Weekly review: soggy Friday can’t hide another good performance

Soggy Friday ASX stock market November 2020
WEEKLY MARKET REPORT

Market watchers are getting very used to soggy Fridays, as traders sell down their positions and sit on the sidelines for the weekend.

And who can blame them, particularly after a week in which the Australian Securities Exchange (ASX), unbelievably lost the best part of a full day’s trade during a still difficult to explain data outage.

ASX outage not good enough

Who wants to be stuck in a trading position when the market unexpectedly doesn’t offer the ability to trade?

It was no different this week with Friday fading off a little, causing the ASX 200 to close down 0.1% at 6539.2 points.

What is really important to realise is that the Friday fade barely takes the gloss off what has been an exceptional run for the share market during November.

A fantastic November so far

Investors still enjoyed a 2.1% rise and the third weekly rise in a row as a nice, steady upward trend continues to push towards new highs.

As  traders like to say, “the trend is your friend” and during November the trend has been very positive indeed, pushing the index up an impressive 10.3% for the month so far.

It will only take another 2.2% rise to wipe out losses for the year, which would be an impressive feat indeed given the index was down 32% in March as the COVID-19 pandemic suddenly gave markets a serious case of the wobbles.

Time for a pat on the back

So even though Friday wasn’t a strong day it is important to look at the overall market performance and allow yourself a self-congratulatory pat on the back – particularly if you were one of the lonely buyers back in March but also if you have simply held your nerve and hung on to stocks during what has been a very volatile and unpredictable year.

It wasn’t hard to spot the reasons for Friday’s decline, with a series of heavyweight appearing in the red and black for the day.

Commonwealth Bank (ASX: CBA) was a strong performer after regulator the Australian Prudential Regulation Authority (APRA) reduced the $1 billion capital requirement it slapped on CBA in May 2018.

After being a very naughty bank indeed for a series of scandals including poor advice, major anti-money laundering breaches, fee errors and dodgy insurance, Commonwealth has become a model pupil and as a result only needs to keep an extra $500 million in capital on its balance sheet.

That’s the sort of news investors love to hear and the bank’s shares jumped 1.43% to close at a neat $80 each.

It was a similar positive picture for blood and biotech giant CSL (ASX: CSL) and miner Rio Tinto (ASX: RIO) which added a healthy 1% and 0.5% respectively.

Pulling in the other direction were other heavyweights in miner BHP (ASX: BHP), bank ANZ (ASX: ANZ) and big retailer Wesfarmers (ASX: WES) which all fell by up to 1% to even up the ledger.

That left the index in a slightly negative holding pattern, coming after the positive news around COVID-19 vaccines and the US election results which has helped to keep up the positive market momentum.

Small cap stock action

The Small Ords index rose 1.51% this week to close on 2988.4 points.

November 2020 ASX 200 Small Ords chart
ASX 200 vs Small Ords

Small cap companies making headlines this week were:

Galan Lithium (ASX: GLN)

This week, Galan Lithium announced a resource of 2.3Mt lithium carbonate equivalent for its Hombre Muerto West lithium brine project in Argentina.

The increase means the project combined with Candelas is now larger than POSCO’s Sal de Vida project.

It is now also the third largest publicly-disclosed lithium resource in the basin, which is part of the “lithium triangle” comprising northern Argentina, and parts of Bolivia and Chile.

Alterity Therapeutics (ASX: ATH)

Melbourne-based Alterity has secured $35 million to advance the development of lead drug ATH434 for the treatment of Parkinsonian diseases.

Investors from Australia, the US and UK have thrown their support behind a capital raising which will allow the biotech to focus on meeting a “desperate” medical need for drugs to treat neurodegenerative conditions within the Parkinson’s family, particularly multiple system atrophy.

Alterity also announced this week that it had collared a US patent for the compounds designed to assist in the treatment of Parkinsonian conditions.

The patent encompasses more than 150 novel pharmaceutical compositions which redistribute the labile iron associated with these diseases.

Angel Seafood (ASX: AS1)

Australian merchant Angel Seafood will be ramping up production of its famous organic and sustainable oysters after acquiring 62,500 square metres of premium water leases on the Eyre Peninsula.

The property will allow Angel to produce up to 12 million oysters per year to meet retail demand and fits with a three-pillar growth strategy to increase scale through acquisitions.

The company hopes to eventually increase its production capacity to 20 million oysters per year.

Engage:BDR (ASX: EN1)

Mobile advertising specialist engage:BDR has added five US-focused clients to its books including ad buyers LoopMe, Sonobi and AdMixer, global video streaming platform TikiLIVE, and programmatic publisher VRTCAL.

All clients are on track to be live by month-end, and will buy and sell mobile apps and connected TV advertising inventory.

Engage:BDR expects the new clients will shore up its financial position as its cash balance grows to $2.7 million and staff costs are cut by 61%.

Impact Minerals (ASX: IPT)

The long-forgotten Doonia project in WA’s eastern goldfields has been snapped up this week by Impact Minerals in a deal which will see the Perth company acquire 80% of the drill-ready target.

Doonia has been recognised as a large but poorly tested gold-in-soil anomaly and had not been pegged.

Impact is hoping the project will be an “out of the box” discovery, similar to De Grey Mining’s giant Hemi deposit.

iCandy Interactive (ASX: ICI)

Mobile gaming company iCandy Interactive revealed it had achieved two major milestones this week, with the company forming a joint venture with Lemon Sky Studios and launching its Masketeers game in the Samsung Galaxy Store in the US.

Under the joint venture with Lemon Sky Studios, iCandy will collaborate on developing a line of AAA quality 3D mobile games.

Meanwhile, early access trials with Masketeers on Google Play led to quick uptake from thousands of gamers in less than two months. The game will now be available on Samsung’s app store which has more than 400 million monthly active users.

Furthermore, Hellopet House, a game developed by Nanali Inc in collaboration with iCandy has been successfully launched in 65 countries, to which iCandy has three years of exclusive rights to publish the game worldwide.

Incannex Healthcare (ASX: IHL)

Incannex Healthcare has entered a trading halt pending a “significant” announcement on Monday regarding “results of an in vivo study relevant to the development of IHL-675A and its corresponding FDA regulatory strategy”.

The study is the final of four preclinical studies, where previous research demonstrating strong evidence cannabidiol and hydroxychloroquine worked synergistically to inhibit inflammatory cytokines that lead to COVID-induced respiratory distress.

Incannex is also progressing its drugs for sleep apnoea and severe brain injury.

Gateway Mining (ASX: GML)

Junior Gateway Mining is the latest gold explorer on the ASX to strike it lucky with a new discovery.

Wide-spaced reverse circulation drill at its Gidgee project in WA has identified a new gold target between its two most advanced deposits.

Results included 10m at 9.2g/t gold and 15m at 3g/t gold, with Gateway managing director Peter Langworthy claiming the assays “provide a clear demonstration” the company is working on a “significant gold system”.

The week ahead

There is not too much to look forward to on the Australian data front this week, with the main features being credit and debit card spending, consumer confidence and detailed labour force numbers.

There is also a speech from Reserve Bank Deputy Governor Debelle and business investment numbers, but the really big news will need to wait until December when the GDP data shows how the Australian pandemic recovery is going.

It is a different matter for the US market which includes GDP numbers on Wednesday and minutes from the US Fed’s last meeting, along with house prices, manufacturing and new home sales in the lead up to the Thanksgiving holiday.

This week’s top stocks

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