Market wrap: tech up, health down after choppy trading
WEEKLY MARKET REPORT
After two positive weeks the Australian market ended the week down 1.7%, despite a bit of a late rally with a 0.2% rise on Friday.
A combination of worries about the Chinese economy and uncertainty around the US debt ceiling negotiations dragged shares lower but technology stocks went on a tear after some impressive profit upgrades by chip maker Nvidia in the US.
That left the ASX 200 at 7154.80 points, with the Australian market’s relative lack of technology stocks acting as a bit of a brake on our relative performance.
IT sector up strongly
As you might expect the Information Technology sector was by far the strongest with Megaport (ASX: MP1) and BrainChip (ASX: BRN) both climbing strongly by 6.2% and WiseTech Global (ASX: WTC) shares up 1.7% to a record high close of $74.90.
At the other end of the market Fisher & Paykel Healthcare (ASX: FPH) shares fell 6.3% to $22.48, after it reported that after tax profit fell 34% to $NZ250.3 million ($233 million) for FY23.
Shares in health care heavyweight CSL (ASX: CSL) also fell 0.7% as the defensive sector took a back seat to hotter tech shares.
Humm fails to buzz as Latitude descends
Buy now, pay later company Humm (ASX: HUM) saw its shares shed a hefty 8.2% to 39c after ASIC made an interim order preventing it from issuing buy now pay later products to new customers.
There was similar bad news for shareholders in Latitude Financial (ASX: LFS) with the stock down 3.5% after it warned investors that a recent cyber-attack that compromised the data of 14 million customers was expected to wipe out virtually all of its profit for the current financial year.
Big miners recover some lost ground
Big mining shares were stronger after Singapore iron ore futures rebounded 3.2% to $US99 tonne after falling to $US95 a tonne earlier in the week.
Fortescue Metals (ASX: FMG) was the strongest of the big guys, with its shares up 3.3% while Rio Tinto (ASX: RIO) shares were up 2.3% and BHP (ASX: BHP) shares rose 1.4%.
It was also announced that Fortescue founder Andrew Forrest had lost out in his fight to get control of Australia’s biggest renewable energy project, the $30 billion Sun Cable export venture to Singapore.
Cannon-Brookes grabs Sun Cable
Rival billionaire and Atlassian co-founder Mike Cannon-Brookes emerged with control after Sun Cable went into administration when the billionaires disagreed on the future direction for the company.
Mr Forrest didn’t want to export any of the solar energy to Singapore but Mr Cannon-Brookes wanted to stick with the original export plan.
Stage one of the project is now due to deliver 900 megawatts of generation into Darwin and 1.8 gigawatts into Singapore.
On the United States market there were two forces pulling in different directions with continuing worries around the debt ceiling negotiations which could see the US Government run out of cash as soon as next week being largely overcome by a technology boost thanks to Artificial Intelligence (AI).
The S&P 500 was up 0.9% after chipmaker Nvidia gave a truly impressive forecast for upcoming sales as it benefits from the rush into AI.
With Nvidia being such a large stock, after its stock price surged by 24.4%, it helped to push the Nasdaq market up 1.7% even as the Dow Jones fell 0.1%.
Chipmaker Nvidia’s shares fly much higher
Nvidia forecast about $US11 billion ($16.9 billion) in revenue for the current quarter – more than double what analysts were predicting – and Nvidia’s share price has already more than doubled this year, taking its total value towards a staggering $US1 trillion.
Understandably shares in other chipmakers also surged as Nvidia said customers were racing to put AI “into every product, service and business process”.
Other technology stocks also rose on the back of AI excitement which is either a bubble or one of the most exciting revolutions reshaping the global economy, depending on who you talk to.
Economic reports showed that unemployment claims were lower than expected and that the US economy and inflation were higher than expected, reducing fears of an imminent recession but increasing the chance that the US Federal Reserve might raise official interest rates again next month.
