The federal government’s latest budget makes for alarming reading! This is not because of the forecasted big budget black hole, but its expectations that the iron ore price will halve before the end of this calendar year.

The iron ore miners have been doing much of the heavy lifting on the S&P/ASX 200 Index (Index:^AXJO) as they are regarded as some of the safest stocks to buy during the COVID-19 mayhem.

That’s more than what can be said for the other major ASX sector – the banks. The National Australia Bank Ltd. (ASX: NAB) share price, Westpac Banking Corp (ASX: WBC) share price, Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price and Commonwealth Bank of Australia (ASX: CBA) share price have underperformed in 2020.

Government’s bearish iron ore forecast

But can investors continue to count on our mining giants if the iron ore price is set to tank, as forewarned by the government?

Treasury is sticking to its US$55 a tonne price forecast for 2020. This price is free-on-board (FOB), which excludes the cost of shipping. The current spot price of around US$108 a tonne includes shipping, but if you strip that out, the implied spot FOB price is around US$100 per tonne.

The bearish prediction stands in contrast to the resilient price of the steel making ingredient, which hasn’t been impacted by the global coronavirus pandemic.

Threat to big ASX miners

Strong demand from China and supply disruptions from our iron ore competitor, Brazil, have given our miners an upper hand.

But the government isn’t willing to keep banking on these tailwinds and decided to take a far more conservative assumption, reported the Australian Financial Review.

If the government’s projections are right, the BHP Group Ltd (ASX: BHP) share price, Rio Tinto Limited (ASX: RIO) share price and Fortescue Metals Group Limited (ASX: FMG) share price are set to crumble.

The good news is that experts aren’t taking the budget forecast for iron ore seriously – certainly not as seriously as they are treating the $184 billion budget deficit the government is expecting in FY21.

Why ASX investors shouldn’t worry

Treasury assumptions have a tendency to be overly pessimistic as the government has much more to gain by getting underestimating the iron ore price. This allows the Morrison government to under-promise and over deliver on its budget.

However, this doesn’t mean that the iron ore price won’t fall off its perch. Most analysts are pegging a price of around US$80 a tonne for the commodity for FY21.

Again, this isn’t something that worries me even though I’m overweight on the sector. If the iron ore price does drop by that 20%-odd amount, the sector looks fair value.

Big earnings upgrades possible

But if the iron ore price continues to defy expectations, this will lead to substantial earnings upgrades for the three major miners.

To give you an idea of the magnitude of the potential upgrade, the analysts at Macquarie Group Ltd (ASX: MQG) estimated that at the spot price, FMG’s earnings would be upgraded by around 79%, Rio Tinto by 39% and BHP is 24%.

But let’s not count our chickens just yet…

More reading

• Brokers name 3 ASX 200 shares to buy right now
• ASX 200 sinks 1%: IAG cancels final dividend, tech shares tumble, IGO jumps
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• Buy NAB and this ASX dividend share for income
• Up 38% in July! Is the Orocobre share price a buy?

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, BHP Billiton Limited, Commonwealth Bank of Australia, Fortescue Metals Group Limited, National Australia Bank Limited, Rio Tinto Ltd., and Westpac Banking. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Vicinity Centres (ASX: VCX) share price is down by 2.49% to $1.37 at the time of writing, after the group announced a portfolio net valuation decline of 11.3%.

Vicinity Centres is one of Australia’s leading retail property groups with a fully integrated asset management platform. It owns, operates and manages a portfolio of retail properties across the country, including both local and world-class shopping centres.

Why is the Vicinity Centres share price under pressure?

Weighing on the Vicinity Centres share price is an announcement of an independent valuation. This resulted in a net valuation decline for its overall portfolio of 11.3% or $1.79 billion for the 6-month period to 30 June 2020.

The announcement highlighted that, due to a lack of suitable transaction evidence as a result of COVID-19 impacts, the valuers addressed market conditions by focusing on underlying cashflow. For example, there has been a reduction in rental income as a ratio of property values. Furthermore, valuers made key assumptions including that rents will see lower growth in the short to medium term, and vacancies have increased.

In addition, Vicinity Centres has provided rent deferrals and waivers as a commitment to its tenants, which has impacted cashflow. Lastly, there has been an increase in capital spending on the company’s properties to ensure they remain relevant. 

