Weekly review: market takes a chaotic European vacation

Weekly review ASX stock market European vacation
WEEKLY MARKET REPORT

After a strong week the Australian share market went on a European vacation on Friday, and it was a Chevy Chase type of disaster.

After the European Central Bank (ECB) surprised markets by downgrading European economic growth forecasts, world markets quickly jumped in the lifts and hit the down button.

Indeed, the US market fell for the fourth straight day and the prospect of slower European growth sent risk assets around the world lower.

Aussie dollar and market hit

The Australian dollar was one of those hit and the Australian market was another, with the ASX 200 shedding 60 points or 1% to 6,203.8 and the dollar threatening to slide through the US70c mark.

The falls were pretty much across the board after ECB president Mario Draghi warned that Europe was in a period of continued weakness and pervasive uncertainty and promised to hold interest rates at record lows until next year.

There was a bit less damage for property trusts, industrials and the usual defensive areas of IT and healthcare but otherwise that 1% fall was almost exactly replicated by decline of at least that or more for most of the big stocks.

Big stocks fall by at least 1%

That included the heavyweight banks: Commonwealth (ASX: CBA), Westpac (ASX: WBC), National Australia (ASX: NAB) and ANZ (ASX: ANZ).

Overall, the financial sector fell 1.6%.

It was a similar scene for the big miners with BHP (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue Metals (ASX: FMG) all slumping by at least 1.3%.

The energy sector also suffered heavy losses, despite a slight rise in global oil prices with Woodside Petroleum (ASX: WPL) down 1.3%, Santos (ASX: STO) 1.1% lower and Oil Search (ASX: OSH) crunching by 2.2%.

Gold a rare safe harbour

Gold stocks were a rare ray of sunshine for the market after investors jumped on the yellow metal as a safe harbour.

Northern Star (ASX: NST) added 1.7%, Evolution Mining (ASX: EVN) was up 1.7% and OceanaGold (ASX: OGC) surged 8.6% following a strong update on the performance of one of its New Zealand gold mines.

Funeral home operator InvoCare (ASX: IVC) placed its shares in a trading halt so that it can raise a total of $85 million through a share purchase plan, with a target of raising $65 million from institutional investors and $20 million from retail investors.

The cash is aimed at giving the group the ability to grow, including by acquisition.

Small cap stock action

Despite a positive midweek performance, the Small Ords index finished the week down 0.79%, after having lost 0.83% on Friday.

ASX 200 vs Small Ords March 2019 chart
ASX 200 vs Small Ords

Among the companies making headlines this week were:

Freehill Mining (ASX: FHS)

Trial iron ore operator Freehill Mining has intersected up to 70% iron from its maiden drilling campaign at Yerbas Buenas in Chile.

The 70% iron was found in a 172m wide intersection that overall graded 24.4% iron. In addition to the higher grade 70% iron interval, the intersection included 38m at 41.7% iron and 16m at 61% iron.

Drilling also unearthed an 18m interval of near-pure magnetite grading 63% iron.

Freehill Mining chief executive officer Peter Hinner said the results were “outstanding” and the company will be reporting a JORC resource and updated conceptual exploration target for the project before the end of the month.

Security Matters (ASX: SMX)

Security Matters announced it will be working with BASF SE to assess how its barcode technology can be used in performance chemicals.

The duo has begun feasibility studies and BASF will evaluate different uses for Security Matters’ patented hidden barcode technology in its customised chemicals for mining, fuel and plastics.

Security Matters’ technology uses a hidden, chemical-based barcode to permanently mark any material whether it is solid, liquid or gas.

Blockchain technology is then used to record and protect stored data that can be accessed using a unique barcode reader.

Bubs Australia (ASX: BUB)

Infant formula and food company Bubs Australia has teamed up with China’s Beingmate to distribute Bubs’ products throughout the country.

The companies inked a non-binding memorandum of understanding and hope to cement a definitive joint venture before the end of next month.

Under the partnership, Beingmate will distribute Bubs’ infant formula and organic baby food through 30,000 stores in China.

Bubs’ baby food is currently sold throughout 500 Chinese stores and its formula is distributed in China via e-commerce and online-to-offline platforms.

