ASX Small Cap Lunch Wrap: What does Australia’s nascent COVID-19 recovery mean for investors?

Australia has generally made good progress in stopping the spread of the COVID-19 virus despite Victoria’s setback, CommSec said today.

Still, the outlook remains fluid. Investors must stay on top of daily info to gauge implications for companies, sectors and the broader market says Craig James, chief economist at CommSec.

“Companies in hospitality, property trusts (REIT), retailing, travel, leisure, education remain most at risk,” James says.

Federal, state and territory governments have committed $301bn — around 15 per cent of GDP — in support and stimulus measures in the wake of COVID-19.

>>>scroll down for the biggest small cap winners and losers in morning trade

“Governments and banks have actively provided all the support and stimulus required so businesses and families can get through this crisis [but] they may need to do more,” James says.

“Encouragingly, they acknowledge that this may be the case.”

Australia has dealt with the crisis better than most nations, he says.

“If health authorities can quickly contain the outbreaks in Victoria, the outlook for the economy is bright.”

For the US – the world’s #1 economy — the outlook isn’t great.

On Friday, US share markets were mixed as investors weighted up the possibility of more fiscal stimulus against the potential for more COVID-19 lockdowns as cases surge, again.

“Wall Street remains upbeat, but sentiment on Main Street is turning grim,” says Bob Schwartz, senior economist at Oxford Economics.

Depending on fiscal action and progress on the health front, speculation about a double-dip recession may well gain traction in the fall.

“The streak of upside surprises on the economic front continued this week but is poised to end in coming months,” Schwartz says.

“The prognosis for the rest of the year has not brightened.”

WINNERS

Here are the best performing ASX small cap stocks at 12pm Monday July 20:

Swipe or scroll to reveal the full table. Click headings to sort.

Aussie biotech Micro-X (ASX:MX1) has received 510(k) clearance from the US Food and Drug Administration (FDA) for its ‘Rover’ mobile X-ray product, which is designed for deployed military medical facilities.

The stock was up +22 per cent in morning trade.

Cyber security play Tesserent (ASX:TNT) hit its previously announced FY20 financial targets – a$40m yearly revenue ‘run rate’ (that’s the June quarter, annualised) and positive cash flow in June.

And with an extra $10m debt facility secured, the company is also progressing a number of new acquisitions “currently under consideration”.

Explorer Alchemy Resources (ASX:ALY) has picked up ground to the southeast of miner Saracen’s (ASX:SAR) 5.4-million-ounce Carosue Dam gold deposit, along strike of Breaker Resources’ (ASX:BRB) 1-million-ounce Bombora gold deposit and immediately west of the Apollo Consolidated (ASX:AOP)-owned 1-million-ounce Rebecca, Duchess and Duke deposits in the Eastern Goldfields of WA. What a spot.

The stock was up 23.5 per cent at lunchtime AEST.

It was also a big morning for ASX-listed uranium players, with Bannerman Resources (ASX:BMN) +22 per cent, Boss Resources (ASX:BOS) +20 per cent, and Vimy Resources (ASX:VMY) +12 per cent, all making early gains on no news.

This follows a so-called ‘Biden bump” last week:

LOSERS

Here are the worst performing ASX small cap stocks at 12pm Monday July 20:

Swipe or scroll to reveal the full table. Click headings to sort.