Local stocks got back in the saddle to some extent this week, after a mid-August iron ore price rout that flowed through to double-digit percentage falls for the big miners in the week prior.

After slumping by more than 5%, the ASX microcap Emerging Markets index has clawed back most of those losses and is on track to finish this week around 4.6% higher.

However, a tone of caution hovered over the market heading into the weekend, with all eyes on the US Federal Reserve as it gets set to meet (virtually) for its annual symposium.

The meeting will accompany all-important US PCE inflation data which also comes out tonight.

While markets will be looking for further clues about whether US inflation looks transitory or more permanent, the Fed focus is likely to centre around the projected pace of tapering to its bond purchasing program.

“If (Fed chair) Jerome Powell does hint at tapering as soon as the September policy meeting, then expect the US dollar to jump because that is earlier than US analysts expect,” CBA analyst Joseph Capurso said.

Reporting season wrap

With FY21 reporting season in full swing, there were plenty of thrills and spills at both ends of the market (large and small), as investors graded the results from what was an unusual FY21 trading environment.

Kogan.com (ASX:KGN) highlighted the early going, falling sharply after announcing record revenues but lower profit margins — a case study in the challenges of post-COVID inventory management for high-growth ecommerce plays.

Also turning heads mid-week was Wisetech Global (ASX:WTC), which back in 2019 was forced to fend off a short-seller attack.

Fast forward two years, and investors lauded the group’s results (led by its logistics technology platform CargoWise) — to the point that the stock mooned higher on Wednesday and got a speeding ticket from the ASX.

Towards the end of the week, it was travel stocks that took centre stage as Qantas & Co tried to stay optimistic on the outlook as the world emerges from the pandemic, following a rough trot in FY21.

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for August 20 – August 27 [intraday]:

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Plenty has already been written and discussed about the market debut of zero-carbon mining play Kuniko (ASX:KNI), which went beserk in Thursday trade in the wake of its mid-week listing.

(In case you missed it, Stockhead caught up for a brief chat with the chairman).

After falling by almost 20% at the opening bell this morning, traders have sent the stock higher again and a short time ago it was tracking into the Friday close at around $2.40, for a three-day post-listing gain of around…1,200%.

Elsewhere, regulatory technology (regtech) company Identitii (ASX:ID8) posted five straight days of solid gains either side of its full-year results announcement on Thursday.

The company’s core product is its Overlay+ technology, which is deployed as an additional layer on top of the existing infrastructure within financial services companies to help streamline their individual compliance obligations.

For FY21, ID8 booked total revenue of $2.7m (including $1.3m of grant revenue) and an annual loss of $5.3m. During the week, ID8 also announced that it was pursuing additional patent claims for its technology in the US market.

Aside from Identitii, it was small cap resources stocks which populated the top end of the weekly winner’s list.

Gains were led by base metals play Orion Metals (ASX:ORM), which mooned by 70% on Wednesday on no news.

Also near the top of the winner’s list was Azure Minerals (ASX:AZS), which had two big days to start the week after drilling results revealed big new intervals of heavily disseminated nickel-copper sulphides at its joint venture Andover project, which is 40% owned by mining heavyweight Mark Creasy.

ASX SMALL CAP LOSERS

Here are the worst performing ASX small cap stocks for August 20 – August 27 [intraday]:

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Plenty of ASX small caps ticked lower during the week in percentage terms, although not many falls were driven by market-moving announcements.

Among stocks with news, WA-based nickel and copper explorer Desert Metals (ASX:DM1) fell by more than 20% after four straight daily losses, either side of its exploration update on Wednesday.

The company announced results from the first three drill holes at its Irrida Hill project. DM1 said Downhole ElectroMagnetics (DHEM) results are still being interpreted, however “preliminary results suggest a large sheet of sulphide mineralisation which runs parallel to current drill holes, and has not been tested by current drilling”.

At 29.5c, DM1 shares are still trading above their December 2020 listing price of 20c, but the stock is now well off its June highs above 80c.

The week ahead

While global stocks are still hovering at or near all-time highs, signs of market jitters have creeped in at the edges of the past fortnight in the form of iron ore volatility, a recent selloff in Chinese tech stocks, geo-political concerns in Afghanistan and jumpiness around the US Fed’s tapering plans.

Taking all that into account, ASX investors will also be trading through a deluge of economic data in the week ahead to kick off the new month.

Economics data will be headlined by Q2 GDP figures on Wednesday, although that is now very much in the rear-view mirror as markets look ahead and assess the broader impact of extended east coast lockdowns in Q3.

Globally, key data will be led by all-important US employment figures on Friday night, with jobs growth now viewed as the next key metric the Fed is focused on with respect to possible tightening of its monetary policy settings.

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