Weekly review: market ends flat despite strong jobs and China growth

Stock market flat ASX jobs China Iron ore miners
WEEKLY MARKET REPORT

Australia’s share market ended the week fairly flat for the Easter holiday after the strong March jobs numbers saw initial gains wiped out.

As is usual before a longer than usual holiday trading break, there were plenty of traders taking bets off the table so some weakness near the end of trade was expected.

After an early rally which added 25 points, the ASX 200 flattened out at the end to close a feeble three points higher to 6,259.8 points, up 0.14% for the week.

Stronger China helps Australia

The big story of the week was the raft of much stronger economic news out of China which played to Australia’s strengths.

The Chinese Government announced that gross domestic product grew 6.4% year-on-year in the first three months of 2019.

However, that effect was muted by the fact that Brazil’s iron ore exports will be boosted by a reopening iron ore mine, which sent the share prices of the big iron ore players sharply lower.

Iron ore slide hits miners

That effect was even evident on Thursday, with BHP (ASX: BHP) down slightly and Rio Tinto (ASX: RIO) and Fortescue Metals (ASX: FMG) recovering slightly after getting thumped by the iron ore price fall.

The big four banks all closed slightly higher after National Australia Bank (ASX: NAB) rose 0.1% after announcing $525 million of extra customer remediation charges, most of them relating to its wealth and financial advice businesses.

It was a bad day for healthcare stocks which fell across the board but Kogan.com (ASX: KGN) jumped 18.6% after the online retailer announced a lift to its active customers and revenue over the March quarter and the launch of Kogan Cars.

Bubs Australia (ASX: BUB) also jumped 10.1% after it inked a sales agreement with Chemist Warehouse to sell its full range of products nationally.

Small cap stock action

The Small Ords index finished in the red after a Thursday sell-off to close at 2,796.1 points, down 0.24% for the week.

ASX 200 Small Ords Easter 2019
ASX 200 vs Small Ords

Among the companies making headlines this week were:

FinTech Chain (ASX: FTC)

FinTech Chain has locked-in another China bank customer after the Hunan Xingsha Rural Commercial Bank (XRCB) signed a contract for FinTech’s proprietary T-Linx platform and integrated payment service.

FinTech’s T-Linx system provides digitised payment services to banks and under the contract with XRCB, the system will generate revenue of 0.02% of each transaction’s value to FinTech.

During a three-month trail, XRCB’s use of T-Linx resulted in RMB9 million (A$1.8 million) in transactions a day.

More than 300 banks are connected to FinTech’s systems and FinTech plans to market its technology to a further 120 banks within China’s Hunan province.

Paradigm Biopharma (ASX: PAR)

Paradigm Biopharma confirmed improved knee function and pain reduction for six months in osteoarthritis of the knee patients treated with the company’s pentosan polysulfate sodium (iPPS) drug.

The company noted its phase 2b clinical trial using iPPS had met its key secondary end-points of increased knee function, pain reduction and lowering of bone marrow lesion grade, volume and area.

Paradigm explained the decrease in bone marrow lesions points to the potential of iPPS in slowing the disease’s progression.

To fund the advancement of clinical studies, new drug applications and further intellectual property acquisitions, Paradigm also launched a capital raise this week seeking to top up its coffers with $77.9 million.

Engage:BDR (ASX: EN1)

It was another busy news week for engage:BDR with the company launching the first phase of its Facebook social media advertising ahead of schedule.

According to engage:BDR, the roll-out is ahead of the targeted third quarter schedule and has been brought forward due to customer demand, with IconicReach customers the first to join the paid social media advertising strategy.

The news follows engage:BDR’s announcement earlier this week that its was offering advertising solutions to North American cannabis and cannabidiol (CBD) brands.

Engage:BDR is now offering custom-curated inventory packages within its programmatic ad exchange to the region’s cannabis sector.

CV Check (ASX: CV1)

CV Check has boosted its operating and investing cash flow by 152% for the March 2019 quarter, compared to the same period in 2018.

The company operates an online platform that enables businesses and individuals to carry out background checks on potential employees. CV Check reported an operating and investing cash flow of $233,000, which was underpinned by customer cash receipts of $3.1 million for the March quarter.

