The three ASX indices (200, 300, and Ordinaries) closed last week higher by 1.87%, 1.85%, and 1.75% respectively, rebounding on the last day after the debt ceiling fiasco in the US ended with a political truce, for now.
Energy shares remained firm after OPEC indicated it would increase its output only gradually, oil prices touched multi-year highs to rise 4% for the week, and an energy crunch appeared to engulf the globe.
On Evergrande, there was news that the troubled property giant will sell half of its stake in Hopson Development, a property management unit to raise $US5 billion ($A6.88 billion).
However, the status of the highly indebted Chinese property developer is still murky.
Technology shares faced a sell-off on Tuesday taking a lead from the US, where the larger tech stocks were unloaded by nervous investors amidst the debt ceiling standoff.
The US declared disappointing non-farm payroll numbers on Friday after the ASX close.
However, only Nasdaq reacted unfavourably, losing 0.51% on the day, while the Dow and S&P 500 ended flat.
Table of Contents
ASX Stocks Last Week
Energy stocks were bullish through the week as oil prices touched multi-year highs.
Woodside Petroleum (ASX:WPL), Oil Search (ASX:OSH) and Santos (ASX:STO) were up +5.36%, +2.97%, and +3.94% respectively.
Qantas (ASX:QAN) announced Darwin would replace Perth as the hub for direct flights between Australia and London when international travel resumes next month.
The airline last week flagged off a process to buy more than 100 new planes worth over US$9 billion.
This marks a big bet on a rebound in travel demand after the pandemic.
However, the stock was down 4.61% on the week, due to concerns of high oil prices and their impact on the airline’s bottom line.
Flight Centre Travel (ASX:FLT) put on 2.87% for the week, while Webjet (ASX:WEB) lost 4.50%.
Mining companies rebounded over the week as iron ore prices ticked higher.
BHP Group (ASX:BHP) rallied strongly on Friday and erased its weekly loss to close higher by 1.26%.
Likewise for Rio Tinto (ASX:RIO), which pivoted to a weekly gain of 2.14%.
Newcrest Mining (ASX:NCM) put on 2.58% after posting a bullish Annual Report.
However, Fortescue Metals Group (ASX:FMG) sulked, closing 3.98% in the red.
Rio Tinto subsidiary Energy Resources of Australia (ASX:ERA) closed the week nearly 9% higher despite warning that the cost and schedule overruns for the rehabilitation of its now shut Ranger uranium mine in the Northern Territory could be “material.”
The stock is up 131.25% over the last 12 months.
Navarre Minerals (ASX:NML) will buy the Mt Carlton gold mine in Queensland from Evolution Mining (ASX:EVN) for about $90 million.
Navarre’s stock plunged 11.34% while Evolution shares were up over 1% on the week.
Coal stock Whitehaven Coal (ASX:WHC) took a breather from its rally, and shed 5.28% for the week; however, Yancoal (ASX:YAL) shot up a solid 16.03%.
Commonwealth Bank (ASX:CBA) helped the market off to a good start on Monday with its A$6 billion off-market buyback and closed the week 1.64% higher.
Other banks were also bullish – Westpac (ASX:WBC) was +0.50%, National Australia Bank (ASX:NAB) moved up 2.27%, and ANX Banking (ASX:ANZ) rose nearly 1%.
Afterpay (ASX:APT) and Appen (ASX:APX) shed more than five per cent each on Tuesday’s tech sell-off.
However, Afterpay rebounded from those lows and closed the week with a gain of 1.64%, though Appen ended the week 1.87% in the red.
Xero Limited (ASX:XRO) was also in negative territory, down 0.19%, so was WiseTech (ASX:WTC), falling 1.33%.
However, Computershare (ASX: CPU) bucked the trend and closed higher by 1.11%
Infratil (ASX:IFT), a data centre provider, announced its acquisition of a stake in data centre Kao Data of London for A$243.5 million.
Infratil shares closed the week 2.46% higher.
On the other hand, EML Payments (ASX:EML) lost nearly 17% on the week after its Irish subsidiary Prepaid Financial Services received fresh heat from the Central Bank of Ireland on Anti-Money Laundering and Counter-Terrorism Financing concerns.
Healthcare stocks were subdued last week.
CSL (ASX:CSL), Fisher Paykel (ASX:FPH), and Ramsay Health Care (ASX:RHC) all ended lower by 0.47%, 6.16%, and 1.60% respectively.
However, Sonic Healthcare (ASX:SHL) ended a shade (+0.33%) in the green.
Furniture group Nick Scali (ASX:NCK) snapped up unlisted Plush-Think Sofas for A$103 million while shipbuilder Austal (ASX:ASB) was bid higher after it won a US Navy deal worth almost $A200 million, and gained 1.85%.
However, milk company A2Milk (ASX:A2M) lost nearly 6% on news that shareholders had filed a class action claiming the company issued misleading earnings forecasts which caused them financial loss.
Collins Foods (ASX:CKF) was up over 8%.
The company bagged a deal from KFC Europe to run the KFC business in the Netherlands and to open 130 new outlets in that country over the next decade.
Next week in ASX Stocks
Upcoming Listings between 11-15 Oct
Recharge Metals Limited will join the ASX on Monday, October 11, to raise A$5 million through the issue of ordinary fully paid shares at A$0.20.
