The ASX was up in morning trading and at time of writing was sitting at +0.2%.
The Australian market is now set to end its four-day losing streak as some major stocks surge and iron ore recovers.
Stocks that were riding high include CSL, CBA, WOW, WES, GMG, TWE, ALL and FMG.
Meanwhile, ING, NSR and TWE hit multi-year highs.
Those that fell include COH, BHP, NCM, BSL, LYC and S32.
BHP hogged news this week
The week has been highlighted by company reporting, however, one event stood out: the BHP Group Ltd/Woodside Petroleum Limited merger. The companies announced late on Tuesday that they had entered into an agreement to merge their respective oil and gas portfolios with an all-stock merger.
We spoke with Wealth Within analyst Dale Gillham to get his take.
“According to the agreement, Woodside or a wholly-owned subsidiary of Woodside will acquire 100% of the issued share capital of BHP Petroleum International Pty Ltd in exchange for shares in Woodside. For BHP shareholders, this means they will receive shares in Woodside with 48% of Woodside owned by BHP shareholders.
“The good news is that Woodside will remain listed on the ASX and, interestingly, they are also considering listing on additional exchanges similar to BHP, which is listed both in Australia and the UK as BHP Group PLC (LSE:BHP).
“I believe this is a good deal, as it not only strengthens both companies but allows them to move into other areas over the next decade and beyond. What is particularly exciting is that the combined businesses will have a focus on building and maintaining a high return and carbon-resilient portfolio, which is critical given the issues with global warming.
“The merger aims to include natural gas and new energy technologies in their portfolio, which is expected to generate significant cash flow to support the development of new energy products and low carbon solutions including hydrogen, ammonia and carbon capture, and storage. This in itself should be a heads up to investors to look at some of the companies in this space that BHP and Woodside would have their eye on, with a view to owning them before things really heat up in this space.
“I suspect we will see more mergers and acquisitions in the coming year,” Gillham says.
The Australian market outlook
After two weeks of solid gains in which the All Ordinaries Index rose over 3%, gains were eroded this week with the market down around 2%.
The market is still technically bullish, but we’ll need to keep the outcomes of strict COVID lockdowns front of mind.
Volatility looks like it will remain, however, we could also see the market push towards 8,000 points and beyond over the next few weeks before, falling into a low in the coming months.
As Gillham says, “we need confirmation that a down move is unfolding, which we are yet to see, so now is not the time to make rash decisions but to prepare yourself for what may occur.”
On the small cap front
Emyria Ltd (ASX:EMD) is up 2.70% after it engaged world-leading neuropharmacologist Dr Mat Martin-Iverson to advise over the screening and expansion for its MDMA-analogue program.
European Lithium is up 2.86% after announcing the appointment of Michael Carter as non-executive director, effective from August 31.
Imugene Limited (ASX:IMU, OTC:IUGNF) was up 0.68% on the back of raising A$5 million in a heavily oversubscribed share purchase plan (SPP), capping off a A$95 million capital raise to fund its clinical pipeline into 2025.
The S&P/ASX Small Ordinaries is down 0.84% to 3,464.0