Weekly Market Update: 10th of August 2020

ASX Update

The ASX200 closed the week at 6,004, adding 77 points or 1.3% for the week despite Friday’s sell-off as concerns weighed heading into the weekend. The first weekly gain in three.

Tuesday’s session was the notable performer for the week - accounting for most of the movement on the market. The RBA announced it would continue to support the economic recovery by resuming its bond purchasing program on the 3-year yields. However, later in the week cited it now sees unemployment hitting 10% before year’s end.

The beginning of earnings season has been mixed so far, with diversified financials such as AMP & IOOF dealt harshly by the market and names such as News Corp and REA Group that outperformed.

New listing 4D Medical (4DX) debuted on the ASX Friday and it was an impressive one. The shares listed at 73c, more than doubling its market cap within a day to settle at $1.59 - almost a 120% return. The company listed at an opportunist time given that they provide a more accurate picture of the lungs, an issue doctors have been facing for years but now even more important than ever given the damaging effects coronavirus is having. 

Top/Bottom Performers (in the ASX 200)

Top Gainers:

• Mesoblast +16.4% (MSB.AX)
• Incitec Pivot +15.4% (IPL.AX)
• Lynas Corp +12.1% (LYC.AX)

Top Losers:

• ResMed -11.4% (RMD.AX)
• NRW Holdings -7.9% (NRW.AX)
• Credit Corp -6.1% (CCP.AX)

Globally

During the week, the Dow Jones climbed 3.8%, the S&P 500 rose 2.4% and the Nasdaq gained 2.5% as investors remained hopeful Congress would reach a new stimulus deal despite talks temporarily falling apart. Talks between the White House and Democratic leaders fell apart as the two sides could not reach a deal on a new coronavirus stimulus package. One of the key sticking points in the negotiations was a $600-per-week enhanced federal unemployment benefit that expired at the end of July. Democrats want to extend the benefit for the same amount while Republicans want a reduced weekly rate.

Play of the Week - IPOs in a Pandemic 

With the 4D Medical listing’s success, another noteworthy company, Manuka Resources did extremely well after being offered to the market. The stock is up almost 200% since listing at 20c just over 3 weeks ago. Any company confident enough to list during these unprecedented times says a lot about the perceived value of their company.

Pan Asia Metals is currently completing its IPO raise with Maqro Capital as the co-joint lead; the low-cost lithium and tungsten miner out of South-East Asia is looking to take advantage of the electric vehicles market emerging out of that area. The company is confident they have great assets and is not worried at all about current market conditions impacting their true valuation. 

Commodities

Gold experienced a ninth straight weekly gain, its longest streak of weekly gains in about a decade, powered by low-interest rates and uncertainty around the long-term effects of the global pandemic. The commodity finished at $2,033 an ounce, retreating from the previous session's record high of $2,074 an ounce.

Oil (Crude WTI) improved for the week to $41US a barrel as global cases show some signs of flattening out.  

Iron ore also hit $120. 

Looking Ahead...

Last week’s gains come during a historically tough time for the market as August kicks off the worst three-month stretch for the S&P 500. US stock futures slipped on Sunday night after President Donald Trump signed several executive orders aimed at extending coronavirus relief.

Locally, earnings season will be the focus on a micro-level whilst still being pulled on a macro level with the ongoing US and Chinese tensions.