The Australian equities market ended the week more or less flat with the ASX 200 and Ordinaries down just 0.06% and 0.1%.
During the week, the market was volatile, driven higher by stellar results from the mining sector, but weighed under by COVID concerns.
The spike of new cases in NSW and deployment of the military in Sydney to enforce lockdown will likely take a toll on sentiment.
Moving forward, this could lead to more conservative guidance from companies.
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Last Week in ASX Stocks
The metals and mining sector was the biggest market driver this week. The ASX/S&P Metals and Mining Index ended the week 3.6% in the green.
The sector ran hot as major commodities such as copper and iron ore, which make up the bulk of its earnings, met with strong demand. Copper ended 3% in the green over the week, while iron ore, which went up till mid-week, later turned somewhat soft due to political issues.
BHP (ASX:BHP) ended the week 1.5% higher after gaining as much as 3.5%.
The market viewed bullishly the mining giant’s bid for Canadian nickel producer Noront Resources, especially after it inked a nickel supply agreement with Tesla (NASDAQ: TSLA) the previous week.
Oz Minerals (ASX:OZL) jumped 8.12% over the week due to excellent production figures at its mine in Prominent Hill in South Australia and robust performance versus guidance.
The company’s trading update showed the company may comfortably achieve its copper production target; further, gold production is likely to surpass guidance.
The company lowered its copper cost estimate from $70-$75 per ton to $65-$70 per ton.
The rally in the stock also received a tailwind from rising copper prices.
Rio Tinto (ASX:RIO) declared a record half-year profit of $12.2 billion that doubled last year’s tally.
Analysts now project a 49% rise in full-year earnings.
The company also announced that it will distribute a generous $9.1 billion dividend to shareholders.
The company made waves by announcing a $2.4 billion investment in a lithium mine in Serbia.
Rio Tinto is the first mining major to enter the lithium space.
Retail is witnessing a revival of sorts as Australians have ramped up discretionary spending at home due to lockdowns and excess disposable income.
Temple and Webster (ASX:TPW) ended the week 3.1% higher after declaring an 85% growth in revenue and 141% jump in EBITDA.
Temple and Webster’s results and strong investor sentiment had a halo effect on traditional retailer Harvey Norman (ASX: HVN).
The stock went up as much as 3% over the week but gave up most of the gains to finally end flat.
However, market expectations are high for its earnings.
On the other hand, online retailer Kogan (ASX:KGN) ended 7% in the red due to inventory issues and a supply glut.
Investors were already having a hard time with the stock after the company cut its profit guidance last week.
The sell-off was exacerbated after multiple analysts downgraded the stock.
It is an opportune time for banks to buy back stock because they can use the excess cash they set aside for provisions.
Of late, the banking sector has been having a good run due to cheap capital and a bullish real estate market.
Banks’ mortgage businesses have performed well over the past 12 months due to boom conditions in the real estate market.
However, bank stocks ended the week mostly flat.
Petroleum major Ampol (ASX:ALD) ended the week 2.45% in the red after it announced an agreement with the Australian Renewable Energy Agency to install 100 charging sites at its retail fuel stations across Australia.
Perhaps investors didn’t receive well the fuel retailer’s hedge against fossil fuels with a tilt towards electric mobility.
Investors are likely worried that businesses with significant US and e-commerce exposure will take a hit on growth after Amazon (NASDAQ: AMZN) underperformed analysts’ expectations.
Another poor performer was power utilities major Origin Energy (ASX:ORG).
The stock ended the week down 9.87% after the company announced a one-time non-cash expense of $2.2 billion.
The company has been facing headwinds in the form of significantly lower wholesale electricity prices, as well as dwindling margins and demand in its gas business.
Stokes’ appointment as chairman will be followed by two more retirements from the board.
While Seven Group ended the week 1% up, Boral ended 3% down.
Next Week in ASX Stocks
On Thursday, August 5, Pantera Minerals Limited (ASX:PFE) will list shares at $0.20 per share, raising $7 million.
The company is acquiring four Western Australian-based iron ore, copper, manganese, and polymetallic projects; the Yampi Iron ore Project, Yampi Copper Project, Weelarrana Manganese Project, and the Frederick Polymetallic Project (Projects).
On Friday, August 6, Gold 50 Limited (ASX:G50) will list shares priced at $0.25 per share, raising $10 million.
Gold50 aims to explore for gold-silver in Nevada and Arizona.
Annual earnings reports
On Tuesday, BWP Trust (ASX:BWP), the real estate investment trust investing in and managing Australian commercial properties, will declare annual results.
The company previously announced a half-yearly unfranked distribution of A$0.0927 per unit for the period ended 30 June 2021.
It reported a net profit after tax of $143.98m for the half-year ended 31 December 2020.
Pinnacle Investment Management Group Limited (ASX: PNI), an investment management company also reports full-year numbers on Tuesday.
It reported an NPAT of $30.34m for the half-year ended 31st December 2020.
On Wednesday, Centuria Office REIT (ASX: COF), Australia’s largest ASX listed pure-play office REIT which is included in the S&P/ASX300 Index, will report numbers.
Previously, the company announced an FPO dividend of 4.12 cps for a period of one quarter ending on 30 June 2021.
On Friday, Insurance Australia Group Limited (ASX: IAG) reports annual earnings.
It offers general insurance products in Australia and New Zealand.
Last month it reported preliminary FY21 results that reflected sound underlying financial performance offset by some unusual items, resulting in a reported net loss.
Also on Friday come annual earnings from investment manager Milton Corporation Limited (ASX: MLT).
In late June, the company announced plans to merge with Washington H. Soul Pattinson (ASX: SOL) to create a diversified investment company.
Indonesian mining and minerals processing company ANEKA TAMBANG (PERSERO) TBK (PT) (ASX: ATM) will issue its interim report on Tuesday.
The company, a producer of ferronickel and nickel ore, is exploring for gold, nickel, and bauxite.
Johannesburg-headquartered AngloGold Ashanti Limited (ASX: AGG), a global gold mining company, will issue its earnings report on Friday.
Last month, the company proposed to acquire the remaining shares of Corvus Gold Inc, which owns exploration assets in Nevada.
Economic News, Currency and Market Outlook
A major development in the Australia-China trade negotiations was the biggest news of the week.
The strong rally in iron ore prices teetered following China’s threat to cut Australian ore orders by cutting steel output.
Apparently, this would reduce China’s dependence on Australia.
Meanwhile, China has also increased its copper scrap inputs by 91% YoY over the past six months.
Analysts expect that China will import 1.7 million of copper scrap in 2021, up 80% in annual terms.
Being one of the world’s largest consumers of copper concentrate, China could hurt copper prices, and therefore miners, if it pivots to scrap.
On Thursday, the US Fed eased any investor concerns about the US economy’s health by stating that the US economic recovery was progressing as planned and that a rate hike is still a while away.
However, the July US jobs due next week will be an important gauge of the economy.
Non-farm payrolls are expected to rise 900K, according to a Bloomberg survey.
The RBA Monetary Policy decision meeting is scheduled for Tuesday, August 3.
The meeting will shed light on important data and forecasts as well as policy.
At the last meeting, the RBA trimmed bond purchases and the spotlight is now on interest rates.
The RBA’s economic forecast would be keenly watched because it will reflect the government’s assessment of the economic impact due to the resurgent pandemic.
If the outcome of the meeting, and forecasts, reflect a negative economic impact, the Australian Dollar could be vulnerable.
On Wednesday, the ABS will release the final estimates of retail spending for June.
The preliminary report indicated a 1.8% decline.