The ASX ended the week moderately higher with miners and energy stocks pushing the market into the green.
On the other hand, the technology sector was one of the worst performers of the week.
The ASX200, ASX300, and Ordinaries ended the week up 0.4%, 0.52%, and 0.8%, respectively.
Table of Contents
Last Week in ASX Stocks
A number of the ASX’s biggest stocks went ex-dividend during the week.
Investors turned bullish on travel stocks with international operations following news that flight passenger volumes had recovered to 76% of pre-COVID levels in the US, and 80% of pre-COVID levels in France, Germany, and China.
There was a lot of activity in the lithium and exotic metals space.
Orocobre (ASX:ORE), Pilbara Minerals (ASX:PLS), Piedmont Lithium (ASX:PLL), and Mineral Resources (ASX:MIN) had a stellar week as investors turned bullish on EVs, more so because Australian car sales have started to take off.
The miners closed the week 13.31%, 5.12%, 8.49%, and 2.2% higher, respectively.
Lynas Rare Earth Metals (ASX:LYC) also benefited from the halo effect of the EV market its products being key inputs in renewable energy product components and electric motors. Lynas closed the week up 8.12%.
Battery materials miner Liontown Resources (ASX:LTR) had a solid week closing nearly 17% higher. Investors bid up the stock following the company’s decision to de-merge and spin-off its minerals business into a new ASX-listed entity and use the proceeds to develop its lithium mines in West Australia.
The new Minerals 260 business will also focus on mining other crucial decarbonization metals including nickel and copper.
Aluminium manufacturers had a bumper week because China’s ceiling on its production is now causing supply-chain shortages.
Further, HPA, which is a form of alumina, is a critical component in lithium-ion batteries as alumina sheets are used as a separator in the anodes and cathodes.
Despite its ESG-unfriendly dynamics, investors turned bullish on coal following soaring prices due to the gradual recovery of global economics and supply chains.
On the other hand, technology stocks had a bad week.
Big names in fintech and the BNPL space took a beating following announcements from US technology behemoths Facebook (NASDAQ; FB) and Amazon (NASDAQ:AMZN) of intentions to launch their own credit products in Australia.
Retail too was on the back foot with the pandemic showing no signs of subsiding.
Next Week ASX In Stocks
Last week marked the end of reporting season in Australia. Earnings season as a whole turned out far better than expected considering the ravage from the pandemic during 2020.
However, credit is due largely to excellent results from mining companies following the bull run in commodities earlier in the year.
The booming real estate market also helped bottom lines at banks, construction companies and ancillaries.
A number of very interesting companies make their market debuts next week.
Copper Search Ltd. (ASX:CUS) is a copper exploration firm that aims to develop copper and gold assets in Gawler Craton of South Australia. The company plans to raise A$12 million on Thursday pricing each share at A$0.35.
Culpeo Minerals Ltd. (ASX:CPO) is a mining exploration company that is engaged in copper exploration in Atacama, Chile. The company aims to raise A$6 million with shares being priced at A$0.2. Culpeo’s market debut is scheduled for Friday.
Sponsored by Australian healthcare major Health and Co, the HealthCo Healthcare and Wellness REIT (ASX:HCW) aims to raise A$650 million to build a portfolio of commercial health and wellness real estate assets. Each share is priced at A$2. The IPO is underwritten by Macquarie and Morgan Stanley and debuts on Monday.
X2M Connect Ltd. (ASX:X2M) is an Australian technology company that has developed its own IoT (Internet of Things) platform to help make utilities such as gas and water cheaper and more efficient. The company aims to raise A$8 million in total from shares priced at A$0.25. X2M is scheduled to list on Friday.
Zoom2u Technologies Ltd. (ASX:Z2U) is a SaaS (Software-as-a-Service) platform designed to give clients the ability to manage and fulfill orders at scale. The company helps clients with the management of large teams of delivery personnel and order management. Debuting on Friday, the company aims to raise A$8 million from shares priced at A$0.2.
Economic and Market Outlook
While the market ended moderately higher for the week, all attention at the close on Friday was on the US non-farm payrolls figures. These underperformed expectations, raising hopes that the Fed may need to rethink its tapering plans.
Australia reported record-high new infections of 1756 cases on Saturday, and experts have warned that the worst is yet to come. In an attempt to speed up vaccinations, Australia and the UK have agreed to share vaccine supply.
The rising case count will have implications on the upcoming RBA Monetary Policy Decision meeting scheduled for Tuesday next week. The worsening COVID scenario may force the RBA to continue with a light hand on the economy including stimulus measures.
The Australian Federal Chamber of Automotive Industries reported that monthly car sales in Australia are currently at a 22-month high and up 33 percent YoY despite the global semi-conductor shortage that is hurting car production.
Strong vehicle sales could be a harbinger of economic recovery, given they are big-ticket financial commitments.
AUDUSD got a boost last week from rising speculation that the virus was taking a higher toll on the US economy than factored in.
On Friday, the disappointing US Non-Farm Payrolls data for August ignited chatter that the Fed may have to rethink its plans for tapering.
A likely continuation of loose monetary policy, therefore, had US Dollar bears flexing their muscles.
On the other hand, down under, the encouragingly better data on company profits and Q2 GDP improved the outlook for the Aussie.
However, data on PMI and construction was nothing to write home about.
Nevertheless, AUDUSD closed the week with a flourish, rising to seven-week highs in the range of 0.7440.
Unfortunately, the AUD will probably not benefit from the expected dovish stance of the RBA at its meeting next week on Tuesday, September 7.
The Australian central bank may have to continue fiscal stimulus measures until demonstrable progress is achieved against the pandemic, and this could be a party-pooper for the AUD’s recent (bear market?) rally.
The AUDNZD pair continues to shape up weak on the technical charts, having already violated its December 2020 low of 1.04199.
The rebound from that point has evaporated amidst a rounding top pattern that could be the forerunner of more downside in the coming months.
The pair rejected 1.045 and quickly moved back lower to 1.04068 on Friday.
The superior handling of Covid by New Zealand and the possibility of a rate hike are bolstering the NZD.
A report from ANZ last week said “October is still game on for the RBNZ to begin the OCR hiking cycle,” amidst better economic data.
AUDCNY too has rebounded over the last couple of weeks, signing off last week at 4.8125, well above its August 20 lows around 4.6186, and breaking out of a downtrending channel in place since May 2021.
The upside move came in the face of a fresh onslaught on iron ore prices just as the month began.
China is said to be making good on its May promise to drive down ore prices and inflict economic pain on Australia by cutting its steel capacity and buying less of the steelmaking raw material.