Management commentary

Mr Grant Kelley, Vicinity Centres CEO and managing director, said: “We have independently valued our entire portfolio at 30 June 2020. While the overall portfolio net valuation decline was 11.3%, the results highlighted the resilience of our Flagship portfolio, affirming our strategy and weighting towards metropolitan markets with strong long-term fundamentals.”

Mr Kelly went on to say “We remain confident in our strategy of focusing on market-leading destinations, which we believe will deliver returns for investors over the medium to long term, and ensure our retailers have the best platform to reach consumers…”

The company has advised that customer visitation to many of its centres, particularly those that are less reliant on office workers or tourists, is close to pre-COVID-19 levels. Customer visitation across the portfolio is 68% of the prior year level, with 83% of stores trading. Excluding Victoria, portfolio customer visitation increases to 80%, with 95% of stores trading. 

Vicinity Centres share price

The company’s share price is down by 2.4% in today’s trade (at the time of writing). Year to date, the Vicinity Centres share price is down by 44.98% and is currently selling at a price-to-earnings ratio of 4.38. At this price, it has a trailing 12 month dividend yield of 11.79%.

More reading

• Why Afterpay, Evolution, IAG, & Vicinity Centres shares are dropping lower
• 4 trends to invest in before August earnings season
• Top brokers name 3 ASX 200 shares to sell right now
• Biggest dividend cuts in 10 years to hit ASX investors next month
• Will retail vacancies hurt the Vicinity Centres share price?

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to record a sizeable decline. The benchmark index is currently down 1% to 6,032.7 points.

Here’s what has been happening on the market today:

Bank shares tumble.

The big four banks are all dropping notably lower on Friday and weighing on the performance of the ASX 200. The worst performer in the group is the Westpac Banking Corp (ASX: WBC) share price with a 1.3% decline. Investor sentiment in the sector may have taken a hit today after Bank of Queensland Limited (ASX: BOQ) increased its COVID-19 provisions. The regional bank also warned that there is considerable economic uncertainty and it will continue to monitor the impacts of COVID‐19 on its portfolio and the collective provision prior to finalising its year end position.

Tech shares drop lower.

It has been a disappointing end to the week for Australia’s leading tech shares. The likes of Altium Limited (ASX: ALU), Appen Ltd (ASX: APX), and Afterpay Ltd (ASX: APT) are all deep in the red at lunch. This appears to have been driven by a selloff on the tech-focused Nasdaq index overnight. In addition to this, news that ecommerce giant Shopify has signed an agreement with Affirm for its own buy now pay later offering could be putting further pressure on the Afterpay share price.

IAG cancels its final dividend.

The Insurance Australia Group Ltd (ASX: IAG) share price is sinking lower on Friday after the release of an a trading update. The insurance giant revealed that the second half of FY 2020 has been extremely tough. As a result, it expects to post a pre-tax loss on shareholders’ funds income of $181 million. This is down sharply from a profit of $227 million in FY 2019. In light of this, it advised that it will not be paying a final dividend.

Best and worst ASX 200 shares.

The best performer on the ASX 200 on Friday has been the IGO Ltd (ASX: IGO) share price. It is up 4.5% at lunch after a strong gain by the spot nickel price overnight. The worst performer on the index has been the Evolution Mining Ltd (ASX: EVN) share price with a 6% decline. This morning analysts at Credit Suisse downgraded the gold miner’s shares to a neutral rating with a $6.00 price target.

More reading

• Brokers name 3 ASX 200 shares to buy right now
• Will the iron ore price crash by half by the end of 2020?
• Why Afterpay, Evolution, IAG, & Vicinity Centres shares are dropping lower
• Why Alcidion, Bubs, IGO, & Next Science shares are pushing higher
• Should Afterpay shareholders be concerned about Shopify’s BNPL launch?

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The DroneShield Ltd (ASX: DRO) share price soared by as much as 26% earlier this morning after announcing it had received an order from a European Ministry of Defence customer. The DroneShield share price has since retreated and is currently up by 12.90% to 12 cents per share.

The group is a worldwide leader in drone security technology. It seeks to respond to the growing issue of drones used for unethical purposes. 

What did the company announce?

The company announced an order for its RadarZero portable counterdrone system from a significant European military force.

According to the company, the $100,000 in sales proceeds is an order for evaluation. It’s expected this will lead to additional deployment. However, the sale is subject to pending relevant export approvals. 

