Weekly wrap: shares take a breather as Rio Tinto eyes off mining crown
WEEKLY MARKET REPORT
Australian shares took a bit of a breather on Friday, shedding a little of their impressive Thursday rally with banks and telcos the major casualties.
However, it was trade in Rio Tinto that caught a lot of interest following on from Bloomberg reports that the world’s second biggest miner was holding talks with fellow mining giant Glencore about merging their businesses.
If that were to happen it would produce a combination that would jump over BHP (ASX: BHP) to become the world’s biggest miner and would add a significant amount of copper reserves and a large commodity trading arm to Rio’s already enviable suite of highly mineralised basins.
China rebounds and sends iron ore higher
At the close of trade on Friday Rio Tinto (ASX: RIO) shares shed 0.7% to $118.74, which suggests that investors think the combination has some chance of happening and that the larger Rio would probably end up paying a premium to become world champion.
For the other miners, the main story was a bit of a rebound in the Chinese economy which expanded at a 5% annual rate in 2024, achieving Beijing’s target of “around 5%” with statistically improbable accuracy.
Still, the numbers were enough to propel the iron ore price to a one month high, up 0.6% to $US103.25 a tonne in Singapore as investors believed that strong Chinese exports and recent stimulus measures were beginning to bear fruit.
The iron ore stocks rose obediently with BHP shares up 0.2% to $40.05 while Fortescue (ASX: FMG) shares were up 1.8% to $19.22.
The major slippage in the market was restricted to the banks that had all rallied hard on Thursday as part of the strong US lead after US inflation numbers came out better than expected, strengthening belief that there are further official interest rate cuts to come and Trump prepared for the coming week’s inauguration as President.
Banks weaken
Shares in the banking heavyweight and hero stock of 2024, Commonwealth Bank (ASX: CBA), fell 1.2% to $153.90.
The rest of the banks obediently followed, with National Australia Bank (ASX: NAB) shares down 1.7% to $37.78, ANZ (ASX: ANZ) down 1.8% to $29.45 and Westpac (ASX: WBC) shares down 1.5% to $32.16.
Despite being a fairly quiet day’s trade, there was no shortage of individual company news which had a bearing on trading during the day.
Higher bid for Insignia
CC Capital raised its bid for Insignia Financial (ASX: IFL) to $4.60 a share, from a previous $4.30, which raised the value of the bid above $3 billion.
That action followed rival bidder Bain Capital matching the previous $2.9 billion offer from CC Capital on Monday.
Understandably the new bid was good for the Insignia share price which climbed 6.5% to $4.43.
Lynas Rare Earths (ASX: LYC) shares slipped 0.9% to $7.03 after the company reported that production had slowed during the December quarter, despite rising sales revenue.
That indicated the company was missing a good opportunity as prices rose.
Jewellery shares shine
A positive upgrade to “overweight” by Morgan Stanley acted like a tonic for shares in jewellery chain Lovisa (ASX: LOV) which rose 7.8% to $29.28.
Shares in Telix Pharmaceuticals (ASX: TLX) jumped 3.1% to $26.59 after it received European approval for its prostate cancer imaging agent Illuccix.
The appointment of new chief executive Brian Maher at Aussie Broadband (ASX: ABB) sent shares up 5.5% to $3.84.
Maher joined the company in 2019.
Small cap stock action
The Small Ords index rose 1.28% for the week to close at 3157 points.
ASX 200 vs Small Ords
The week ahead
As usual, much of the week’s activity will be based on events in the US with President-elect Trump’s inauguration on Monday one of the biggest highlights.
The US share market will even close on Monday, not to welcome Trump’s second presidential term, but to commemorate the birthday of Martin Luther King Jr.
Of course, we have a long weekend holiday here in Australia too for Australia Day but there is still a bit of data to watch out for.
The main feature is a forest of mining and energy company production, sales and earnings reports from BHP all the way through to Karoon Energy and plenty in between.
There are also a lot of US fourth quarter earnings out that will cause plenty of share price movements.
There are a few local data releases such as building activity as well as CPI numbers out of New Zealand and an expected rise in official interest rates in Japan.