technology has the potential to enhance lithium extraction yields by up to 50% and is designed to recover lithium from fine and low-grade spodumene, improving mining efficiency and sustainability.

QMines (ASX: QML)

QMines reported that the initial drilling program at Artillery Road, a part of its Mt Chalmers copper-gold project in Queensland, has made an intersection containing semi-massive sulphides. This finding confirms the possibility of a significant discovery in the area.

The first of 30 planned drill holes intersected 20m of strong pyrite-pyrrhotite skarn with visible chalcopyrite at 115m down the hole, and samples have been sent for analysis.

The company has identified 34 individual anomalies across the gossans at Artillery Road, with the large gossan outcrop extending over 700m.

QMines noted that skarn deposits are globally significant sources of various minerals, including copper, gold, lead, zinc, tin, tungsten, molybdenum, and rare earths.

The week ahead

Locally, the big data points to watch out for are wages and unemployment, with the main focus being on whether the economy has been showing signs of weakening.

Wages remain fairly subdued in Australia, especially compared to the robust wage growth in the United States as it deals with a lot of retirements and lower immigration compared to Australia’s breakneck pace of migration.

Analysts expect the quarterly wages number to come in around the 0.9% mark, which would leave annual growth steady at 3.7%.

Similarly, not a lot of change is expected on the jobless front, with a rise of around 20,000 jobs in July which would result in a marginal increase in the jobless rate from 3.5% to 3.6%.

Anyway, time will tell but the release of tourism and migration flows on Thursday is almost certain to also show a continuation of the catch-up of migrants and tourists following the lost COVID years.

USA and China pulling in different directions

Internationally, the main figures to watch are out of the United States and China – two economies that seem to be heading in vastly different directions at the moment with China particularly weak while the US keeps on growing.

In the US, retail sales and production data should continue to show how resilient the US economy has been in the face of an unprecedented rapid rise in interest rates.

China’s major data release on Tuesday is likely to show poor retail spending which might lead to further stimulus measures as China battles to stop deflation.

Central banks explain

Some central bank explanations should be forthcoming with the minutes of the last US Federal Reserve meeting out on Wednesday likely to shed more light on why further rate rises were skipped while the New Zealand Reserve Bank will have to explain why it raised rates until the economy entered a recession.

Locally, profit announcements will continue to cause plenty of share price movements with some of the more interesting reports in the coming week including JB Hi-Fi, CSL, Cochlear, NAB, Treasury Wine Estates, Endeavour Group, Transurban, Mirvac, Amcor, ASX, Goodman Group, Origin Energy, Telstra, Westpac and the troubled fund manager Magellan.

The US market is in the final straight for its reporting season with a focus on retailers in the coming week.

Some of the reporting companies there include Home Depot, Cisco, Walmart, Applied Materials, Deere & Co. and Estee Lauder.

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