DroneShield CEO, Oleg Vornik, commented:

The importance of this sale is several-fold. First, this is our first order from this European military. Secondly, this is the first sale of radar-only fixed site system powered by DroneShieldComplete, demonstrating the modularity of our offering. DroneShield is both a sensor manufacturer and an integrator, with the customer having ability to add further sensor loads to acquired system, which DroneShieldComplete supports.

The DroneShieldComplete command-and-control system is a user interface with a rich reporting functionality of drone threats. Additionally, the RadarZero enables detection and tracking of enemy drones.

Other recent updates

Today’s news follows an announcement yesterday informing the market the company had been awarded a United States Air Force contract. The amount of the contract is approximately US$200,000.

On 22 July 2020, DroneShield released its quarterly report for the period ended 30 June 2020. In the report, the company stated cash inflows from customers and grants were approximately $2.1 million, which represented a quarterly record. 

The report also noted a substantial increase in US government business and confirmed the company was working towards executing a $70–$85 million Middle Eastern bid. It was also the first approximate breakeven quarter for the company. DroneShield also revealed it has won a four-year framework agreement to supply European Union police forces with DroneGun Tactical. 

The company’s order book is approximately $3.4 million and it has a high conviction pipeline of approximately $85 million. Furthermore, the company could benefit further from Australia’s increased defence budget spend of approximately $270 billion as announced by the Prime Minister on 30 June 2020, after already receiving several orders from the Department of Defence.

About the DroneShield share price  

The DroneShield share price is currently up by 12.90% to 12 cents per share at the time of writing, however, remains 28% down on this time last year.

More reading

• DroneShield share price surges 25% on US Air Force contract

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is on course to follow the lead of U.S. markets and record a sizeable decline on Friday. At the time of writing the benchmark index is down 0.9% to 6,038.3 points.

Four shares that are falling more than most today are listed below. Here’s why they are dropping lower:

The Afterpay Ltd (ASX: APT) share price is down 3.5% to $69.41. This appears to be down to general weakness in the tech sector after a pullback on the Nasdaq index overnight. In addition to this, news that ecommerce giant Shopify has signed an agreement with Affirm for its own buy now pay later offering could be weighing on its shares.

The Evolution Mining Ltd (ASX: EVN) share price has tumbled over 6% lower to $5.91. Investors have been selling the gold miner’s shares after they were downgraded by analysts at Credit Suisse. According to the note, the broker has downgraded Evolution’s shares to a neutral rating with a $6.00 price target on valuation grounds.

The Insurance Australia Group Ltd (ASX: IAG) share price is down 4.5% to $5.51. Investors have been selling the insurance giant’s shares after the release of a trading update this morning. Insurance Australia Group expects to post a pre-tax loss on shareholders’ funds income of $181 million. This is down sharply from a profit of $227 million in FY 2019 and has resulted in the company cancelling its final dividend.

The Vicinity Centres (ASX: VCX) share price has fallen 2.5% to $1.37. This follows the release of an update on its portfolio valuations. According to the release, the company’s portfolio has experienced a net valuation decline of 11.3%. This reflects the impact of COVID-19 and the evolving retail landscape. Among its valuation declines is its flagship portfolio, which includes Chadstone, Premium CBD locations, and DFO outlet centres. This portfolio has seen a net valuation loss of 8.8%.

More reading

• Should Afterpay shareholders be concerned about Shopify’s BNPL launch?
• Insurance Australia Group share price sinks 4% lower after cancelling final dividend
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• 5 things to watch on the ASX 200 on Friday
• What to do if your ASX shares hit a record high

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Long-term shareholders of emerging ASX healthcare company Opthea Ltd (ASX: OPT) have endured a volatile 12 months. A little under a year ago, the Opthea share price was trading at a 52-week low of just $0.735. Then, in the space of a month, shares skyrocketed 465% to an all-time high price of $4.15.

In March, amid a wave of selloffs prompted by the global spread of COVID-19, the Opthea share price plunged all the way back down to just $1.25. Opthea shares have rallied significantly since then – at one point in early June they even looked set to push back up beyond $3.50. But then came yet another pullback, and as at the time of writing they are trading at $2.67.

What’s been driving the Opthea share price?

