While international influences such as the surprise jump in US bond yields had a big impact on the Australian share market overall, local factors also played a big part in some significant price volatility in many individual shares.
By the close of trade on Friday the ASX 200 managed to reverse an earlier fall to end up 0.2% at 7325.4 points, up just seven points as seven of the 11 sectors ended up higher.
For the week the ASX 200 was down 1.3% – the first weekly fall in four weeks – after an unexpected surge in US debt funding needs triggers a jump in bond yields.
Technology, energy, discretionary and materials were the biggest Australian outperformers while the defensive health care, utilities and property sectors were the biggest drags on the market.
ACCC action moves share prices
One of the factors moving share prices around was the rejection of the proposed ANZ (ASX: ANZ) takeover of Suncorp’s (ASX: SUN) banking assets by the ACCC.
Initially, ANZ shares rose 1.1% on the news that the competition regulator was blocking the biggest transaction in Australian banking since Westpac’s GFC-driven takeover of St George in 2008 but that moderated to a 0.75% rise as ANZ announced it would be appealing the decision.
Bank shareholders turn cautious
In early trade Suncorp shares slid 0.9% but then gained 0.4% on news of the appeal, with shareholders in the target company obviously keener on the transaction proceeding that those with ANZ shares.
That wasn’t the only action in the banking stocks with shares in market leader Commonwealth Bank (ASX: CBA) falling 0.6% as a cautious reaction to the bank’s results which will be out on Monday.
Another significant move was a 9.3% dive in RedMed (ASX: RMD) shares after the US based sleep apnea and medical device company’s quarterly earnings miss expectations by about 5%.
FDA action slams Mesoblast shares
However, by far the biggest mover in the biomed space was Mesoblast (ASX: MSB), with its shares falling an epic 57% after its flagship stem cell treatment for graft versus host disease was blocked by the US Food and Drug Administration.
Once again, the US regulator wants to see more data from the company before it will sign off on the treatment, which has been more than ten years in the making and was developed as a treatment for graft versus host disease, a severe immune reaction which can occur after a bone marrow transplant.
It has been a long and disappointing journey for Mesoblast shareholders with a controlled study in high-risk adults now required, despite significant benefits being shown in long term data for children.
Mesoblast shares have traded as high as $5.22 but initially crashed hard in 2020 when the FDA required more information and have now been crunched yet again to just 47c as the patience of shareholders is really tested.
Another notable local release was the Reserve Bank’s quarterly statement on monetary policy which predicted a soft landing for the economy, with a caveat that their predictions for productivity, inflation and interest rates all seemed on the optimistic side compared to many independent forecasts.
There was also a late positive influence on the Australian market from the US with shares in tech giant Amazon rising in after-market trade after it reported higher than expected revenue and forecasts while the decision by OPEC+ countries to extend production cuts was positive for the oil price and energy companies.
Small cap stock action
The Small Ords index slid 1.34% for the week to 2850.5 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Azure Minerals (ASX: AZS)
Azure Minerals released promising results from its Andover lithium project in Western Australia, with drilling intersecting the thickest zones of lithium mineralisation to date.
Intersections included 209.4m at 1.42% lithium oxide in hole ANRD0017 and a second hole intersected 183.1m at 1.25% lithium oxide in hole ANDD0228.
The company’s managing director, Tony Rovira, highlighted the high-grade intercepts and potential for further lithium intersections in future drilling.
Technical data show the project’s pegmatite swarm extends over an area of 9km east-west and up to 5km north-south, with 40 diamond core holes and 83 RC holes completed, revealing high lithium grades.
The Andover Project has secured heritage and environmental approvals for further drilling, and the granting of Exploration Licence E47/4701 has expanded the project’s coverage to 108km².
Viridis Mining And Minerals (ASX: VMM)
Viridis has entered into an agreement to acquire 100% of the rights to the rare earth elements of the Colossus rare earth project, based in Brazil’s largest known Alkaline Complex.
The agreement comprises 41 licenses and covers 56km², with 34 shallow auger holes showing remarkable grades of REE mineralisation.
Viridis believes these preliminary results indicate the potential for a tier-one project, with grades expected to increase significantly with deeper drilling.
Viridis will raise $2.2m to fund exploration and the initial upfront cash payment for the Colossus Project, with Ionic Rare Earths (ASX: IXR) contributing $600,000 to help fast-track development.
BCAL Diagnostics (ASX: BDX)
Australian biotech company BCAL Diagnostics announced successful results from a clinical study for its non-invasive, blood-based test for early-stage breast cancer detection.
The study achieved a test sensitivity of 90% and specificity of 85.5%, mirroring earlier findings from Australian studies.
These results pave the way for commercialising the BCAL test in 2024 and suggest that the test could be reproduced in labs globally.
BCAL’s blood-based test, which observes changes in blood lipid profiles associated with the disease, will initially complement existing screening technologies such as mammograms.
Patriot Battery Metals (ASX: PMT)
Patriot Battery Metals signed a deal with Albemarle for a private placement of approximately $124 million, supporting development of its CV5 lithium project in Quebec, Canada.
The agreement will give Albemarle a 4.9% stake in Patriot.
The funds will be used to advance the Corvette Lithium Project in James Bay, including drilling, permitting, and study work.
This follows Patriot’s announcement of holding the largest lithium pegmatite resource in Northern America, with potential for significant expansion, providing a substantial boost for other companies in the region like James Bay Minerals.
Ecofibre (ASX: EOF)
Ecofibre secured a three-year agreement to supply Under Armour with a special hemp yarn through its Hemp Black manufacturing division.
Under Armour will finance $6.74 million in specialised manufacturing equipment as part of the deal, with two machines projected to yield around $9 million in annual revenue each at full capacity.
The hemp for eco6 yarn, a lightweight, low-density product, is grown on certified US farms.
Additionally, Hemp Black has signed a contract with Cruz Foam to produce sustainable, biodegradable packaging material, expected to generate $3 million annually when at full production.
The week ahead
Once again local developments in Australia will serve to augment the leads from offshore markets with a grab bag of local companies reporting their profit results.
Some of the more interesting to watch will be the real estate investment trusts, with write-downs in the value of office space for some REITS leading to falls in share prices.
Some of the property reports for the week include Charter Hall Long Wale REIT (ASX: CLW), Arena REIT (ASX: ARF), Charter Hall Social Infrastructure REIT (ASX: CQE) and the property related REA Group (ASX: REA),
Some of the other companies reporting include Baby Bunting (ASX: BBN), Reckon (ASX: RKN), Regis Resources (ASX: RRL), James Hardie (ASX: JHX), Commonwealth Bank, Suncorp, AMP (ASX: AMP), AGL Energy (ASX: AGL), Boral (ASX: BLD), QBE Insurance (ASX: QBE), Downer EDI (ASX: DOW), Newcrest Mining (ASX: NCM) and News Corp (ASX: NWS).
There should also be plenty of trading in the mining sector this week with 53 companies across exploration, mining and mining services presenting at the influential and interesting annual Diggers & Dealers forum held in Kalgoorlie.
The US profit-reporting season is also continuing this week with more than 100 companies reporting and many companies trading ex-dividend.
Other local things to watch out for during the week include job advertisements data for July, consumer confidence data, household spending, monthly business turnover and weekly payroll jobs figures.
Internationally, there is plenty of action too with consumer and business prices in both China and the US giving an idea of how inflation is trending.
Market wrap: local factors push Australian stocks higher - Small Caps
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