Market wrap: shares struggle to end three-week slump
WEEKLY MARKET REPORT
It was hard going but the Australian share market just snapped out of its three-week losing streak with a small gain on Friday.
Combined with a solid rise on Monday it was enough to finish the week on a positive note despite a mid-week lull, with the ASX 200 index up 4.8 points or nearly 0.1% to close at 7256.70 points, up 0.5% for the week.
It was a close-run thing on Friday with eight of the 11 sectors stronger as health and tech stocks offset falls in the heavyweight materials sector as gold wilted and iron ore managed to scrape back above the US$100 a tonne level.
Gold heads down
Gold prices fell after concerns were raised about a recession as concerns about banks continued and US economic data showed some weakness.
Regis Resources (ASX: REG), Evolution Mining (ASX: EVN) and De Grey Mining (ASX: DEG) all lost about 3% while shares in takeover target Newcrest (ASX: NCM) dropped 2.2% after it gave Newmont another week to complete its exclusive due diligence before it submits a binding scrip offer that values the target at around $32 billion.
Storms gather for QBE
Global insurer QBE (ASX: QBE) was in the wars after reporting that catastrophe activity remained elevated amid a double-digit lift in gross written premium after it enjoyed a strong start to the year.
A combination of US storms and Australian flooding last year caused a $190 million hit to the group’s profit, however QBE shares climbed back during the day and ended down 3.6% at $14.61.
The slight recovery in the iron ore price was not enough to rescue the big miners with BHP (ASX: BHP) shares down 1.2% to $43.48, Fortescue (ASXL FMG) shares down 0.6% and shares in Rio Tinto (ASX: RIO) off 1%.
Lithium boom reignites
There was better news for the lithium sector after the Allkem’s (ASX: AKE) planned US$10 billion merger with US listed Livent shone a light on the remaining equity exposures to one of the key battery making materials.
Shares in Lake Resources (ASX: LKE) took off with a 13% rise to 65c while Core Lithium (ASX: CXO) shares jumped 5% to $1.145 and Liontown Resources (ASX: LTR) rose 1.4% to $2.97.
GrainCorp (ASX: GNC) shares rallied 5.9% as the rural exporter upgraded its earnings expectations for the financial year.
Another positive performer was media group News Corp (ASX: NWS), with shares rallying 4.7% to $25.96 as it held third-quarter revenue steady despite headwinds from rising interest rates, inflation and supply chain disruption.
CSL leads health stocks higher
Healthcare stocks had a good day with the sector up 1.2% after shares in CSL (ASX: CSL) rose 1.4% to $306.36 and ResMed (ASX: RMD) gained 1.2% to $35.18 but that positivity was counter-balanced by energy shares, which were under pressure as oil prices remained down.
Beach Energy (ASX: BPT) shares fell 1.4% to $1.40 and Woodside (ASX: WDS) was off 0.4% to $33.66.
Small cap stock action
The Small Ords index rose 0.61% for the week to close on 2918.6 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Chesser Resources (ASX: CHZ)
Chesser Resources is set to be acquired by Fortuna Silver Mines Inc in a deal valued at $89 million.
Under the arrangement, Fortuna will acquire all fully-paid ordinary shares of Chesser for a consideration of 0.0248 Fortuna shares per Chesser share.
The acquisition represents a significant premium to Chesser’s recent share prices.
The deal will expand Fortuna’s existing asset portfolio and West African operations with the inclusion of Chesser’s Diamba Sud gold development project.
Upon completion, Chesser shareholders will hold approximately 5.1% of Fortuna’s shares, with Fortuna also offering a secured bridging loan of up to $3 million to assist with transaction costs.
Kalamazoo Resources (ASX: KZR)
Kalamazoo Resources will spin out its Australian lithium assets into a new publicly-listed exploration company, Kali Metals.
The new company will have a portfolio of lithium projects in the Pilbara and Lachlan Fold Belt, including the Marble Bar and DOM’s Hill lithium projects, and the Jingellic and Tallangatta projects.
Kali is expected to raise up to $12 million at IPO via a demerger and concurrent listing.
Post IPO, Kalamazoo will own 55% of Kali, while Karora will hold the remaining 45%.
Kali is expected to list on the Australian Stock Exchange in September using the ticker code KM1.
Voltaic Strategic Resources (ASX: VRS)
Voltaic Strategic Resources concluded its initial drill campaign at the Andrada prospect, part of the Ti Tree project, ahead of schedule, uncovering several thick pegmatite bodies down-dip from the surface.
Multiple significant pegmatites were intercepted at Andrada, including a 58m pegmatite from the surface.
The campaign completed phase 1 drilling across six initial targets, intersecting pegmatites in each hole, with assay results expected in about six weeks.
The drilling confirmed key structural trends associated with lithium, caesium, and tantalum (LCT) pegmatites near granitic contacts.
With over 300 pegmatites mapped and less than 10% of the tenure explored so far, planning for a ‘Phase 2’ campaign to test the potential of these pegmatites is being expedited.
Legacy Minerals (ASX: LGM)
Legacy Minerals, backed by Newmont Corporation, has announced a significant new precious and base metals discovery at its flagship Bauloora project in New South Wales’ Lachlan Fold Belt.
Initial diamond drill assays have confirmed high-grade mineralisation at the Bluecap discovery, which could be a large low-sulphide epithermal deposit.
The discovery came from a 1650-metre diamond drill program across ten holes, with notably high grades of gold equivalent.
In early April, Legacy Minerals and Newmont Exploration entered a joint venture agreement, with Newmont providing $15 million for further drilling across Bauloora.
Newmont’s global expertise in epithermal systems will aid in rapidly advancing the exploration at Bauloora.
The week ahead
There will be plenty of stock specific news to look forward to on the Australian market in the coming week as the profit reporting season begins here and continues in the US.
Some of the local company results to look forward to include Elders, United Malt, Incitec Pivot, Aristocrat, Nufarm, Australian Agricultural Co and Xero while in the US there are a lot of retailer results including Home Depot, Target and Walmart along with Cisco Systems and Deere.
There are also some annual shareholder meetings being held in Australia and the US which could provide some more updated views on the forward guidance for some companies.
The minutes from the last Reserve Bank board meeting on Tuesday may give some extra insight into the decision to raise official rates but that may be limited by the detailed statement on monetary policy already released.
Other data to watch out for includes the job market, wages, overseas migration and consumer confidence.
Offshore, there are a host of releases in China including retail sales, production, investment and unemployment while in the US, retail sales, production and housing indicators are released and US Federal Reserve Chair Jerome Powell is due to take part in a monetary policy panel with former Chair Ben Bernanke in Washington on Friday.