“The over 150% improvement on the same quarter last year is directly attributable to the efforts of our team for delivering solid growth in B2B segments, maintaining our market presence in B2C markets and managing our cost base effectively,” CV Check chief executive officer Rod Sherwood said.

CV Check is looking to further accelerate growth by exploring strategic options and leveraging its technology and market position.

Tinybeans Group (ASX: TNY)

Technology company Tinybeans has landed its largest contract to-date with globally renowned toy giant Lego Systems Inc.

The deal paves the way for Lego to advertise its Duplo toys on Tinybeans’ modern family album app which is for families of toddlers and pre-schoolers in the US.

“Tinybeans’ smart and agile analytics will empower us to target and share the benefits of Duplo products with the right families to help their child’s development and reinforce Tinybeans’ growing power as a trusted source of child-related product recommendations,” Tinybeans chief executive officer Eddie Geller said.

Mr Geller added the contract will drive the company towards its goal of becoming cash flow positive before the end of 2019.

During the March 2019 quarter, Tinybeans achieved revenue of $992,081 – up 143% on the same period in 2018 of $408,063.

Freehill Mining (ASX: FHS)

Ahead of its maiden iron ore resource, Freehill Mining has firmed up more copper potential at the Yerbas Buenas magnetite project in Chile.

A recent induced polarisation survey has detected a second large potential copper sulphide structure at the project.

Earlier this year, Freehill reported it had identified a large copper anomaly in the north-east section of the survey area, with this latest anomaly detected 800m to the south.

Freehill plans to incorporate both anomalies in its upcoming drilling program that is targeting the magnetite structure within the project.

IPOs this week

Small Caps readers who want to view upcoming IPOs or see the performance of stocks that have listed in 2019 can now do so.

The latest companies to make their way onto the ASX this week were:

Next Science (ASX: NXS)

As one of the year’s most notable IPOs, Next Science made its much anticipated ASX debut on Friday, with the company opening at a 40% premium to its offer price of $1 per share.

The company’s offer closed in just three days and was significantly over subscribed, with investors putting their faith in Next Science’s FDA approved Xbio technology, which treats chronic infections including those caused by antibiotic resistant bacteria.

Under the offer, 35 million shares were issued to raise $35 million, which will go towards rolling out available products globally and advancing those in development.

On its first day of trade, Next Science reached an intraday high of $1.48 – up 48% on its $1 offer price, before finishing at $1.35.

ReadyTech (ASX: RDY)

Software-as-a-service (SaaS) provider ReadyTech commenced trading Wednesday on the ASX, having raised around $50 million at $1.51 per share.

The company was founded over 20 years ago, previously known as JobReady.

Its SaaS solutions are designed to assist companies in complying with regulatory reporting, payroll and legislative compliance.

In addition, ReadyTech offers packages for the education market.

ReadyTech closed out its first week of trade at $1.72 per share, having reached a high of $1.83.

The week ahead

Once again holidays are shortening the Australian trading week with the Easter Monday and ANZAC holidays leaving traders with just three trading days.

That doesn’t mean there won’t be plenty of action with Wednesday’s CPI numbers particularly important.

The Reserve Bank has been closely watching inflation and hoping for an uptick from the expected 1.5% annual number but so far it has been disappointed and this will probably be no exception.

Headline CPI is expected to lift by just 0.2% for the March quarter, dragging the annual rate down from 1.8% to 1.5%.

Lower fuel prices in the March quarter – which miraculously disappeared just before everyone filled up for Easter – are expected to drag the CPI lower.

It is a busy week on the US markets with a host of big companies reporting their results including Halliburton, Kimberly-Clark, Coca Cola, Harley Davidson, Lockheed Martin, Procter & Gamble, Twitter, Boeing, Caterpillar, Goodyear, Novartis, Facebook, Wynn Resorts, Microsoft, Tesla, Visa, 3M, American Airlines, Amazon, Intel, Ford, Chevron, Exxon Mobil and Colgate-Palmolive to name just a few.

There is also a wealth of US housing data out as well.

This week’s top stocks

John is a highly experienced business journalist and formerly chief business writer for the Herald Sun. He has covered Federal politics in Canberra, was Los Angeles Bureau chief for News Limited and was also chief of staff for the Herald Sun. He has covered a wide range of small and large cap ASX stocks and has a special interest in mining, technology and biotech.