Opthea specialises in developing novel treatments for chronic eye diseases such as age-related macular degeneration (AMD). The initial steep rise in the share price back in August 2019 was driven by positive clinical trial results from a phase 2b study involving 366 patients suffering from “wet” AMD. Wet AMD is a condition caused by blood vessels leaking fluid into the macular resulting in blurred vision or persistent blind spots. According to Opthea, wet AMD is the leading cause of blindness for those aged over 50 across the developed world.

In the trial, Opthea’s OPT-302 treatment was shown to deliver statistically significant benefits versus the control group when used in combination with an existing wet AMD treatment called Lucentis. Opthea has stated that currently approximately 50% of wet AMD patients who use Lucentis will not experience significant gains in vision. And yet, in 2018 alone, sales of Lucentis totalled US $3.7 billion.

That trial was followed by positive results from a further phase 2a trial released just last month. This time, OPT-302 was used in combination with another therapy called Eylea in patients suffering from diabetic macular edema (DME). DME is a similar condition to wet AMD and occurs in people suffering the long-term effects of diabetes.

On Thursday, the company announced that the results of the trial will be presented at the upcoming American Society of Retina Specialists 2020 Annual Meeting. This gives Opthea significant international exposure, as over 3,000 retinal specialists from 63 countries are expected to attend the virtual meeting.  

Should you invest?

Economic uncertainty caused by the COVID-19 global pandemic has made valuing growth stocks like Opthea incredibly difficult. Other emerging ASX healthcare companies like Medical Developments International Limited (ASX: MVP) and Polynovo Ltd (ASX: PNV) have also seen big swings in their share prices over the last 12 months as investors try to price in the longer-term impacts of the pandemic.

However, Opthea has continued to demonstrate that its treatments are not only effective but also address a debilitating condition affecting a significant portion of the population. Sales of Lucentis and Eylea show that this is a potentially lucrative market if Opthea can successfully commercialise its treatment.

The COVID-19 economy poses significant challenges to young companies. Supply-side logistical challenges may persist for months and funding will be harder to come by. However, for those willing to take on the risk, in my opinion an investment in Opthea has the potential to deliver significant long-term gains.

More reading

• Why the Polynovo share price could climb in August
• Why this underperforming ASX healthcare company could still light up the market in 2020 and beyond
• Why the Opthea share price surged more than 20% today
• 4 exciting ASX biotech shares surging higher today
• 5 of the worst performing ASX shares from last week

Rhys Brock owns shares of Medical Developments International Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Medical Developments International Limited and POLYNOVO FPO. The Motley Fool Australia has recommended Medical Developments International Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to finish the week in a disappointing fashion. At the time of writing the benchmark index is down 1% to 6,034.4 points.

Four shares that have not let that hold them back today are listed below. Here’s why they are pushing higher:

The Alcidion Group Ltd (ASX: ALC) share price has jumped almost 7% to 16 cents. This morning the healthcare technology company announced an enterprise agreement with NHS Lanarkshire for a five-year term. The agreement will see the health board deploy Alcidion’s Patientrack electronic bedside monitoring system across its entire regional health network. The total value of the new contract is ~$1.5 million over five years.

The Bubs Australia Ltd (ASX: BUB) share price is up 3.5% to $1.01 despite there being no news out of the infant formula and baby food company. However, Bubs is likely to release its fourth quarter update next week. Investors may be snapping up shares on Friday in anticipation of a stellar update. Infant formula demand has been very strong during the pandemic and could have underpinned solid sales growth in the fourth quarter.

The IGO Ltd (ASX: IGO) share price has stormed 4.5% higher to $5.41. This follows a jump in the spot nickel price overnight. According to CommSec, the nickel price climbed 4.2% to US$13,650.75 a tonne. It was the best-performing base metal during overnight commodities trading.

The Next Science Ltd (ASX: NXS) share price has risen 2.5% to $1.37. This follows the release of the medical technology company’s second quarter update on Thursday. Next Science’s performance was negatively impacted during the quarter due to the shutdown of elective surgeries. As a result, it reported cash receipts of $1.9 million. However, management expects a rebound in revenues as surgeries recommence and wound care clinics reopen.

More reading

• Where I’d invest $9,000 in ASX shares
• Got $1,000? You should buy 1 of these 6 ASX shares
• 3 of the best mid cap ASX shares you can buy right now
• The smartest ASX shares to buy if you have $2,000
• 4 ASX shares I’d buy with $4,000

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Alcidion Group Ltd. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia has recommended Alcidion Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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