ASX Trading Wrap: Lithium stocks soar, banks shine, but gold shares fade

ASX Trading Wrap: Lithium stocks soar, banks shine, but gold shares fade

The ASX notched up a near nine-month high this week as a second round of vaccine news continued to give rise to optimism among investors.

Trading momentum was also supported by Australian unemployment data that painted a better picture than many economists had anticipated. The ASX 200 finished the week 2.1% higher than last Friday, on 6539.2 points.

 

Which shares excelled?

Continuing a trend that has emerged in recent weeks, lithium stocks were on the rise as sentiment for miners and producers in this space picked up rapidly. Pilbara Minerals (ASX: PLS) headlined the bigger names, leaping 24.2%, however, Orocobre (ASX: ORE) was not far behind, delivering returns of 17.5%. There were other small-cap lithium names like Galan Lithium (ASX: GLN) that capitalised with news of their own, while the possibility of corporate activity between Pilbara Minerals and embattled Altura Mining highlights that there may be change in the sector brewing.

A week after it was among the best-performing stocks, Unibail-Rodamco-Westfield (ASX: URW) backed up that achievement with another strong effort, this time gaining 25.7%. Upbeat progress regarding the effectiveness of vaccines from both Pfizer and Moderna have improved sentiment for brick-and-mortar retailers, while the news that activist investors have seized a grip of the company’s Board was also cheered on by fellow shareholders, even though it led to the CEO’s departure.

A suite of announcements from Mesoblast (ASX: MSB) was enough to cement its place among the best-performing stocks this week, jumping 12%. Perhaps the most prominent news to come from the company was a licence and collaboration agreement with Swiss pharma giant Novartis, which will commercialise Mesoblast’s remestemcel-L therapy drug. As part of the deal, Novartis will make an upfront payment of US$50 million to Mesoblast, with hundreds of millions of dollars in potential royalties also on the line.

Elsewhere, banks had a strong showing in light of the government’s rhetoric this week which took aim at financial regulators, while also reinforcing a call for changes to responsible lending standards. In addition, news that APRA could scrap the cap on dividends among the Big Four helped buoy the sector, albeit the rally was actually led by the regional banks, with Bendigo Bank (ASX: BEN) and Bank of Queensland (ASX: BOQ) faring the best.

Last but not least, there were also strong moves from two stocks that have been on the outer for the majority of 2020, with Whitehaven Coal (ASX: WHC) and Alumina (ASX: AWC) both managing to claw back a small fraction of their year-to-date losses.

 

 

Which shares dragged on the market?

For the second week in a row, gold stocks were on the outer as the price of the precious metal drifted lower. This hit stocks like Evolution Mining (ASX: EVN), Kirkland Lake Gold (ASX: KLA), Gold Road Resources (ASX: GOR), Northern Star Resources (ASX: NST) and Saracen Mineral Holdings (ASX: SAR), to name but a few from a long list.

Momentum also continued to sour for communications and data companies that some investors have backed amid digitisation trends playing out since the start of COVID. Nonetheless, Codan (ASX: CDA) shares fell 7.8% and NextDC (ASX: NXT) dipped 6.7%.

Things were not so rosy for Kogan (ASX: KGN) shareholders either, as the stock lost support amid the company’s controversial plan to issue circa $100 million in options to its co-founders. While the deal was originally struck months ago when the stock was at a significantly lower price, proxy advisers had recently advised shareholders to reject the proposal and also vote against the remuneration report. In the end, Kogan’s Board was hit with a ‘first strike’ over its remuneration, but the company still received the necessary support to gain approval for the options issuance.

Despite posting a sizeable increase in profit for FY20, shares in Elders (ASX: ELD) were among the weakest mid-to-large-cap stocks this week. Recording sales revenue growth of 29% and statutory profit of $122.9 million versus $68.9 million a year prior, the company touted its disciplined capital allocation, cost reduction initiatives and ability to increase gross margins. Nonetheless, it appears investors may have been anticipating the positive results, since the update was treated as a ‘sell the news’ event by shareholders.

There were a number of other names that struggled to make inroads in what was a positive week for the broader market, and this list featured high-profile names like Ausnet Services (ASX: AST), Charter Hall Group (ASX: CHC) and Goodman Group (ASX: GMG).

 

We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great weekend!

 

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