The Australian share market strung together a series of gains this week to deliver a rise of 1.2%, with the benchmark ASX 200 finishing on 7,628.90 points. Lithium stocks were the standout, but reporting blue-chip names also fared well, offsetting weakness in the gold and iron ore sectors.
Which shares excelled?
Lithium stocks were all the craze this week, with a host of names, both large and small, seeing significant demand, albeit this eased into the week’s close. Leading the way were the likes of Orocobre (ASX: ORE), Galaxy Resources (ASX: GXY), Vulcan Energy Resources (ASX: VUL), Pilbara Minerals (ASX: PLS) and Piedmont Lithium (ASX: PLL).
Off the back of building momentum in the sector, fuelled by mandates to push the uptake of electric vehicles, investment bank JPMorgan lifted its view of the sector, upgrading five lithium mining names. The bank is tipping a CAGR of 19% for lithium demand across the next ten years, with battery development and electric vehicle demand underpinning this forecast.
JPM expects a market deficit beyond 2030, giving rise to the prospect of green lights for projects with lower economic returns. In the meantime, however, it foresees potentially higher lithium prices, with its long-term outlook for lithium spodumene now predicting $850 per tonne, some 31% higher.
On a related note, Novonix (ASX: NVX) was one of the week’s best-performing stocks, and a clear winner in the segment of the market focusing on stocks worth more than $750 million. The company started the week by announcing a strategic capital raise, with news subsequently emerging that US energy giant Phillips 66 (NYSE: PSX) was set to make a US$150 million strategic investment in the company. With a 16% stake in the company, shareholders were receptive to the news, spurring the stock more than 30% higher and well past the capital raise price.
The coal sector is seeing strength once again, even as the sector faces pressure amid the shift to renewable energy. Coronado Global Resources (ASX: CRN) reported its half-year losses narrowed, while also sounding a more upbeat outlook for the coming half. It comes as export prices for coking and thermal coal continue to appreciate, which has also provided support to the likes of Yancoal (ASX: YAL).
Insurers QBE Insurance (ASX: QBE) and Insurance Australia Group (ASX: IAG) also had a stellar week, which came on the back of their earnings reports. QBE was the pick of the duo, with the company able to lift its dividend on the back of a 26.9% improvement in gross written premiums, an 8.9% increase in net earned premiums, and a lift in the company’s combined operating ratio to 93.3%. One of the key themes within the industry has been strong premium rates, offsetting weakness associated with business interruption claims and weather-related claims.
Some of this week’s other standouts included Australian Strategic Materials (ASX: ASM), Cettire (ASX: CTT), Graincorp (ASX: GNC), Pointsbet Holdings (ASX: PBH), Brainchip Holdings (ASX: BRN) and Downer EDI (ASX: DOW), to name a few.
Which shares dragged on the market?
Gold shares were under the cosh this week as the precious metal faced a difficult week. Job numbers in the US last week showed strong growth, which immediately shifted observers’ expectations for the Federal Reserve’s interest rate trajectory.
That hit the gold market almost instantly, while the slide continued when markets opened Monday morning, at one stage diving below US$1,700 per ounce. Although gold has since pared most of this week’s losses, the market remains cautious towards names in this space, as evidenced by the large fall in share prices for stocks such as Silver Lake Resources (ASX: SLR), AngloGold Ashanti (ASX: AGG), Ramelius Resources (ASX: RMS), Northern Star Resources (ASX: NST) and De Grey Mining (ASX: DEG), among others.
Iron ore stocks also continue to face some pressure, even in the midst of elevated prices. The iron ore market has lost some touch in recent weeks as China’s demand for the commodity starts to moderate in the wake of a decrease in steel production, being pushed by government efforts to reduce pollution. Rio Tinto (ASX: RIO) also traded ex-dividend this week, which had a significant effect in driving its share price lower, but otherwise, Champion Iron (ASX: CIA), Grange Resources (ASX: GRR) and Fortescue Metals Group (ASX: FMG) dragged on the market.
Elsewhere, shares in News Corp (ASX: NWS) shed gains put on in the wake of the media giant’s FY21 results, while Baby Bunting (ASX: BBN) and Transurban (ASX: TCL) both slid after their respective results, which fell flat in terms of meeting shareholders expectations.
We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great week!
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