Walkabout Resources (ASX: WKT)

Walkabout Resources unveiled an enhanced definitive feasibility study this week for its flagship Lindi graphite project in Tanzania.

The study reduced capital cost estimates by 6% to US$27.8 million and boosted life-of-mine revenue more than 20% to US$1.445 billion over 24 years.

With the updated study, Lindi’s post-tax net present value now totals US$197 million – up 9.4% on the original feasibility study.

The new study was underpinned by an upgraded reserve of 5.5Mt at 17.9% total graphitic carbon.

Syntonic (ASX: SYT)

Seattle-based Syntonic has entered an agreement with leading mobile consortium Bridge Alliance giving it access to the Asia Pacific, Middle East and Africa.

Under the agreement, Syntonic will develop a white-labelled and customised version of its International Roaming Service.

Bridge will sublicence the service to its tier-one mobile carrier members that operate within 34 countries across the key regions.

The service will be branded as Bridge’s but Syntonic will receive compensation for all engineering and support costs associated with developing the service.

Authorised Investment Fund (ASX: AIY)

Pooled investment fund Authorised Investment Fund has moved to acquire 30% of SpartaCard, valued at $5.7 million.

The non-binding term sheet also allows for Authorised Investment Fund to up its stake in SpartaCard to 55%.

SpartaCard has developed a hardware wallet with transactional capabilities allowing cryptocurrency investors to store their assets offline and use cryptocurrencies to purchase goods and services from participating merchants – without the need for a computer or cables.

The card has been branded as “the world’s first ever secure transactional hardware wallet”.

Engage:BDR (ASX: EN1)

It was another big week for engage:BDR with the company announcing it was launching a campaign with ASHLEYlauren to boost in-store and online traffic for the women’s fashion brand.

The two companies will incorporate influencer-developed integrated content across several platforms including Instagram.

Additionally, engage:BDR also reported it has successfully integrated AdCel’s new software kit into its programmatic services ahead of schedule.

AdCel’s technology is expected to contribute revenue, higher efficiencies and incremental customer adoption for engage:BDR.

Envirosuite (ASX: EVS)

Environmental management company Envirosuite has collared global steel major Tata Steel as the latest signatory to its platform.

Tata will use Envirosuite’s platform to translate operational data in real-time to drive improvements in air quality throughout its steel production facility in Wales.

About 60 air quality sensors and three weather stations at the facility will feed data directly to Envirosuite’s platform.

The information will enable Tata to take action before air quality issues occur and respond rapidly in emergencies.

Spectrum Metals (ASX: SPX)

Spectrum Metals has intersected a new high-grade zone of gold mineralisation at its Penny West project in WA.

The discovery was made about 150m north of the historic Penny West open pit where 121,000 of ore was mined grading 21.8g/t gold to produce 85,000oz of the precious metal.

Named Penny North, drilling at the new zone returned 8m at 23g/t gold and 6.9g/t silver.

Spectrum believes the high-grade section of the intersection was similar to mineralisation found at the historic Penny West lode.

Northern Minerals (ASX: NTU)

Rare earths explorer Northern Minerals debuted a maiden resource for the Dazzler deposit within its WA-based Browns Range project.

The maiden inferred resource estimate totals 144,000t at 2.23% total rare earth oxides (TREO), comprising 3.2 million kg TREO.

Northern Minerals plans to undertake further drilling at the deposit and the Iceman target later this year.

The company opened a pilot plant at the project mid-last year and has produced 7,200kg of rare earth carbonate since then.

The week ahead

Next week is shaping up as a bit quieter on the data front, although there won’t be any shortage of offshore stories to react to.

The NAB business survey is out and there is a range of other statistical releases including numbers for lending, consumer confidence and tourism arrivals and departures.

On Tuesday, there is a speech being given by Reserve Bank Deputy Governor Guy Debelle which will be closely watched.

In China, some more perspective on its economic slowdown should come from January and February monthly production, investment and retail spending data.

Over in the US, we should see a raft of data including retail sales, inflation, durable goods orders, industrial production and job openings data.

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.