The company is an Australian copper developer and explorer, focusing on the three 100%-owned Australian copper projects.
Resilience Mining Mongolia Limited will list on Tuesday, October 12, to raise A$6 million by the issue of ordinary fully paid shares at A$0.20 each.
Formed by an independent group of exploration, mining, and financing professionals based in Mongolia and Australasia, the company is focused on investments in Mongolia’s promising minerals sector.
Diablo Resources Limited (ASX:DBO) will debut on Tuesday, October 12, with its issue of ordinary, fully paid shares at A$0.20 to raise A$6.5 million.
The company boasts of imminent drilling near prolific gold mines in Nevada’s 195Moz Carlin gold district.
Minerals 260 Limited (ASX:MI6) launches an issue of ordinary fully paid shares at A$0.50 each to raise A$15 million on Tuesday, October 12.
The company is a spin-out from Liontown Resources Limited (ASX:LTR) and holds mining assets including 100% of the Moora Gold-Nickel-Copper-PGE Project.
On Thursday, October 14, Aurum Resources Limited (ASX:AUN) is offering fully paid shares at A$0.20 each to raise up to A$5 million.
The company has been demerged from and is a wholly-owned subsidiary of, Aldoro Resources Limited (ASX:ARN) to hold the Penny South Project, the Unaly Hill South Project, and the Ryan’s Find Project – all gold mining projects located in Western Australia.
Eastern Metals (ASX:EMS) will offer fully paid shares at A$0.20 each to raise A$4.5 million on Thursday, October 14.
The company is an Australian base and precious metals exploration company with a portfolio of copper-gold and zinc-silver-lead projects in New South Wales and the Northern Territory.
Economic News And Market Outlook
On Tuesday, the RBA left the cash rate at a record low of 0.1%.
Bond buying was also unchanged at $4 billion a week until a February review.
Significantly, RBA Governor Philip Lowe indicated that the Australian economy would likely claw its way back to pre-Delta levels by the second half of next year.
He also shared research that showed companies were hiring workers before virus rules eased off.
Further, the RBA indicated that a hike in the cash rate before 2024 was unlikely given the inflation outlook.
The RBNZ, on the other hand, hiked interest rates to 0.5% amidst rising prices and continued economic uncertainty from the pandemic.
Australia’s trade surplus for August stood at a record $15.1 billion, boosted by exports of cereal grains (+17% from July), mineral fuel exports (+16%), and coal products (+13%).
New vehicle sales in September at 83,312 units were up 20.8$ y-on-y.
Further, new vehicle sales during the 12 months ended September totalled 1,088,217 (a 25-month high).
The NAB said business confidence rose by 4 pts to -4 index points in September.
“Confidence increased in the month, building on the gains of last month, and is now well above the trough in March,” commented Alan Oster, NAB Group Chief Economist.
“That said, it remains negative and likely fragile.”
In its Financial Stability Review, the RBA noted rapid progress in vaccinations and a reduction in risks to the economy with a rebound expected on reopening.
“The Australian financial system is highly resilient,” the RBA said.
Even so, it warned of high home prices, rapid growth in borrowing, and a risk that borrowers, in industries hit harder by the pandemic, could struggle with repayments.
“Vulnerabilities can increase if housing market strength turns to exuberance with borrowers taking on greater risk given expectations of further price rises and banks potentially easing lending standards,” the RBA cautioned.
On Friday, the US non-farm payrolls for September showed the U.S. economy added 194,000 jobs in September and the unemployment rate fell to 4.8%.
The market consensus was for an addition of 500K jobs.
The tepid numbers may result in a subdued open of the ASX on Monday.
This week the FOMC Meeting Minutes will release in the US on Wednesday, October 13.
On Thursday, October 14, Australia will report Employment data for September.
Forex Outlook
The AUD/USD touched a low of 0.72258 on Wednesday, October 6, before rebounding to a high of 0.73381 on the last day of the week, finally closing at 0.73050 and well above last week’s close of 0.72664.
The Australian dollar has been bolstered by a very favourable trade surplus that blew away market consensus, some stability in iron ore prices, and runaway gains in energy commodities such as oil, LNG, and coal.
Meanwhile, the US dollar index showed weakness after NFP data disappointed against expectations.
Technically, on the 3-month hourly chart, the AUD/USD appears to be hammering out a second inverse head-and-shoulders pattern.
The first pattern appeared in August, and both have necklines within the range of 0.72800 to 0.73200. Is the pair due for a significant break to the upside? Time will tell.
The AUD/NZD pair embarked on a sharp rally on Tuesday, October 5, before the RBNZ’s announcement on October 6 of its first rate hike in seven years, a move widely anticipated by the market and likely priced in well before the event.
Driven more by factors native to the Australian economy (including vaccination progress, trade balance, and reopening joys), and an improving global “risk-on” environment, AUD/NZD shrugged off the RBNZ rate hike and continued on its uptrend until it stalled at the seemingly unsurmountable resistance line at 1.0550 and thereabouts.
AUD/NZD closed Friday at 1.05447, comfortably above the previous week’s close of 1.04664.
The Chinese markets were closed for a week’s public holiday on account of China National Day and opened only on Friday.
AUD/CNY closed the week at 4.7087, marginally above the previous week’s close of 4.6815.