Small cap stock action
The Small Ords index slipped 2.95% this week to close at 2807.9 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Blaze Minerals (ASX: BLZ)
Blaze Minerals acquired the North Spirit lithium project in Ontario, Canada.
The project is located in the Red Lake mineral province and is referred to as the “electric avenue” by the company.
It encompasses 1,698 mineral claims covering an area of about 340 square kilometres.
The project is situated 30km away from the PAK and Spark lithium deposits owned by Frontier Lithium.
Blaze plans to focus its initial field activities on two granite pegmatites, which have geological similarities to the PAK deposit.
Pure Hydrogen (ASX: PH2)
Pure Hydrogen’s investee company, H2X Global, has received a $34 million order from Renova AB, a Swedish waste management company, for hydrogen fuel cell-powered trucks.
The trucks will be used as garbage trucks in Gothenburg, and the order will make Renova the owner of Sweden’s largest fleet of hydrogen-powered trucks.
Pure Hydrogen’s managing director, Scott Brown, sees this deal as a step towards a decarbonised future, as hydrogen fuel cells can overcome the limitations of battery-electric vehicles in heavy transport.
Pure Hydrogen is also exploring opportunities for H2X Global’s smaller garbage trucks in the Australian waste management sector, with a trial planned on the Gold Coast.
Rubix Resources (ASX: RB6)
Rubix Resources secured exploration rights in James Bay, Quebec, an area that’s become a lithium hot spot as of late.
The company obtained the Ceiling lithium project from DG Resource Management, a private vendor.
Located within the under-explored spodumene-bearing pegmatite trend along the Wemindji greenstone belt, the project spans 5,000 hectares and has a 25km strike length.
Rubix Resources considers it to be a large-scale project with 101 active mineral claims.
Avecho Biotechnology (ASX: AVE)
Avecho Biotechnology has entered into a partnership with Arthur Group for the licensing and development of cancer drugs using tocopherol phosphate mixture (TPM) as a replacement for conventional solvents or surfactants.
The agreement includes rights to five of Arthur’s oncology products, representing a total market opportunity of $4.39 billion in the US.
Arthur Group will cover the formulation, non-clinical, and clinical development costs, while Avecho will receive 30% of the revenue from licensing and commercialisation.
Avecho’s Vitamin E-based TPM has the potential to dissolve poorly-water soluble injectable drugs without the need for adverse solvents, which could lead to safer and more manageable dosage forms for cancer treatment.
Stavely Minerals (ASX: SVY)
Stavely Minerals is expediting follow-up testing for its newly discovered gold-silver mineralisation system at the Stavely copper-gold project in western Victoria.
Initial assays from drilling at the S41 prospect revealed a promising carbonate-base metal-gold brecia-hosted system.
While the grades were relatively low, the success of the diamond drill-hole at S41 has justified further exploration.
Stavely Minerals plans to conduct additional air-core drilling to define the geochemical zonation of the breccia pipe and is considering more diamond drilling.
The company’s recent discovery comes alongside its acquisition of the Hawkstone project in Western Australia, aligning with its focus on exploring metals for the transition to a low-carbon future.
The week ahead
In the coming week the main event for Australia will be the release of April inflation numbers on Wednesday, with most estimates putting consumer prices up 6.4% for the year.
Also on Wednesday, the Reserve Bank Governor, Dr Philip Lowe, will appear before the Senate Economics Legislation Committee.
Some of the important ingredients for upcoming economic growth numbers are also out with the release of construction and business investment.
It is a busy week in the US, with a host of indicators including unemployment and a measure for job openings and nonfarm payrolls.
Chinese numbers on manufacturing and services should give a good read on how the big economy is recovering after its extended COVID closures.
There are a few annual shareholder meetings in Australia for Alumina and Life360 while annuity provider Challenger and conglomerate Wesfarmers will both host investor days.
There are more profit results and annual meetings in the US covering companies including Exxon and Chevron, Meta Platforms, Walmart, HP, Nordstrom, Macy’s, Costco and Dollar General.