Market wrap: record high ASX 200 follows on from optimism on rates

Australian shares hit a record high on Friday after rising six days out of seven as global optimism on falling interest rates remained high.

The ASX 200 finished Friday up 0.6% at a record 7745.6 points for a weekly gain of 1.3% – the biggest weekly rise for a month – as pundits cautiously predicted that finishing the year with a figure above 8000 points is now not out of the question.

The local bullishness followed on from a 0.9% rise in the tech-heavy Nasdaq to a record high of 16,091 points while the S&P 500 index advanced 0.5% to a fresh high of 5096.27 points.

Easing US inflation buoys shares

In part the US optimism was buoyed by US inflation which eased to 2.8% year-on-year in January, which sent bond yields down, with the benchmark US 10-year government treasuries down to just 4.24%.

Locally one of the tech names in the form of mobile app maker Life360 (ASX: 360) saw its shares rise by an incredible 38.5% to $11.30 after it revealed that more than 61 million people now use its app each month to track friends and family members.

It was not all centred on promises about future revenue with actual revenue up 33% to $US305 million with the company reporting a significantly higher adjusted EBITDA (operating income) of $US20.6 million – a long way ahead of previous estimates of $US12 million to $US16 million.

Other tech names to enjoy a nice rise included accounting software provider Xero (ASX: XRO) with shares up 6% but the rise was broader than that and included a 2% rise in the materials as miners outperformed and lithium stocks continued a comeback.

BHP (ASX: BHP) shares were up an impressive 2.3% while Newmont Corporation (ASX: NEM) rode a stronger gold price with its shares up 5.2 %.

There was finally some good news for lithium miners too as futures for the battery metal jumped during the week in China, with the effect felt by shares in Pilbara Minerals (ASX: PLS) up 4.3%, Arcadium Lithium (ASX: LTM) up 10.3% and Lynas Rare EArths (ASX: LYC) up 4.6%.

To prove not even the oil and gas sector was out of the picture, Woodside Energy (ASX: WDS) shares were up a solid 1.6% while even the troubled asset management space was included with a solid turnaround plan announced by Platinum Asset Management (ASX: PTM) seeing the company shares rise by an amazing 17%.

If there was a weak spot on the market, it was in defensive shares with health care stocks down in both the US and locally.

Some prime local examples included CSL (ASX: CSL) down 1.4% and Cochlear (ASX:COH) shares which fell 3.9%.

Small cap stock action

The Small Ords index rose 2.24% for the week to close at 3011.1 points.

Small cap companies making headlines this week were:

Nyrada (ASX: NYR)

Nyrada reported positive outcomes from a pre-clinical study on NYR-BI03 for preventing secondary brain injury post-stroke or traumatic brain injury (TBI), showcasing potential in reducing long-term disabilities.

The study, conducted with the University of New South Wales, used a focal ischemic stroke model in animals, treating them with NYR-BI03 or a control shortly after injury and assessing effects through MRI and blood biomarker analysis.

Results indicated significant neuroprotection by NYR-BI03, with a 42% reduction in brain injury in targeted areas and a notable decrease in neurofilament light levels, without any adverse effects.

The findings, demonstrating the drug’s safety and efficacy in neuroprotection, pave the way for further studies and a potential breakthrough in treating secondary brain injuries. chief executive officer James Bonnar highlighted the study’s success as a significant milestone, emphasising NYR-BI03’s promising therapeutic and market potential ahead of planned human trials.

PharmAust (ASX: PAA)

PharmAust’s Phase 1 trial of monepantel (MPL) for motor neurone disease (MND) / amyotrophic lateral sclerosis (ALS) patients showed a promising 58% reduction in disease progression rate, according to the ALS functional rating scale-revised (ALSFRS-R).

The trial, which involved 12 participants across two cohorts with varying dose levels, established MPL’s safety and tolerability, noting superior performance to the FDA-approved ALS drug Relyvrio with no treatment-related deaths or dose-limiting toxicities.

Preliminary efficacy data highlighted significant potential in slowing ALS progression, supported by biomarker analysis indicating a reduction in cerebrospinal fluid neurofilament light chain, a marker of neuronal damage.

