Weekly wrap: Nvidia and AirTrunk bookend a big week for the Australian market
WEEKLY MARKET REPORT
The week on the Australian share market can be neatly summarised by two vastly different technology bookends.
One was the incredible 9.5% single day plunge in the value of Nvidia shares, which wiped out an incredible US$278.9 billion (A$415.5 billion) of market capitalisation for the AI chip maker in one fell swoop.
And the second was the amazing sale of the home-grown data centre giant AirTrunk to a consortium led by Blackstone for $23.5 billion.
While the Nvidia plunge was by far the biggest influence given that the largest one-day loss ever by a US stock led to a sizeable rout of the world’s share markets, the sale of AirTrunk for a price well above the $10 billion valuation being considered just last year is also a rare positive Australian Artificial Intelligence (AI) story.
AI remains strong despite Nvidia fall
Indeed, both occasions are different sides of the same AI coin – Nvidia shares had gone for an incredible, lengthy and unprecedented run upwards which puts some context around such a substantial fall while the AIrTrunk deal proves that the appetite for AI assets such as data centres remains incredibly strong.
However, by the end of the week it was left to a sharp rally in Australia’s big four bank stocks to drive the Australian share market to a more respectable close on Friday.
Considering the mayhem brought on by the Nvidia crunch, the final 1% weekly fall on the Australian market was not a bad result, with the ASX 200 Index adding 0.4% or 31 points on Friday to 8013.4 points by the close.
Banks lead the market higher
Unsurprisingly, the financials sector led the market, up 1.5% as the big four banks all rose.
Commonwealth Bank (ASX: CBA) leapt 1.5% to a record $143.47, Westpac (ASX: WBC) added 1.7% to $32.10, ANZ (ASX: ANZ) also added 1.7% to $31.79 while National Australia Bank (ASX: NAB) put on 1.4% to $39.05.
Macquarie (ASX: MQG) also soared 2.4% to a record $225.17.
Miners feel the heat
It was a different story for the materials index, which fell 0.9% as iron ore futures continued to slump towards the US$90 a tonne mark.
BHP (ASX: BHP) fell 1.2% to $38.45, Rio Tinto (ASX: RIO) fell 0.1% to $107.02 and Fortescue Metals (ASX: FMG) lost 0.1% to $16.12.
There were some individual share moves of interest as well.
Locally listed dental chain Pacific Smiles (ASX: PSQ) saw its shares dip 1.4% to $1.76 after the company announced that chief executive Andrew Vidler is stepping down.
Mr Vidler will serve a six-month notice period while the board runs a recruitment process for his replacement.
Energy shares sluggish
Woodside Energy (ASX: WDS) continued their poor performance of late, falling 3.9% to $24.02 on the back of lower crude oil prices.
Shareholders are also digesting a successful US$2 billion (A$3 billion) bond issue in the US market which will be used partly to fund the US$2.35 billion acquisition of a clean ammonia project in Texas and the US$900 million purchase of a prospective LNG export terminal in Louisiana.
Other energy shares were also lower, with Santos (ASX: STO) down 1.4% to $6.92 and Ampol (ASX: ALD) fell 1% to $28.48.
Small cap stock action
The Small Ords index fell 3.2% for the week to close at 2909.7 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Black Rock Mining (ASX: BKT)
Graphite developer Black Rock Mining will receive a US$40 million equity investment from POSCO International, securing long-term offtake rights from Module 2 of the Mahenge graphite project.
The investment is contingent upon approvals from regulatory bodies and Black Rock shareholders.
Proceeds will fund the development of Mahenge Module 1, where POSCO has already secured offtake contracts for fines graphite production.
POSCO will also obtain rights to market large flake graphite outside China and receive commissions on sales, deepening its strategic alliance with Black Rock.
The Mahenge project is one of the world’s largest JORC-compliant flake graphite resources, with reserves supporting significant future production.
Osmond Resources (ASX: OSM)
Osmond Resources is set to acquire up to an 80% interest in the Orion EU rutile, zircon and rare earth project, located in southern Spain, via a staged acquisition of Iberian Critical Minerals.
The project covers 86 square kilometers and has shown significant potential for critical minerals, including rutile, zircon, hafnium, and rare earth elements, with previous exploration identifying rich mineral layers.
Osmond plans to fast-track exploration with a modest drilling program and aims to establish a mineral resource estimate to support a scoping study.
Metallurgical test work has already shown promising results, with heavy metals exceeding 28% in samples.
To support the acquisition, the company is undertaking a 10 million share placement and has appointed new leadership, including Anthony Hall as chief executive officer and Tolga Kumova as a strategic advisor.
Lithium Australia (ASX: LIT)
Lithium Australia has signed a three-year agreement with BYD Auto to provide battery recycling services for its electric vehicles in Australia.
The deal will see Lithium Australia collect and recycle BYD’s end-of-life lithium iron phosphate (LFP) batteries, aligning with its strategy to increase LFP battery processing capacity.
This partnership is expected to significantly boost the company’s large-format lithium-ion battery collection volumes, driving growth in higher-margin batteries.
Lithium Australia continues to focus on securing recycling agreements with electric vehicle and energy storage manufacturers, achieving a record 69% lithium-ion battery collections in the latest quarter.
BYD Auto, a pioneer in battery technology, entered the Australian market in 2022 and now holds around 14% of the domestic market share.
NoviqTech (ASX: NVQ)
NoviqTech has partnered with Clean Hydrogen Technologies (CHT), a BPH Energy (ASX: BPH) investee, to implement its tracking system for Guarantee of Origin certificates, supporting CHT’s global clean energy goals.
The system will track and verify turquoise hydrogen production (hydrogen without carbon emissions) by integrating real-time monitoring and tokenising the certificates for transparency.
CHT will use a subscription model for tracking, paying NoviqTech per token produced, with token issuance planned once production begins.
The collaboration aims to enhance transparency and credibility in the clean hydrogen market. CHT’s chief executive officer, David Cassidy, praised NoviqTech’s platform for helping CHT access economic and sustainability incentives in the US and India.
Golden Deeps (ASX: GED)
Golden Deeps intersected sulphide mineralisation from all three drill holes at its fully-owned Havilah project in NSW
The third hole targeted a copper-zinc soil anomaly, intersecting semi-massive copper and zinc sulphides over an 80-metre zone.
Chief executive officer Jon Dugdale stated that these findings align with surface anomalies, suggesting a large porphyry-sulphide system similar to other major discoveries in the Lachlan Fold Belt.
The most mineralised zone showed copper values up to 18.5% and zinc up to 34.8%, along with high tungsten and cobalt readings.
Golden Deeps is focusing on the Lachlan Fold Belt and recently acquired exploration interests with plans for further geophysical surveys to identify additional drilling targets.
The week ahead
Following the flood of profit results, we look set for a quieter week to come with offshore moves likely to provide much of the direction for our share market.
The only exception to that rule is the fact that scores of Australian companies will go ex-divided this week, which should put some localised downward pressure on share prices.
Local statistics to watch out for include monthly consumer and business confidence surveys plus CommBank economists releasing their household spending insights (HSI) report.
Overseas arrivals and departures and a speech by RBA assistant governor Sarah Hunter round out the week.
Offshore, there are Chinese consumer and producer prices, international trade and retail sales, production and investment – all of which is particularly relevant for Australia given they are our largest trading partners.
In the US, nervousness about falling growth will persist with releases covering inflation expectations, consumer credit, small business optimism, producer prices and sentiment and Budget figures which will all play a part in that cautious approach.