Weekly review: Banks help lift the market as AMP and Resmed tank

Real world proof that Australia’s banks provide a strong impetus for the local market as their determination to protect profits saw share prices rally.

National Australia Bank (ASX: NAB) followed many of its bigger and smaller brothers in raising variable home loan rates by as much as 0.16%, claiming higher funding costs had forced it to raise rates even though there has been no movement in official interest rates from the Reserve Bank.

That set all of the banks up for a share price rise, being seen as confirmation that the banks remain dedicated to preserving profits rather than placating customers in the wake of the Royal Commission.

NAB shares were up 16c or 0.65% with the rest of the banking sector also much firmer.

Miners get in on the act too

The big miners and the energy sector were also buoyant, helping to push the ASX 200 to a healthy jump of 38.9 points or 0.68% to close at 5,905.60.

BHP (ASX: BHP) was up an impressive 1.3% to $33.05 while Rio Tinto (ASX: RIO) climbed 1.1% to $80.47.

There has been much speculation that BHP might try to clear some more of its market leading store of franking credits of about US$9.2 billion before the potential election of a Shorten Labor Federal Government, which is planning to significantly devalue those credits in the hands of small shareholders and retirees.

BHP has already used up US$2.2 billion of franking credits in its recent buy-back and a further US$1.3 billion in its special dividend but still has plenty of franking credits to distribute – pending sufficient profitability, of course.

Heavy breathing for Resmed

It wasn’t all sweetness and light on the market with sleep apnoea and healthcare company Resmed (ASX: RMD) forced to do some heavy breathing of its own as its shares lost $1.98 or 12% after a revenue disappointment and an acquisition binge.

Qantas (ASX: QAN) shares also shaved off 13c or 2% on fears that international travel might be on the wane and oil prices may rally.

Embattled wealth manager AMP (ASX: AMP) really hit the skids with a 7.9% fall to $2.34 on the back of a cut to its dividend and news that it was setting aside more money to compensate customers.

Small cap stock action

The Small Ords outperformed the rest of the market this week to close up 1.27% for the week at 2596.9 points.

Companies driving the news in the small cap space this week included:

Engage:BDR (ASX: EN1)

Engage:BDR has enjoyed a big week, including two of its board members upping their stake in the company.

The company’s co-founder and chief executive officer Ted Dhanik increased his interest in the company to the 19.99% maximum permitted by law, while chief operating officer and executive director Kurtis Rintala added 1.5 million shares to his holding, bringing his ownership in engage:BDR up to 36.7 million shares.

Engage:BDR also launched a capital raising to bring in a further $702,784 in cash, which will fund working capital and revenue generating publisher payments.

Meanwhile, two recently signed integrations went live on Monday. After signing deals with ThirdPresence and Acuity in late December, the programmatic platforms have now been integrated into engage:BDR’s platform, along with several others.

MOD Resources (ASX: MOD) and Sandfire Resources (ASX: SFR)

As the merger and acquisition space heats up, copper miner Sandfire Resources has launched a takeover bid for Botswana-focused MOD Resources.

Sandfire’s non-binding offer valued MOD at $0.38 per share or $94.5 million – a premium from the company’s previous closing price of $0.22.

However, MOD rebuffed the offer claiming it “significantly undervalued” the company and its assets. Despite rebuffing the initial offer, MOD stated it will continue to engage with Sandfire to explore all options.

MOD’s refusal follows its recently completed $10 million capital raising to advance its T3 copper project in Botswana.

Fenix Resources (ASX: FEX)

Formerly known as Emergent Resources, Fenix Resources has unearthed multiple high-grade iron ore intersections from drilling at its Iron Ridge project in WA’s Murchison region.

A maiden 21-hole reverse circulation drilling program was carried out at the project, which Fenix acquired in May 2018.

Best results from the latest assays were 70m at 64.8% iron from 72m; 66m at 66.2% iron from 80m; 58m at 66.7% iron from 84m; 52m at 66.2% iron from 130m; and 56m at 63.6% iron from 54m.

The project has an inferred resource of 5Mt at 64.1% iron, 3.3% silicon dioxide, 2.7% aluminium oxide and 0.05% phosphorus.

Australian Potash (ASX: APC)

Australian Potash has generated Australia’s first batch of field-evaporated sulphate of potash at its pilot processing facility in Perth, Western Australia.

An initial 65kg of sulphate of potash was produce from 3t of potassium-rich harvest salts that were mined from Australian Potash’s Lake Wells project.

Preliminary analysis has revealed the product had a 98% purity, which is equivalent to 53% potassium oxide.

A DFS is underway at the project and due to be published by mid-year, with the company targeting production in the latter half of 2020.

Pure Minerals (ASX: PM1)

Pure Minerals expects to make a binding decision on the acquisition of Queensland Pacific by 3 May 2018.

Pure Minerals’ acquisition of Queensland Pacific Metals (QPM) is looking even more promising after QPM reported a positive scoping study on its proposed battery minerals processing plant in Queensland.

The scoping study revealed a 25-year operation to produce 25,400tpa of nickel sulphate hexahydrate, 3,000tpa of cobalt sulphate heptahydrate, 221,000tpa hematite, 8,700tpa alumina and 4,600tpa magnesium oxide.

Capital costs for the 600,000tpa plant were estimated at US$297.4 million, with ore to be sourced from New Caledonian producers under existing supply contracts.

Pure Minerals expects to make a binding decision on the acquisition of QPM by 28 February 2018.

Authorised Investment Fund (ASX: AIY)

Garuda Indonesia has teamed up with Authorised Investment Fund’s investee Asia Integrated Media.

Under the partnership, Garuda will use Asia Integrated Media’s programmatic digital advertising company Travel Elite to engage its passengers with targeted computer-based and automated buying, selling, placement, and optimised digital advertising.

Asia Integrated Media anticipates the agreement will draw more than US$2 million in initial revenue.

Known as programmatic advertising, Asia Integrated Media established Travel Elite to offer brands the opportunity to target “high value airline passengers” travelling both internationally and domestically.

Australian Mines (ASX: AUZ)

Australian Mines is another stock that had a big news week after reporting “outstanding” cobalt drill results from its flagship Sconi cobalt, nickel and scandium project in Queensland’s north.

This latest drill program returned up to 3.4% cobalt with other notable intersections of 12m at 1.07% cobalt from 1m, 9m at 1.02% cobalt from 1m, and 13m at 1.11% nickel from the surface.

The positive news continued with the Queensland Government declaring Sconi a prescribed project, enabling the company to streamline the final regulatory approvals.

Australian Mines has engaged an independent consultant to re-estimate the project’s current resource and plans to begin construction later this year.

The week ahead

Once again this week the release of data in the US is uncertain due to the government shutdown but there is plenty of other activity which will feed into market trading.

The most important will be the rash of profit reports but there is also a meeting of the US Federal Reserve and the US-China trade talks on 30 and 31 January.

Brexit discussions may also come into play, along with, potentially, some sort of activity around the now stalled US State of the Union address which was due to happen on 29 January.

Here in Australia there are a few things to look forward to including data on business confidence, consumer prices, private sector credit and home values.

Australia’s profit reporting season has also begun but the real action will happen in the following week.

The Australia Day holiday on Monday will also leave this a shorter than usual week with no trading or settlement occurring that day.

Weekly top stocks