ASX WEEKLY REPORT FOR 6 MAY TO 10 MAY 2024
Global sharemarkets mostly rallied last week on the back of strong US earnings results and a number of central bank indicators that inflation was slowly being tamed.
Sweden’s Riksbank somewhat unexpectedly cut their interest rates by 0.25% as their inflation targets were close to being met. The Swiss National Bank was the first major Central Bank to cut rates after the pandemic back in March and last week the Bank of England made dovish comments that suggested a rate cut by June or July was likely.
The RBA met last week and left rates unchanged at 4.35%. The accompanying Statement was careful with the tone to ensure the markets understood it would not hesitate to raise rates if the inflation numbers moved higher.
The $S&P/ASX 200(.XJO.AU$ rose 1.57% and the All Ordinaries Index rose 1.59%. Sectors to perform well included Energy jumping 4.34%, Utilities gaining 4.79%, Real Estate moving 2.48% higher and IT rising 2.48%.
The Consumer Discretionary sector fell 0.52% but within that large falls were seen in $JB Hi Fi Ltd(JBH.AU$ (-6.71%), $Harvey Norman Holdings Ltd(HVN.AU$ (-4.06%), $Temple & Webster Group Ltd(TPW.AU$ (-7.69%) and $Adairs Ltd(ADH.AU$ (-10.14%). $Kogan.com Ltd(KGN.AU$ shares were pounded again as shareholders reacted angrily to the decision by the company to cash in the executive share options just prior to the company reporting very weak sales numbers. Shares fell 3.10% on the week but are down 45.8% since March 12. $Super Retail Group Ltd(SUL.AU$ shares also fell a hefty 4.84% on weaker sales numbers.
Very weak consumer spending is hurting retail stocks across the board and the RBA would be worried that cost of living increases are crimping the economy. Retail sales numbers have fallen in five of the past six quarters and real retail spending is well down on a year ago.
Around the globe we saw the $Dow Jones Industrial Average(.DJI.US$ rise 2.17%, the $S&P 500 Index(.SPX.US$ gain 1.86% and the $Nasdaq Composite Index(.IXIC.US$ rise 1.51%. US stocks have now risen three weeks in a row.
In Europe shares picked up 3.01% and stocks in China rose 1.60%. Hong Kong gained 2.64% but Japan lost 0.02% with the Yen weakening again to $USD155.7, a level last seen in 1990. Hedge Funds are said to actively buying Reverse Knock Out options believing that the Yen will soon breach 160 to the US Dollar.
Australian 2 year and 10 year bonds fell 2 basis points to 4.05% and 4.36% respectively. US 2 year bonds rose 7 basis points to 4.87% whilst US 10 year bonds were flat at 4.50%. The Australian Dollar closed the week at $US0.6604, largely unchanged.
The Gold price rose 2.47% to $US2367, Copper gained 1.75% and Oil barely moved.
Gold stocks $Newmont Corp(NEM.AU$ (+3.79%) and $Northern Star Resources Ltd(NST.AU$ (+2.37%) saw good buying.
$AGL Energy Ltd(AGL.AU$ shares jumped 10.08% as the company upped its earnings guidance. It was looking for Net Profit After Tax to be 12% higher than previously forecast on operational improvements and strong demand.
$Woodside Energy Group Ltd(WDS.AU$ (+4.95%), $Santos Ltd(STO.AU$ (+5.08%) and $Ampol Ltd(ALD.AU$ (+2.44%) were the pick of the Oil and Gas stocks. Origin Energy rose 3.00% as the value if its holding in UK electricity sector disruptor Octopus, gained hundreds of millions of dollars in value after the company secured a new funding round. Uranium miners $Paladin Energy Ltd(PDN.AU$ (+6.71%) and $Boss Energy Ltd(BOE.AU$ (+8.85%) had standout weeks.
$Qantas Airways Ltd(QAN.AU$ shares gained 6.12% on the week as the company settled its claim with the ACCC regarding tickets sold on non-existing flights.
The Financial Sector has been performing strongly and last week $Westpac Banking Corp(WBC.AU$ announced a $1 billion share buyback and Special Dividend of $0.15 per share. Shares initially jumped before settling back 0.91% higher. $ANZ Group Holdings Ltd(ANZ.AU$ rose 2.14%, $CommBank(CBA.AU$ gained 2.00% and Macquarie rose 5.14%. $National Australia Bank Ltd(NAB.AU$ shares fell 1.72%. ANZ announced a 7% fall in cash profit but it offset the news with a $2 billion share buyback and an $0.83 dividend. CBA reported that cash profit fell 5.00% from the previous corresponding quarter. The Financial Sector rose 1.50%.
Shares in $Graincorp Ltd(GNC.AU$ have had a bumpy ride with the shares rising on news that HMC Capital had taken a significant stake in the company. Last week shares fell 6.18% as the company handed out a profit warning on softer commodity prices.
In the REIT sector Goodman Group upgraded its earnings forecast for the second time this year on the back of strong forecasts in Sydney warehouse rental market and its Global Data Centre business. Shares closed up 3.13% close to its record closing highs. $Stockland Corp Ltd(SGP.AU$ also rose strongly gaining 3.63% whilst $Charter Hall Group(CHC.AU$ gained 3.57%.
In takeover news, the Olam Group from Singapore raised its takeover offer for $Namoi Cotton Ltd(NAM.AU$ for the second time in under a week, to $0.70 a share. US commodity house Louis Dreyfus had earlier put in a $0.67 a share bid for the company. The battle has been going on since March with neither side declaring their offers ‘final’.
In sad news the 138 year old $Perpetual Ltd(PPT.AU$ agreed to sell its trustee and advice business to private equity group KKR for $2.175 billion. The $227 billion asset management business will be separated out with the name Perpetual to disappear from the ASX Boards. Shareholders are angry at the turn of events and will look to block the move in the weeks ahead.
$Sims Ltd(SGM.AU$ , the recycling and metals business, fell 7.50% last week as the company issued a profit warning.
Last week was relatively quiet for economic data but the coming week will see a ramp up in activity.
US inflation (Wed), US Industrial Production (Thu), US Housing Starts (Thu), Japanese GDP (Wed), China Economic Data (Fri) are the key international data points to watch.
In Australia the Federal Budget on Tuesday will be watched closely for signs that Government spending might increase inflation. On Wednesday wages growth numbers are released and April Jobs data will be released on Thursday.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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