weekly market report
Stock markets ended higher on Friday after a rough week as the Russian invasion of Ukraine marked the beginning of a major service of volatility for world markets.
After a massive drop of $73 billion on Thursday, the ASX 200 failed to reflect a positive US recovery lead and closed below the 7000-point target.
The ASX 200 index rose 0.1% to 6997.8 points, but fell a solid 3.1% for the week, even after ignoring a 1.5% rally on the US S&P 500.
The market had some interesting bright points that reversed that trend, however, with shares in Afterpay Owners Block (ASX:SQ2) up an impressive 40% in early trading after reporting earnings per share of US27C — Well above analyst estimates for US22c .
Block shares surge in Australia
Block shares were down in the US, but closed at $153.75 in Australia, up $37.70, or 32.5%, with cryptocurrency trading gains on the back of some outperformance.
The profit results have led to some other stock movements as well as an overall shale-shocked market amid uncertainty about how the Ukraine crisis will develop as many investors flock to safe havens such as gold, commodities and oil.
Magellan Financial shares (ASX:MFG) fell $2, or 10.1%, to $17.78 as investors reacted to a further drop of $77.2 billion in funds under management — last updated Feb. 11 due to a combination of institutions and individual investors a decline of 11.4%. Withdrawal of funds and fall in property prices.
Retailers battling inflation
Retailers also reported some interesting results with Harvey Norman (ASX:HVN), shares up 16c, or 3.2%, to $5.15 despite reporting the first drop in sales since the start of the COVID-19 pandemic.
Underlying net profit also fell 22% to $340 million, but profit fell only 6.7% to $430 million due to a revaluation of the group’s broad asset portfolio.
Shares of online retailer Kogan (ASX:KGN) fell 6.2% to $5.26 as supply chain disruptions wreaked havoc with product availability.
Kogan reported an underlying loss of $11 million for the December half as rising inflation in commodities, including shipping containers, caused problems.
However, founder Ruslan Kogan was confident that the retailer’s agility and determination to maintain keen pricing would improve the outlook.
small cap stock action
The Small Orders index fell 3.17% to close at 3187.7 points for the week.
ASX 200 vs Small Orders
The small cap companies making headlines this week were:
eVision Medical Devices (ASX:EMV)
The half year ended December 2021 saw eVision Medical Devices develop and commercialize its portable brain scanner, which is designed to detect the incidence of stroke.
Keysight Technologies has created a bespoke vector network analyzer for EVision’s device—which enables it to shrink “dramatically” for use in the pre-hospital space.
While refining its technology during this period, eMvision continued to build industry and public awareness of its capabilities, as well as linking up with larger imaging and subsidiaries to build long-term commercial relationships.
Agency Group Australia (ASX: AU1)
Real estate group The Agency Group Australia posted strong financial results for the half-year ended December, resulting in continued growth in new states across the country.
A 33% increase in underlying EBITDA was manifested for the period to $2.14 million, while 2,910 assets were sold for a combined value of $3.1 billion.
Geoff Lucas, the agency’s managing director and CEO, says he expects this revenue growth to continue from expanded agent numbers and new geographic markets.
Rulife Group (ASX:RLG)
Another small cap with a positive December half was Rulife Group, a China-focused e-commerce and digital marketing company, which reported a 304 percent increase in revenue from operations to $8.1 million, compared to $2 million in the previous same period.
It had a 723% increase in base product sales as its direct-to-consumer sales platforms continued to expand.
Fueling this strong growth was Roolife’s continued investment in technology and customer acquisition strategies.
Cash Converter (ASX:CCV)
Cash Converters has a strong balance sheet to pursue inorganic growth opportunities including acquisitions after a positive H1 FY2022.
Despite the COVID-19 lockdown, the company’s revenue grew 23% to $115.2 million as compared to H1 FY2021 levels.
This was fueled by growth in the Cash Converters loan book, which expanded to $192.1 million, as the company focused on attracting new customers with a variety of loan products.
The company declared a fully franc interim dividend for the period of $0.01 per share.
Resource Base (ASX: RBX)
Aspiring rare earth developer Resource Base will begin drilling its wholly owned Miter Hill project next month.
The company has built 1,509 sq km of houses in the southern margin of the Murray Basin, spanning South Australia and Victoria.
With recent discoveries in the surrounding areas, the Resource Base believes the area to be an emerging REE complex that is potentially of “global importance”.
Carvine Resources (ASX: CWX)
Shares of Carawine Resources took a beating this week on the back of an unsolicited on-market all-cash takeover bid from QGold that valued Carawine at $0.21 per share.
The bid was a 27.27% premium over Carawine’s final trading price of $0.164.
Carawine’s board advised its shareholders to “take action now” regarding the acquisition while it evaluates the bid.
QGold’s broker Ord Minnet filed bids on its behalf on Tuesday, with the offer due to close at the end of April.
Perth-based Carvine has a portfolio of potential projects for copper, gold, nickel and cobalt. Three projects are in WA and a fourth is located in Victoria.
Naturally the progress or otherwise of the Ukrainian invasion will have a major impact on world markets, but there are a few Australian releases to watch as well.
The main one is the GDP figures released on Wednesday, which is expected to come in at around 3.3% mark, which would be a fair result considering the continued impact of the COVID-19 lockdown and restrictions.
Other local data to consider include retail trade, private sector lending, home prices, balance of payments, international trade, building approvals and retail sales.
The second major event for the week is the Reserve Bank’s board meeting on Tuesday, though there is little chance of any change in interest rate settings given the very lax stance on inflation so far.
Overseas, the big question is how strict the US Federal Reserve will be about raising interest rates in light of the Ukrainian situation in March.
Some economists are forecasting lower-than-expected growth due to the uncertain international situation, while others think the Fed will not deviate from its task of controlling inflation and will continue with substantial growth in March.
Fed Chairman Jerome Powell is due to testify before Congress on Wednesday, so there will be no shortage of interpretations flowing from that testimony.
The State of the Union address by President Biden on Monday will also be keenly watched for any economic impact.
Other releases of note in the US include job numbers, construction and manufacturing statistics, factory orders, services and non-farm payroll.
Chinese manufacturing and services numbers are sure to be a very busy week for world markets as they react to events in Ukraine and elsewhere.
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