Weekly wrap: shares rise to a record high on mining optimism
WEEKLY MARKET REPORT
Australian shares just managed to seal a record closing high on Friday, with a strong rally in mining shares managing to offset losses in almost every other sector.
By the close of trade, the ASX 200 was up a slim 8.5 points or 0.1% to 8212.2 points, with the index closing just above flat for the week following two consecutive weeks of gains.
Star endures massive drop
One of the more extreme movements was in Star Entertainment (ASX: SGR) shares, which shed an alarming 44% to a record low after the troubled casino group endured its first day of trading in a month after a share suspension.
Star is battling substantial regulatory issues, write-downs and massive losses and will need to work hard to get investors back onside.
Miners on a tear
Most of the market’s gains were made by the big miners which reacted very positively to China’s stimulus pledges during the week, which has injected a lot of optimism into the outlook for many minerals, particularly iron ore, copper and lithium.
Fortescue Metals (ASX: FMG) added an impressive 3.6% to $20.10 on the back of rising iron ore prices which jumped more than 4% to crack above US$100 a tonne in Asian trade.
Fellow iron ore miners BHP (ASX: BHP) and Rio Tinto (ASX: RIO) were also stronger, up 3.1% to $44.74 and 3.4% to $127.45 respectively, with BHP reaching a four-month high.
Lithium miners were also much stronger, with shares in Mineral Resources (ASX: MIN) adding 14% to hit $49.14 as investors bet that interest in electric and hybrid cars would recover.
Shares in Sayona (ASX: SYA) were up 6.9% to 3.2c while Liontown Resources (ASX: LTR) shares charged up 8.3% to 78.5c amid speculation that many investors were scrambling to cover short positions they had taken on lithium stocks.
Eight sectors reported losses
The good news was fairly narrowly spread, however, with eight of the 11 sectors on the ASX recording losses for the day.
Defensive health stocks led the losses and the big retailers Coles (ASX: COL) and Woolworths (ASX: WOW) had to endure choppy trading after the competition watchdog continued to pile pressure on the companies over misleading price discount specials.
Coles shares finished down 0.5% to $18.06 while Woolworths shares rose slightly by 0.2% to hit $33.43.
News leads to mixed reactions
There was a fair bit of individual share action following on from announcements with shares in hospitality and beverages company Endeavour Group (ASX: EDV) dropping 2.5% to $4.99 after news that chief executive Steve Donohue was leaving.
Shares in lithium producer Vulcan Energy Resources (ASX: VUL) were up 5.32% to $4.55 after it bought up geothermal well operator Geo GmbH.
Funds management company GQG Partners (ASX: GQG) saw its shares shed 2.4% to $2.81 after it was hit with a $725,000 penalty from the US regulator for offering contracts which violated whistleblower protection rules.
Shares in De Grey Mining (ASX: DEG) rose 3.4% to $1.38 despite the company denying a media report suggesting the gold miner had received a takeover offer from Canada’s Agnico Eagle.
Shares in agribusiness Namoi Cotton (ASX: NAM) fell 0.7% to 71c after the ACCC repeated its concerns about the proposed acquisition by Singapore-based Olam Agri Holdings.
Small cap stock action
The Small Ords index rallied 2.76% to close on 3138.7 points for the week.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Douugh (ASX: DOU)
Australian fintech Douugh revealed plans to acquire US digital banking specialist Radical DBX (R-DBX) through a share issuance of 892,823,759 DOU shares at $0.005 each.
R-DBX, founded by top fintech industry alumni, has contracts with leading US fintechs, banks, and credit unions, generating $1.1 million in revenue in 2023.
Following the acquisition, R-DBX will be rebranded as Stakk Technologies, focusing on upselling customers and expanding Douugh’s embedded finance and credit-as-a-service offerings in the US.
Douugh also secured $1 million in working capital from Relentless Fintech Partners to support its growth strategy.
4DMedical (ASX:4DX)
4DMedical has signed a distribution agreement with Koninklijke Philips, expanding its access to US markets.
The five-year agreement grants Philips exclusive distribution rights to 4DMedical’s respiratory imaging products for US government customers and non-exclusive rights for commercial customers.
This collaboration builds on a previous partnership focused on lung screening for US veterans, utilising 4DMedical’s software and Philips’ fluoroscopy and CT systems.
The agreement is expected to enhance 4DMedical’s ability to deliver non-invasive lung function analyses for conditions like COPD, asthma, and interstitial lung disease.
Strickland Metals (ASX: STK)
Strickland Metals reported new assay results from its Rogozna gold and base metal project in Serbia, highlighting potential for rapid resource growth.
A main result from the Medenovac prospect includes 50 metres at 5.6 grams per tonne gold equivalent within a broader intersection of 365.8m at 2.0g/t.
The results have extended mineralisation at Medenovac, where Strickland is conducting resource extension and exploration drilling.
Strickland is also awaiting additional results from follow-up holes as part of its broader discovery-focused drilling campaign targeting copper-gold porphyry systems.
Algorae Pharmaceuticals (ASX: 1AI)
Algorae Pharmaceuticals has launched its biopharmaceutical platform AlgoraeOS, which aggregates data on over 5,000 drugs and molecules across 150 human cell types.
Using AI, AlgoraeOS predicts fixed-dose combination (FDC) drugs, which Algorae plans to take to clinical trials or collaborate with partners.
FDCs combine multiple active ingredients, potentially offering enhanced efficacy or fewer side effects, while reducing development costs compared to creating new drugs from scratch.
Algorae aims to patent novel FDCs, addressing the biotech industry’s growing demand as many blockbuster drugs face patent expirations by 2030.
Respiri (ASX: RSH)
Respiri has secured remote patient monitoring agreements with two skilled nursing facilities in Hawaii, estimated to generate $1.5 million annually.
These agreements, with Liliha and The Care Centre of Honolulu, will support around 1,000 patients discharged to home care each year, utilising Respiri’s Clinic in Cloud solution.
The deals offer higher-than-expected per patient revenues, strengthening the company’s revenue profile.
Respiri is also in discussions to expand its services across Hawaii’s 42 nursing facilities and is scaling its operations following a $3 million capital raise.
The week ahead
Locally the release of monthly retail spending and housing market data will be of the most interest, with expectations that retail spending will have grown by about 0.5%.
House prices are also likely to have grown by 0.5% in September for the 20th month in a row, although much of the gains are expected to have come from Adelaide, Brisbane and Perth, with affordability concerns beginning to bite in Canberra, Sydney and Melbourne.
Fresh from some overdue stimulus from China’s central banks, the purchasing managers indices for services and manufacturing sectors might show some extra reasons for the sudden urgency to add growth to the moribund Chinese economy.
Jobs numbers in the US will round out the week, with the expectation being that job openings will remain weak but the unemployment rate might stay steady at around 4.2%.