MPL’s active metabolite was also detected in the cerebrospinal fluid, suggesting its ability to cross the blood-brain barrier. PharmAust chief executive officer Dr Michael Thurn hailed the results as a crucial step forward in treating MND and ALS, with all study participants opting to continue MPL treatment under a special access scheme.

Galan Lithium (ASX: GLN)

Galan Lithium is progressing towards its first lithium chloride production in H1 2025 at the Hombre Muerto West (HMW) project in Argentina, with key construction milestones being met, including the commencement of brine evaporation in pond 1.

The project plans to scale up production through four phases, targeting an initial 5.4 thousand metric tonnes per annum (ktpa) of lithium carbonate equivalent (LCE) in 2025, with subsequent increases aiming for 60ktpa LCE by 2030.

Significant progress includes the completion of earthworks and liner installation for pond 1, the construction of nine production wells (surpassing the initial requirement of six), and the ongoing construction of pond 2 earthworks.

Managing director Juan Pablo Vargas de la Vega highlights the project’s strong returns and low-risk development strategy, aiming to position Galan as a leading lithium producer in Argentina.

Galan has also engaged with Glencore for a potential offtake and funding agreement, including a financing prepayment facility, further underlining HMW’s strategic significance in the lithium market.

Frontier Digital Ventures (ASX: FDV)

Frontier Digital Ventures reported a notable financial improvement in FY23, achieving a 15% increase in group statutory revenue to $67.9 million, driven by organic growth across its three divisions: 360 LATAM, MENA Marketplaces Group, and FDV Asia, along with an additional $12.7 million from associates.

The company’s EBITDA rose to $4.8 million, with significant contributions from each division, leading to a group statutory EBITDA improvement of $8.3 million, attributed to restructuring, cost management, and revenue growth.

In Latin America, Frontier’s revenue surged by 15% to $52.1 million, propelled by the property vertical, the launch of the Iris technology, and increased transactions revenue by 123%.

The Iris platform, a proprietary MLS service launched in 2023, contributed $1.2 million in revenue, with expectations for further growth in 2024 due to its expansion into new markets.

FDV Asia also saw significant gains, with a record revenue of $6.2 million and EBITDA of $0.7 million, marking a 25% increase in revenue, notably from Hoppler and iMyanmarHouse.

Nova Minerals (ASX: NVA)

Nova Minerals reported significant findings of high-grade gold along with silver, copper, and antimony at the Stoney tenement within the Estelle gold project in Alaska.

The combination of recent surface sample assays and historical data re-examination has underscored Stoney’s polymetallic nature, with plans for further exploration and sample collection in 2024.

Chief executive officer Christopher Gerteisen emphasised Stoney’s status as a high-priority, high-grade gold and multi-element target, contributing to the Estelle project’s extensive exploration potential

Highlight results from the area include 48.4g/t gold, 2,720g/t silver, 8.5% copper, and 1.3% antimony, indicating a significant multi-element by-product credit potential for future production.

The Stoney vein, a primary mineralisation source, exhibits a wide and exposed vein system with anomalous gold, silver, copper, and antimony values, reinforcing the site’s exploration and development potential.

The week ahead

With a fairly positive Australian earnings season now successfully out of the way, we are back to looking for statistical releases for market inspiration and this week that comes along in the form of the National Accounts.

While the economic growth result contained within the accounts is fairly backward looking, others such as productivity are more timely and will tend to confirm if the inflation measure will continue to point downwards.

Productivity has been a bit of a missing link in Australia after the pandemic but if to can lift to around 1.5% that would be enormously helpful in predicting that inflation would continue its downward march even as wages continue to grow.

It is a similar situation in the US with testimony from US Federal Reserve chair Jerome Powell on Wednesday and Thursday, followed by nonfarm payroll jobs data out on Friday.

However, the engine room for continuing Australian share price growth will continue to be the big US market, which has shown few signs of flagging in its current bull run.

Continuing rises in the US are almost certain to be followed by more muted rises here in Australia, with our relative lack of technology stocks our biggest downfall.

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