Weekly review: Powell worries ruin chances of a sixth weekly rise

Worries about what US Federal Reserve chief Jerome Powell might say just managed to snatch away a weekly rise on the Australian share market, despite an impressive 0.8% rally to close the week.

In the end, a broad rise across all sectors except communications was not quite enough, with the 55.98-point rise to 7104.21 points still ending the five-week winning streak with a 0.2% fall for the week.

Of course, the looming speech by Powell at the Jackson Hole symposium in Wyoming was a big deal and we all know that central bankers are wonderful at snatching away the punch bowl no matter how the party is going.

So, in the end the Australian market rally was probably as much as you could have hoped for in the circumstances.

We follow the US market higher

It followed on from a good day on the US markets with the Dow Jones up 0.9%, the S&P 500 index gaining 1.4% and the tech heavy Nasdaq Composite Index rising 1.7%.

A barrage of Australian profit reports during the week kept analysts on their toes as they tried to cut through the management rhetoric to see what really lurks in the accounts beneath.

Some of the profit reaction on Friday included a 0.65% rise for Wesfarmers (ASX: WES) shares after it released its annual profit.

The big retailer reported an 8.5% lift in revenues to $36.8 billion, but profits slid 2.9% to $2.4 billion.

A $0.10 rise in the final dividend to $1 a share overcame guarded guidance that blamed funky global supply chains for stock delays and higher costs.

Bega now the big cheese

Shares in Bega Cheese (ASX: BGA) put on an impressive 11.8% after lifting revenues by 45% to $3 billion, although profits slid 69% to $24.2 million.

Underneath the hood, however, the company’s net debt position had improved and it increased its dividend by 10% to $0.055 a share, with Bega saying better consumer prices had started to flow through.

It wasn’t all sweetness and light though, with medical device developer Polynovo (ASX: PNV) really disappointing investors with a $1.2 million loss despite a 43% lift in revenues to $42 million.

That sent Polynovo shares plunging 18.8% to $1.64.

And while Qantas (ASX: QAN) might not have delivered your bags on the last flight, shares in the airline had a fantastic day, up 6.6% to $5.18 as investors see value as travel rebounds strongly.

Small cap stock action

The Small Ords index fell 1.01% for the week to close at 2996.3 points.

Small cap companies making headlines this week were:

BPH Energy (ASX: BPH)

Following revelations in recent weeks that former Prime Minister Scott Morrison had secretly appointed himself to several ministerial portfolios during his time in government, BPH Energy announced it will conduct a full review of its options relating to the PEP-11 gas exploration licence in NSW.

BPH’s investee Advent Energy and its wholly owned subsidiary have been investigating the potential for legal recourse after Mr Morrison took secret responsibility of the resources portfolio and used it to block the offshore permit.

In June, Advent’s subsidiary started proceedings in Australia’s Federal Court alleging Mr Morrison “failed to afford procedural fairness” in his decision to knock back the extension of term, as well as a suspension and variation of the minimum work requirements for PEP-11.

Earlier this week, the solicitor general Dr Stephen Donaghue QC advised current Prime Minister Anthony Albanese that Mr Morrison’s actions (including that for PEP-11) “fundamentally undermined” responsible government.

BPH is also calling on the NSW and federal governments to “urgently” rethink opposition to the permit.

The company and its investees say PEP-11 could be part of the solution to the east coast’s looming gas crisis.

Arcadia Minerals (ASX: AM7)

Arcadia Minerals rocketed on the ASX this week after it announced a more than 500% increase to resources for its Bitterwasser lithium-in-clay project in Namibia.

At a 500ppm lithium cut-off, the updated resource now totals 85.2Mt at 633ppm lithium for 286,909t of contained lithium carbonate equivalent.

The resource is based on 77 auger drill holes and 486 core samples. Arcadia noted the resource represents only 19% of the project’s 14 exposed clay pans within its tenure that covers 593sq km.

Arcadia chief executive officer Philip le Roux said the increase in metal content at Bitterwasser is equivalent to a hard rock resource of 11.6Mt at 1% lithium.

