Market wrap: shares suffer Friday fade but still manage to add 1% in Budget week

The Australian market may have slid on Friday but still managed to add 1% in a week that featured the Federal Budget which certainly added some economic stimulus in the renewable energy and future metals space.

Traders also grew more confident that the Reserve Bank might be getting closer to cutting official interest rates in 2024.

Still, none of that stopped the ASX 200 from following on from the Dow Jones index on Wall Street, which lifted above 40,000 points for the first time ever before shedding 0.1 % for the day, with the Australian index dropping 0.9% or 66.9 points for the day, down to 7814.4 points.

Iron ore up on Chinese housing stimulus

It was a bit of a tug of war in a bifurcated market with share price falls in the healthcare, technology and utilities sectors being offset by gains for lithium and iron ore miners.

Firmer iron ore futures which rose 1.2% pushed up the materials sector by 0.4% as investors digested Beijing’s latest plans to support China’s ailing property market.

Those measures included a softening of lending standards which will allow for lower minimum down payments for residential home buyers, which could breathe some new life into the moribund Chinese housing sector.

The People’s Bank of China lowered the minimum down-payment ratio for first-time buyers to 15% and cut it to 25% for second homes, according to a statement released on Friday.

High copper also aids miners

Riding the same wave, copper prices rose 2% to levels last seen in 2022 which further supported the share prices of the big miners.

BHP (ASX: BHP) shares added 0.8% to $44.89 on the news while Rio Tinto (ASX: RIO) rose 1.4% to $132.15.

There was also some positive action in the lithium space with shares in miner Pilbara Minerals (ASX: PLS) up a solid 2.2% to $4.10 while shares in mining services company Mineral Resources (ASX: MIN) rose 0.8% to $78.61.

Positive news from a banking surprise

Another positive surprise came with the results for regional bank Bendigo and Adelaide Bank (ASX: BEN), which revealed that its cash profit for the 10 months to April 30 fell just 2.3% to $464 million.

While that was still better than expected, investors were most impressed by rising profit margins and pushed the stock up 8.2% to an impressive $10.73.

Of course, the market does tragedy and farce as well as victory and the suspension of Star Entertainment’s (ASX: SGR) Queensland casino licences which was lengthened until December 2024 saw the casino group’s shares lose another 2.2% to 45c.

Small cap stock action

The Small Ords index shed 0.15% for the week to close at 3043.6 points.

Small cap companies making headlines this week were:

Latrobe Magnesium (ASX: LMG)

Latrobe Magnesium has completed commissioning the first phase of its 1000-tonnes per annum Stage 1 demonstration plant in Victoria, successfully producing the world’s first environmentally-sustainable magnesium oxide from fly ash.

The process uses Latrobe’s patented hydrometallurgical extraction method, which processes fly ash from brown coal power generation without generating further waste.

The magnesium oxide produced will be sold to WA-based Rainstorm Dust Control.

Latrobe now plans to conduct a bankable feasibility study and secure financing for a 10,000-tonnes per annum Stage 2 commercial plant, which will be built using similar technology but on a larger scale.

Australian Gold and Copper (ASX: AGC)

Australian Gold and Copper has reported significant exploration results from its Achilles project in New South Wales.

The follow-up reverse circulation drilling program returned high-grade results, including up to 45 grams per tonne gold, over 3,000 g/t silver, and 38.8% lead plus zinc.

One sample’s silver content exceeded local laboratory analysis capabilities and was sent to Canada for further testing.

The company is fast-tracking the testing of six additional holes, with results expected soon.

AGC is planning the next phase of exploration, which will include more RC drilling and deeper diamond drilling to further define the high-grade mineralisation.

Unico Silver (ASX: USL)

Unico Silver has announced a maiden exploration target for its Cerro Leon project in Argentina, estimating between 10 to 15 million tonnes grading up to 266 grams per tonne silver equivalent, totalling up to 128 million ounces.

The target complements the existing mineral resource estimate of 16.4 million tonnes at 172 grams per tonne silver equivalent, amounting to 92 million ounces.

The target was derived from an extensive review of 735 drill holes and 969 trenches, incorporating 30 prospects, including both extensions of mineral resources and lateral extensions of mineralised veins.

Field activities are scheduled for later this year, pending final drill permits.

PharmAust (ASX: PAA)

PharmAust has received orphan drug designation (ODD) from the US FDA for its monepantel (MPL) treatment for motor neurone disease (MND), also known as amyotrophic lateral sclerosis (ALS).

The ODD status provides significant incentives, including tax credits, grants, fee waivers for clinical trials, and seven years of market exclusivity post-approval.

PharmAust’s managing director, John Clark, highlighted this as a major milestone, enhancing the company’s pathway towards the pivotal Phase 2/3 study planned for the second half of 2024.

Positive results from the Phase 1 MEND Study demonstrated that MPL was well-tolerated with potential therapeutic benefits.

Additionally, PharmAust has appointed Sergio Duchini as non-executive chair, bringing extensive experience in strategy, governance and capital access to the board.

Errawarra Resources (ASX: ERW)

Errawarra Resources has discovered a large stacked pegmatite swarm at its Andover West project in Western Australia, measuring approximately 1.6 by 1 kilometers with peak lithium oxide values of 325 ppm.

A second anomalous trend in the northwest peaks at 299 ppm lithium oxide.

This discovery lies along a soil trend associated with a lithium pegmatite discovery by Raiden Resources, with rock chips grading 3.8% lithium oxide, and is adjacent to Azure Minerals’ Andover project.

Heritage clearances are expected soon, paving the way for drilling to begin by the end of the quarter.

Additionally, Errawarra formed a joint venture with Alien Metals for lithium rights at the Pinderi Hills project, where initial reconnaissance exploration has commenced.

The week ahead

Perhaps the biggest news for the coming week will be driven by company fundamentals as some company earnings and sales results are released and a large number of companies hold their annual shareholder meetings.

These meetings often produce some sort of trading update and a forecast for the year ahead so they can really set up company shares for rises or falls, depending on how traders react to the new information.

Rates watch continues

Of course, central banks also have a part to play with the US Federal Reserve chair Jerome Powell delivering a speech which will be watched for any confirmation that a cut to interest rates could happen this year.

The Fed’s minutes from its last meeting will also be released.

In a similar way, the minutes from the Reserve Bank of Australia will be watched for any hints on future interest rate moves and the Reserve Bank of New Zealand will release its policy decision.

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