Weekly review: uncertainty strikes the market after a stronger week
每周市场报告
Uncertainty once again spooked the Australian market which closed down 0.6% on Friday after five days of recovery gains.
That pushed the ASX 200 down 41 points to 7111 points after US markets finally ran out of puff after being reassured by the US Federal Reserve that interest rate rises would be smaller and slower due to the Ukraine conflict.
With Wall Street futures pointing to losses and reports of Russian forces firing on Ukraine’s Zaporizhzhia nuclear power plant producing alarming images of intense fires, stocks fell hard, particularly uranium stocks such as Paladin Energy which plunged as much as 26% amid serious fears of a nuclear disaster.
Fears of nuclear accident crunch global markets
Paladin (ASX: PDN) shares then recovered to close down 14.8% after the fears of a nuclear accident receded but by then the damage had been done.
All sectors were lower bar the defensive Consumer Staples and Utilities sectors which added 1.2% and 0.7% respectively as caution took hold.
However, that only took some of the gloss off a fairly solid week of recovery which saw the ASX 200 index rise 1.6% after losing 3.1% the previous week as Russian forces began to roll through Ukraine.
Energy and mining shares on the rise
Part of the reason Australian stocks did so well was the galloping price of oil and all energy sources, which helped the energy sector climb an impressive 8.9%.
The big miners were also stronger overall, pushing the materials sector up 8.1% as Australia’s old school industries hit a purple patch.
CSL shareholders cheered by $16.4 billion Vifor purchase
There were patches of strength amid the weaker tone on Friday, with CSL (ASX: CSL) shares up by 0.3% after the biotechnology and blood products group announced that 74% of Vifor shares had been tendered into the main $16.4 billion offer for the company.
CSL said the “regulatory approval process for the acquisition is on track and CSL remains confident that the remaining conditions will be satisfied and the transaction completed by mid-2022”.
The purchase of the Swiss maker of treatments for kidney disease, dialysis and iron deficiency will be the biggest since CSL first listed on the ASX as a tiny privatised government company almost 30 years ago.
CSL has now dropped an 80% minimum acceptance condition under the offer and extended it for another two weeks until March 22 to mop up the remaining shares and meet final regulatory conditions.
Gold stocks like Newcrest (ASX: NCM) provided some relief from the downturn, with retailers such as Coles and Woolworths also improving after trading ex-dividend on Thursday while grain stocks also rallied.
Shares in lithium resource developer Piedmont Lithium (ASX: PLL) rose 6.7% after it announced that its partner, Sayona Mining (ASX: SYA) has doubled its Sayona Quebec lithium resource estimate for the North American Lithium and Authier Projects.
Piedmont has a 25% interest in both projects which are now on track to restart production in 2023.
Small cap stock action
The Small Ords index finished 0.41% higher for the week to close on 3200.7 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Vonex (ASX: VN8)
Full service telecommunications company Vonex plans to pursue organic and inorganic growth prospects in 2022 following a positive H1 FY2022 financial result.
During H1 FY2022, Vonex revealed revenue had risen 54% to $15.047 million, with annual recurring revenue reaching $34.5 million – up 103% year-on-year.
Underlying EBITDA for H1 FY2022 had grown to $3.3 million compared to $200,000 in H1 FY2021.
The positive financial performance was attributed to the company’s inorganic and organic growth strategies that will continue throughout 2022.
Incannex Healthcare (ASX: IHL)
It was a big week for Incannex Healthcare, which debuted on the US-based Nasdaq Global Market.
The company’s stock will be traded in American Depositary Shares under the ticker IXHL, with the US listing expected to increase visibility with international investors and researchers.
On Thursday, Incannex revealed it had partnered with Monash University to develop a novel treatment for anxiety disorders using virtual reality and psychedelic medicines.
Incannex will use BrainPark’s virtual reality platform in combination with a psychedelic drug as an exposure-based approach.
It is anticipated this novel treatment will alter mental and biological responses to triggering stimuli to reduce pathological symptoms and behaviours.
Blackstone Minerals (ASX: BSX)
Aspiring nickel miner and downstream battery metal producer Blackstone Minerals unveiled a completed pre-feasibility study for its Ta Khoa nickel project in northern Vietnam.
The study confirmed the viability of a larger beneficiation plant to process inventory of 64.5Mt at 0.41% nickel for 264,000t of the metal which will provide 50% of the concentrate required for Blackstone’s proposed downstream refinery.
To further build its nickel exposure, Blackstone has scooped up a 14.32% interest in Corazon Mining, which is developing the Lake Lynn nickel-copper-cobalt project in Canada’s Manitoba province.
Lake Lynn has contained resources of 168,000t nickel, 81,700t of copper and 7,000t of cobalt and under an additional memorandum of understanding agreement, Blackstone has an offtake right.
Frontier Energy (ASX: FHE)
The former Superior Lake Resources has relisted on the ASX under the name Fronter Energy with a new direction in clean energy production.
Frontier raised $8 million to fund development of its Bristol Springs solar project and assess other clean energy projects, including green hydrogen, and wind.
Bristol Springs is in WA’s South West and surrounded by “world class infrastructure” and will initially produce 11MWdc of electricity for feeding into the region’s grid.
Frontier managing director Mike Young says the renewable energy industry offers “significant growth opportunities”.
Fatfish Group (ASX: FFG)
Technology venture firm Fatfish will restructure and consolidate fintech business investments under its flagship holding company ASEAN Fintech Group.
The restructure will allow Fatfish to integrate its multi-disciplinary fintech businesses and operational processes, bring about more efficient and effective management for expansion, and achieve cost savings in overall fintech business administration.
The company is focused on building an integrated value chain across the core verticals of payments, lending and buy now pay later services (BNPL), and insurance technology.
The week ahead
Obviously, events in the Russian invasion of Ukraine will continue to impact share markets this week, particularly as there are precious few major economic events planned that will be competing for attention.
Here in Australia the major events to watch for are two speeches by the Reserve Bank Governor, Dr Philip Lowe, to two conferences.
It is unlikely that he will change his fairly patient view towards raising interest rates but the market is always ready to hear extra nuances from central bankers.
Other than Dr Lowe, the main local events include February job advertisements data, consumer sentiment, household spending intentions and the NAB business survey.
Overseas the main thing to watch for is consumer price data from the US and China, with inflation or even worse potential stagflation still a major factor in market wariness.
There are a host of other minor announcements in China and the US but little to distract from continuing news out of Ukraine, with the stranglehold of Russian troops potentially tightening during the coming week.