Weekly review: Market off to a good start in March

Weekly review ASX market good start March 2019
WEEKLY MARKET REPORT

Australia’s share market shrugged off some negative leads to jump higher on the first March trading day, adding 29.4 points or 0.4% to close the week at 6192.7.

That is the highest read on the index since since September 2018.

The tail end of the profit reports has been fairly positive with 93% of reporting companies posting a profit for the half-year results and 49% of companies improving on their comparable profits from a year ago.

Reaction to the stronger than expected business investment number released on Thursday continued to be positive and helped to continue on from the strong 5.2% bounce in the ASX 200 during February.

Dollar and US confidence at play

There are some international factors at play too with the weaker dollar driving some offshore interest in the Australian market.

Contrasting signals are coming from the US which is showing more confidence in the growth outlook there while weak Chinese Purchasing Managers’ Index (PMI) numbers are leading to some caution about the outlook for our biggest trading partner, although you wouldn’t guess it from the Chinese share market which has added around 22% so far this year.

Chinese bulls looking for stimulus

Perhaps the Chinese bulls are looking at the return of government stimulus to hang their hats on rather than getting too wrapped up in what has happened previously.

The collapse of the Trump-Kim talks in Hanoi didn’t seem to cause much of a ripple here on the Australian market which seemed to be more driven by profit results that were overall not as bad as feared.

Some of those company specific moves were on show in the market with the energy sector taking a hit courtesy of some major companies trading ex-dividend.

Caltex (ASX: CTX) was one of those trading without its dividend with its shares slumping 4.8% to $27.22 and Origin Energy (ASX: ORG) also felt the loss of its dividend with a 1.1% fall to $7.28 with these and other falls leading to a 4.8% cut in the energy sector.

It was also a down day for mining share prices with iron ore miners Rio Tinto (ASX: RIO) and Fortescue Metals (ASX: FMG) falling 1.3% each to $94.92 and $5.98 respectively.

Almost all other sectors were higher though with retailer Harvey Norman (ASX: HVN) responding well to broker upgrades after a better than expected first half result, adding 3.3% to $3.72.

Investors continued to like dairy exporter Bellamy’s Australia’s (ASX: BAL) results with the stock firming 8.3% to $8.83.

Controversial buy now pay later player Afterpay touch (ASX: APT) also put on a spurt, adding 6.1% to $19.57.

There were 11 company suspensions from the ASX as well, with shares in Yellow Brick Road (ASX: YBR), Carnegie Clean Energy (ASX: CCE) and iBuyNew Group (ASX: IBN) now unable to be traded until they file their overdue profit results.

Small cap stock action

The Small Ords index finished the week down 0.25%, having lost most of its ground on Tuesday then recovering strong on Friday.

ASX 200 vs Small Ords March 2019

Among those making headlines in the small cap space this week were:

9 Spokes International (ASX: 9SP)

9 Spokes International finished the week on a high after announcing on Friday it had secured a co-sell partner agreement with Microsoft.

Microsoft’s One Commercial Partner program will incentivise its sales team to co-sell the 9 Spokes platform into banking markets.

As part of Microsoft’s partner program, 9 Spokes will also list on Microsoft’s AppSource Marketplace.

9 Spokes chief executive officer Adrian Grant said the Microsoft partnership will help 9 Spokes reduce some of the challenges involved with entering new markets.

OpenDNA (ASX: OPN)

OpenDNA generated a lot of news flow this week, with the first announcement resulting in a supply agreement with pharmaceutical wholesale company NNM Services.

The agreement with NNM allows OpenDNA to sell NNM’s Australian-made and sourced products on RooLife to consumers in China.

A few days after the NNM agreement, OpenDNA reported it had teamed up with health and wellness company Better Nature.

OpenDNA will provide market entry services and digital marketing to Better Nature targeting the Chinese market. OpenDNA will also receive a commission on all Better Nature products sold through RooLife.

Atrum Coal (ASX: ATU)

Canadian coal explorer Atrum has carried out metallurgical test work on the coal quality from its Elan project in Alberta’s south-west.

The work was carried out on two samples from the Elan South deposit and revealed better key coking coal properties to earlier samples.

Atrum expects these samples will also yield even higher coke strength after reaction values than the previous samples.

Further coke characterisation testing is underway with final results expected at the end of March.

MGM Wireless (ASX: MWR)

This week, MGM Wireless was showcasing its Spacetalk mobile watch device at the MWC 2019 technology event in Barcelona.

Small Caps attended the event which attracted more than 110,000 delegates and 2,400 companies.

According to MGM founder and chief executive officer Mark Fortunatow, the company had experienced a high level of interest.

The news follows MGM posting record first half 2019 revenue of $4.07 million, which is up 158% on the previous corresponding period.

Pure Minerals (ASX: PM1)

Pure Minerals has officially committed to its previously announced acquisition of Queensland Pacific Metals and its assets.

On Monday, the company’s board reported it had agreed to execute the option to acquire Queensland Pacific Metals after carrying out thorough due diligence since October last year.

To cement the purchase, Pure Minerals will issue Queensland Pacific Metals’ vendors 33.3 million shares (subject to 12-month escrow) and $500,000 in cash.

A further 366.62 million deferred consideration shares will also be issued and are linked to performance milestones.

Queensland Pacific Metals has agreements in place to source nickel and cobalt ore from New Caledonian producers and plans to treat it at a 6,000tpa plant in Townsville to generate battery grade nickel and cobalt products.

Northern Cobalt (ASX: N27)

Northern Cobalt has completed a helicopter-borne magnetic survey over its recently acquired Snettisham vanadium project in Alaska.

The survey was conducted over an Alaskan-style mafic-ultramafic intrusive complex, which hosts vanadium-bearing magnetite.

Northern Cobalt will use the survey and other data to construct a 3D model of the magnetite deposit, which will assist with firming up targets for a drilling program.

The company plans to start drilling Snettisham before the end of June.

West African Resources (ASX: WAF)

Advanced gold explorer West African Resources pulled up 132g/t gold while drilling at its Sanbrado project in Burkina Faso.

During reserve drilling at the M1 South deposit, West African unearthed 6.5m at 61.8g/t gold from 258.5m, including 3m at 132g/t gold.

Drilling at the M5 deposit returned a best result of 14m at 12g/t gold from 510m, including 1m at 49.9g/t.

West African will include the results in an optimised feasibility study which is due for completion before the end of March.

The week ahead

Next week the Australian data will be concentrating on how the economy performed during the December quarter.

On Wednesday we get to see numbers on construction work done and on Thursday, business investment figures.

There is no shortage of potential offshore leads as well with testimony by the US Federal Reserve Jerome Powell and also economic growth figures.

In China, there is a range of figures around activity in the manufacturing and services sectors.

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.