Debt, iron ore and reduction combine to drive down market share
An intoxicating combination of Chinese real estate debt, iron ore prices and US Federal Reserve plans to curb bond purchases conspired to leave a dent in the Australian stock market.
In the end, the faltering Chinese real estate group Evergrande seems to have survived for now and the US Fed’s plans have been reasonably well received, but the price of yo-yo-ing iron ore has driven miners down and saw the ASX 200 lose 0.4% to 7342.6 points. Friday.
This led the market to close 0.65% for the week, although some of the really bearish sentiment from the start of the week has reversed.
Stability fears the ease of Evergrande
Initially, there were real fears that the inability of giant and heavily indebted Chinese real estate group Evergrande to pay its loans as they fall due would cause much wider financial contagion in China and spread to the rest of the world as well.
However, after Evergrande avoided default on its debt by negotiating some interest payments, those concerns eased considerably, with indications that the Chinese real estate market would continue to limp without any immediate risk.
The decision of the People’s Bank of China to inject an additional $ 18.6 billion in liquidity into its banking system was also viewed as positive, bringing the amount of liquidity the central bank has injected since last Friday to around $ 50 billion. dollars.
Bring the carve up?
Some reports that authorities are organizing a restructuring and bailout of Evergrande to share it among a number of state-owned entities have also been greeted as confirmation that China appeared to want to do everything in its power to prevent a collapse. real estate that could damage the nation’s economic growth.
Mining shares hovered over the week, with some predictions indicating that the price of iron ore could remain below US $ 100 per tonne until next year.
A lower iron ore price could leave a significant dent in the Australian economy, although the fact that rising and then falling iron ore prices were not extrapolated too much could lessen the blow.
Falling iron prices could leave a mark
There is no doubt, however, that if prices fall below US $ 100 per tonne in the medium term, it would cause significant pain to miners and government budgets.
In the end, shares of BHP (ASX: BHP) fell 1.72% to $ 37.72 on Friday, while shares of Rio Tinto (ASX: RIO) rose 0.47% to $ 99.33 and shares of Fortescue Metals (ASX: FMG) fell 1.22% to $ 15.34.
Some individual business news has helped some firms with Solomon Lew’s Premier Investments (ASX: PMV) to rise 5.5% to $ 29.15 on Friday after revealing a full-year profit increase on Thursday and considering d ” acquire attractive retail businesses that are struggling due to bottlenecks.
Likewise, Washington H. Soul Pattinson (ASX: SOL) finished up 3.8% to $ 39.16 after reporting a solid increase in earnings.
Power distribution provider AusNet (ASX: AST) saw its shares soar 29% during the week after revealing two softened takeover bids earlier in the week.
Real estate ad company Domain (ASX: DHG) rose 1.5% to a record high of $ 5.78 on Friday.
Centuria (ASX: CNI), which made a $ 300 million placement on Friday, lost 2.52% to $ 3.49, while shares of gold miner Ramelius Resources (ASX: RMS) fell by 6.1% to $ 1.31.
Small Cap Equity Action
The Small Ords index fell 0.74% this week to close at 3493.5 points.
Small-cap companies that made the headlines this week were:
Lake Resources (ASX: LKE)
It has been a big news week for Lake Resources, which revealed that it has strengthened its partnership with Lilac Solutions.
The companies have reached an agreement that paves the way for Lilac to secure a 25% stake in Argentina’s Lake Kachi lithium brine project.
In return for the stake, Lilac will bring its direct-mining lithium processing technology, engineering teams, an on-site demonstration plant, and invest US $ 50 million to move Kachi forward once it acquires its stake. .
Days later, Lilac announced that it was raising US $ 150 million to expand and deploy its technology, including in Kachi.
iCandy interactive (ASX: HERE)
In an effort to expand its reach into the global games industry, iCandy Interactive has acquired an almost 8% stake in the ASX-listed game developer Mighty Kingdom (ASX: MKL).
iCandy recovered 11.78 million shares at $ 0.135 to secure interest, and iCandy said the acquisition would increase its reach in the Asian games market.
The company also noted that there would be added value from the collaboration between itself and Mighty Kingdom which it says is a very similar business.
AD1 Fund (ASX: AD1)
AD1 Holdings’ subsidiary, Art of Mentoring, is set to pilot a wellness program for the Australian Government’s Department of Defense.
The contract is valued at $ 130,000 over 12 months and is in addition to two other agreements that Art of Mentoring has already made with the department.
AD1 says the contract positions Art of Mentoring as a preferred provider of mentoring software and services to federal, state and local governments.
Nova Minerals (ASX: NVA)
Gold explorer Nova Minerals has had a week of positive news, starting with the discovery of a massive polymetallic vein system at its Estelle gold project in Alaska.
Rock chip sampling at the Stoney, Rainy Day and T5 prospects returned up to 48.4 g / t gold, 2720 g / t silver and 2.4% copper.
Sampling was also carried out on the Train and Shoeshine prospects and revealed a maximum result of 30.4 g / t gold.
Nova CEO Christopher Gerteisen said the latest findings will fuel Estelle’s global resource inventory, which includes the 4.7 Moz Korbel deposit.
Aura Energy (ASX: AEE)
Aura Energy re-registered with ASX on Thursday to continue its plans to accelerate the Tiris uranium project through to production.
CEO and Managing Director Peter Reeve said Tiris remains “one of the most compelling uranium projects” in the world with its low estimated capital cost and short development schedule.
Tiris contains 56Mlb of uranium resources in Mauritania. Aura will also assess the potential of vanadium in Tiris.
92 Energy (ASX: 92E)
Another hope for uranium 92 Energy production has been boosted by analysis revealing the company has discovered a new uranium zone on its Gemini project in the Athabasca Basin, Saskatchewan.
Drilling intersected 5.5 m of 0.12% uranium oxide (1200 ppm uranium oxide), including 1 m at 0.28% uranium oxide.
Within a 0.5 m subinterval, there was 0.36% uranium oxide (3600 ppm) at 234.5 m.
92 Chief Energy Officer Siobhan Lancaster described the interception as an “extraordinary result” and a testament to the company’s chemical exploration strategy.
The coming week
Australia enters the final quarter of the year with a slew of economic statistics pointing the way, including retail, consumer confidence, job vacancies and housing data as the damage caused by continued closures in our two largest cities continue to pile up.
Retail sales are expected to decline in August, although the expected easing of lockdowns could draw it low with a recovery coming up.
A highly anticipated outcome will be the CoreLogic Home Value Index which will show how much house prices have risen.
Overseas, interest in what is going on in China is expected to continue, with data on factories and services and company earnings providing insight into how things are going on the ground in what may be a difficult country to follow.
In the United States, most economic numbers are expected to be positive as the country continues to recover, manufacturing, house prices, GDP, personal spending and durable goods orders should all point to the recovery continuing to grow. accelerate.
The best actions of the week