Additionally, leaching test work on the ore indicates the potential for an organic acid to recover 82% of the lithium from clays.

Taruga Minerals (ASX: TAR)

In readiness for an imminent phase two drilling campaign, Taruga Minerals has firmed up a series of clay-hosted REE targets at the Morgans Creek prospect within its Mt Craig project in South Australia.

The rotary airblast campaign will target mineralised extensions of Hydrothermal Hill where 5km of strike has been identified. Drilling will also be completed at the Shute prospect.

In identifying the targets, Taruga used previous drill results along with airborne magnetics and radiometrics, hyperspectral satellite alteration mapping, auger and soil geochemistry, and surface geological mapping.

Also during the week, Taruga revealed it was acquiring a 491sq km tenement package in South Australia’s prospective Curnamona region.

The region is an established copper, gold and uranium province and Taruga’s project is in proximity to a number of major deposits, including Havilah Resources’ Kalkaroo copper asset, which is Australia’s largest undeveloped open pit copper project with 1.1Mt in contained copper resources and 3.1Moz gold.

TZ Limited (ASX: TZL)

This week, TZ Limited announced it had secured its first software only deal with a multi-billion-dollar company.

TZ chief executive officer Mario Vecchio said securing its first software only agreement was a “pivotal moment” for the company.

“It is the first commercial success of a strategy developed last year to generate a separate income from the software platform only,” Mr Vecchio explained.

Under the agreement, Ricoh will use TZ’s cloud offering over a three-year term.

The deal has a total contract value of $950,000 to TZ over the term.

“We have been investing and focusing on building our strong software foundation, and this $950,000 deal reflects those capabilities,” Mr Vecchio added.

Netccentric (ASX: NCL)

Netccentric is closer to profitability after announcing a 11% increase in revenue for its H1 FY2022 ending June.

The social commercial technology developer achieved $6.02 million in revenue for the period, with revenue growth also posted across all business units.

This increase in revenue brought Netccentric closer to profitability and the company revealed a $170,000 before tax loss for the period – much smaller than the $1.4 million loss in H1 FY2021.

Driving the higher revenue was Netccentric’s wholly-owned social influencer and marketing platform Nuffnang, which contributed 60% of the group’s income.

Netccentric executive chairman Ganesh Kumar Bangah said the company was pleased with the “solid progress” towards profitability.

“We have set ambitious objectives to expand in our chosen markets, which show great potential for long-term growth, particularly for our core influencer and content marketing business.”

Mr Kumar Bangah added he anticipated the company’s growth would continue throughout H2 FY2022.

Investigator Resources (ASX: IVR)

Regional exploration has generated more success for Investigator Resources, with assays confirming the presence of zinc, lead and silver at several prospects.

Drilling at the Ares prospect uncovered 39m at 1.26% zinc, including 12m at 2.66% zinc; 6m at 24g/t silver; 9m at 0.33% lead; and 15m at 0.26% zinc.

Over at the Diomedes prospect drilling hit 21m at 15g/t silver; 5m at 2.03% lead; and 2m at 2.18% zinc.

The prospects are located on Investigator’s wholly-owned Peterlumbo tenement, which also hosts the flagship high-grade Paris silver project in South Australia.

Paris has a resource of 18.8Mt at 88g/t silver for 53.1Moz silver.

Investigator managing director Andrew McIlwain said regional exploration at the project continued to be “exciting and successful”.

The week ahead

In the coming week, the focus comes off company profit reports and back on to macro factors such as economic releases and anything central bankers do or say.

Some of those local releases to watch out for include construction figures, business investment, trade numbers, consumer confidence numbers and economic growth figures.

One of the interesting things to watch out for are home price numbers, with CoreLogic releasing its August home value report while rival Proptrack will also release its home price data.

There has been a lot of speculation about how far and fast home prices are falling, with ramifications right through the banking sector and for consumer spending.

Internationally, there is a forest of US data due with the main highlights being the jobs numbers, home prices, consumer confidence, construction figures.

China is also releasing some interesting data on industrial profits and purchasing managers indices, which will hopefully shine a light on the weakening state of the Chinese economy.

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