ASX WEEKLY REPORT FOR 22 APR TO 26 APR 2024
Sharemarkets around the globe recovered from their recent sell-off despite inflation numbers coming in hotter than expected both in Australia and the US. Australian inflation was 1.00% in the first three months of 2024 above market expectations of 0.80%.
A good start to the US quarterly earnings season however saw a solid rebound in US tech stocks and that, along with no further increase in tensions between Israel and Iran, improved investor sentiment overall.
The S&P/ASX200 only finished the week 0.11% higher with the broader All Ordinaries Index slightly better up +0.26%.
The tech-heavy Nasdaq index closed up 4.00% on the back of strong results from Google parent $Alphabet-C(GOOG.US$ , $Apple(AAPL.US$ and $NVIDIA(NVDA.US$ . The $Dow Jones Industrial Average(.DJI.US$ closed up 0.667% and the S&P500 closed 2.67% higher.
In Europe stocks closed up 1.74%, while Asian markets also rebounded. China was up a modest 0.76% but Hong Kong jumped 8.80%, its best week in calendar year 2024 as the earnings outlook brightened. Japan’s Nikkei Index gained a healthy 2.34%.
It is a challenging time for investors with elevated valuations in some sectors, increasing volatility and a number of unknowns with unpredictable conflicts in Ukraine and the Middle East.
Central Banks are also now grappling with the reality that inflation is still present and not yet been tamed. Markets now view interest rate cuts as coming at the end of the year at the earliest and in Australia the possibility of a rate hike cannot be discounted.
The strength of the Australian economy, particularly in the services sector, will give the RBA plenty to worry about in the second quarter.
The Australian Dollar rose 1.71% to $US0.6535 as higher interest rates became more likely after the inflation numbers. Australian 2 year bonds rose 26bps to 4.15% whilst Australian 10 year bonds rose 23bps to 4.49%.
The Iron Ore price continues to defy expectations rising again while the oil price is relatively steady. The Gold price has retreated from its recent record highs and closed the week at $US2350.
The best performing sector in Australia last week was Health Care rising 2.60%. This was followed closely by IT that gained 2.52% largely on the back of the positive stories out of the US.
Consumer Staple stocks have been broadly weaker in 2024 and haven’t been helped by Government enquiries into supermarket price gouging but last week they rose 1.07%. Financials were the only other sector in the black rising 0.82%. And this was despite a Citi analyst downgrading all the major banks during the week.
Energy stocks were the worst performing sector falling 3.02% with $Woodside Energy Group Ltd(WDS.AU$ dropping 3.88% as the company held its AGM and received a 58% vote against its climate report. $Santos Ltd(STO.AU$ shed 1.40%, $Karoon Energy Ltd(KAR.AU$ fell 7.62% and Uranium miner $Paladin Energy Ltd(PDN.AU$ lost 6.00%.
Industrial stocks drifted 1.58% lower with $Brambles Ltd(BXB.AU$ dropping 8.18% despite announcing sales revenue increasing 9% over the past 9 months and the company saying it was on-track to meet its profit guidance.
Toll road company $Atlas Arteria Ltd(ALX.AU$ (-3.73%) fell after reporting a dip in traffic numbers. $Transurban Group(TCL.AU$ (-2.43%) moved lower in sympathy.
$BHP Group Ltd(BHP.AU$ announced that it had proposed a takeover/merger with British mining giant Anglo American worth around $60 billion. The offer was promptly rejected by Anglo American but focused attention on BHP’s copper acquisition strategy. The company has previously said that world will experience a massive copper shortfall as it transitions to renewable energy. New infrastructure projects and large urbanisation projects in India and China require huge amounts of copper that BHP is looking to take advantage of. The BHP share price fell 3.32% on the news but will be watched closely in coming weeks for its response to the rejection by Anglo American.
Whilst Gold has retreated from its recent record highs, many gold companies have lower Gold price forecasts in their forward projections. Many are around the $US1700-1800 level. With Gold now trading at $UA2350 an ounce it is expected that Gold companies will begin to see large benefits in their revenue numbers. One of the first to report a solid increase was $Newmont Corp(NEM.AU$ . Its shares rose 9.34% over the week.
Not all Gold miners fared well however with $Bellevue Gold Ltd(BGL.AU$ dropping 11.3% and $Northern Star Resources Ltd(NST.AU$ shedding 2.58%.
Luxury goods online retailer $Cettire Ltd(CTT.AU$ fell 6.47% last week as one of its major fund manager backers, LHC Capital, said they had lost faith in the company and the large selling of stock by the CEO was a ‘red flag’ that couldn’t be ignored.
$Perpetual Equity Investment Co Ltd(PIC.AU$ shares fell 3.52% as the company reported further fund outflows during the March quarter.
$Cleanaway Waste Management Ltd(CWY.AU$ shares rose 15.8% at one point last week as speculation mounted that Seven Group was readying a takeover proposal. It was denied by Cleanaway but markets often see fire where there is smoke and the stock rose a healthy 4.72% over the week.
$Nick Scali Ltd(NCK.AU$ shares rose 15.69% after it was announced the company would expand into the UK, buying the Fabb Furniture business for a nominal price of £2 million.
Small cap mineral sands producer $Base Resources Ltd(BSE.AU$ shares rose 133% last week to $0.245 following news of a proposed buyout from $Energy Fuels(UUUU.US$ , a US-based uranium and critical minerals producer.
This coming week we will be watching more quarterly earnings reports from the US, the US Fed meeting on Wednesday to decide its next move in interest rates and US payrolls on Friday.
Eurozone inflation numbers and GDP are due out (Tues), Japanese jobs data will be released, Chinese Business Conditions (Tues) and Australian Retail Sales for March (Tues). Building Approvals, Housing Finance and Trade Data will also be out later in the week.
*The data sheet has the Friday Australian market closing prices rather than closing US prices.
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