As supply chain woes begin to take their toll on ASX names, the local benchmark index finished the week lower, down 0.8% to 7,393.9 points. Strength in the commodities market, mainly energy, iron ore and lithium, was a bright spot, as was the performance of tech stock Brainchip.


Which shares excelled?

For the second week running, microchip developer Brainchip (ASX: BRN) was the ASX’s top-performing mid-to-large cap stock, up more than 40% in the first four days of the trading week to eclipse a $2 billion valuation, and then surging again on Friday morning to at one stage be up 80% for the week. The company did not release any news throughout the first half of the week, and in fact it was forced to respond to a ‘speeding ticket’ price query from the ASX. 

On Friday, it issued notice of a capital call, effectively securing funding for the company based on the recent favourable run. However, it appears the momentum has been in full swing since Mercedes-Benz unveiled it will use an Akida microchip in its Vision EQXX concept car. Favourable media coverage in the AFR may have also sparked buying action.

Elsewhere, hitting all-time highs, Core Lithium (ASX: CXO) burst out of the gates this week. That follows optimistic outlooks for lithium prices from the likes of JPMorgan and S&P Global Platts, which anticipate a supply deficit for lithium starting this year. Those forecasts have also supported lithium peers like Liontown Resources (ASX: LTR), which signed an offtake term sheet with LG Energy Solutions this week, and Pilbara Minerals (ASX: PLS), which hit a record high.

After an extended period being out of favour, energy distributor AGL (ASX: AGL) made a decisive move higher. The stock has rallied about 40% from its recent twenty-year low seen in mid-November, even though the company hasn’t released any price-sensitive news over that time. A number of investment banks have recently turned bullish towards shares in AGL, coinciding with a broader transition from growth to value stocks, while buoyant gas and coal prices have been a catalyst.

Shares in Polynovo (ASX: PNV) leapt higher this week, at least across Monday and Tuesday, which followed the release of the company’s unaudited indicative trading result. The medical device-maker recorded sales of US$2.4 million in December, up 76% versus a year ago, and US$5.9 million across the December quarter, more than double the prior corresponding result. First-half sales are expected to exceed US$10 million for the first time excluding Barda revenue, with the addition of new accounts and sales staff aiding momentum.

Rounding things out, positive movements in the commodities market, namely across iron ore and energy prices, spurred rallies in the likes of Champion Iron (ASX: CIA), Mineral Resources (ASX: MIN), Woodside Petroleum (ASX: WPL) and Beach Energy (ASX: BPT), while Syrah Resources (ASX: SYR) and Nickel Mines (ASX: NIC) both caught a strong bid in the wake of positive sentiment for stocks exposed to the battery metals thematic.



Which shares dragged on the market?

Fund manager Pendal (ASX: PDL) was out in front as one of the worst-performing names this week, with the stock diving on Friday following the release of its latest Funds Under Management (FUM) update. In the December quarter the company saw net fund outflows of $6.8 billion, with its Australian funds underperforming and European mandates seeing notable outflows. Performance fees for the firm were only marginally higher than a year ago, sapping investor confidence.

Tuesday saw the share price of ARB Corporation (ASX: ARB) come tumbling down, as investment bank Credit Suisse lowered its price target for the stock and flagged weaker margins for the car accessories supplier over the coming years. Despite expecting revenue growth, Credit Suisse is tipping the end of cost-cutting measures and COVID support will lead to narrower margins and ultimately lead to an impact on net profits this financial year and next.

Caught in the midst of supply issues, KFC franchise operator Collins Foods (ASX: CKF) also ended the week with a headache. The fast-food business has seen extensive disruptions across its network of restaurants as its poultry supplier, Inghams (ASX: ING), has been forced to suspend deliveries amid supply chain disruptions and critical staff shortages due to the widespread transmission of the Omicron variant.

Other names on the back foot this week included Australian Ethical Investment (ASX: AEF), Firefinch (ASX:FFX), Pro Medicus (ASX: PME), Vulcan Steel (ASX: VSL), Reece (ASX: REH) and Sonic Healthcare (ASX: SHL).


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


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