Weekly ASX Report for 11 Mar to 15 Mar 2024
With earnings season out of the way in the US and Australia the focus for investors has once again moved on to economic data and commodity price action.
Last week we saw Eurozone and US markets briefly make new record highs before closing off those highs on the back of a slightly hotter than expected US inflation report and messy US retail sales data that was below expectations.
The $Dow Jones Industrial Average(.DJI.US$ fell 0.02%, the $S&P 500 Index(.SPX.US$ lost 0.13% and the $Nasdaq Composite Index(.IXIC.US$ ended 1.17% lower.
Chinese shares continued their recent rebound rising 0.71%, Hong Kong shares gained 2.35% but Japan's Nikkei index fell 2.47% on the increasing expectation that the Bank of Japan will end its negative interest rate policy sooner rather than later (it meets this week).
The $S&P/ASX 200(.XJO.AU$ drifted 2.25% lower and the All Ordinaries Index lost 2.27%. The start of last week saw the Australian market have its biggest one-day fall in twelve months.
The Australian Dollar lost ground against the US Dollar falling 0.87% to $US0.6560.
2-year Australian bonds rose 15 basis points to 3.816% while 10 year Australian bonds rose 16 basis points to 4.163%.
Most sectors of the Australian equity market experienced weakness except for Real Estate Trusts and Utilities that rose 0.81% and 1.21% respectively.
Materials and Financial stocks were hit the hardest last week falling 3.36% and 3.17%. Financials have had a stellar run since October but Materials continue to show weakness on falling Iron Ore Prices and doubts about China's commitment to pump priming its economy via its housing sector. Stockpiles of ore and other commodities also point to weaker demand.
$BHP Group Ltd(BHP.AU$ continued its poor year to date (-15.87%) with $Rio Tinto Ltd(RIO.AU$ (-13.79%) and $Fortescue Ltd(FMG.AU$ (-17.44%) not faring any better. Last week saw a continuation of the weakness with Fortescue shedding 7.70%, BHP losing 3.50% and Rio Tinto falling 2.45% over the week.
One mining stock jumping higher last was rare-earth player $Arafura Rare Earths Ltd(ARU.AU$. The Gina Rinehart-backed company will receive a support package from the Federal Government that is keen to secure supplies for its electrification and renewable energy push. Shares traded 51% higher.
Australian banks all fell last week as questions about sky-high valuations, shrinking net interest margins and downgrades from a Macquarie Analyst dogged the sector. $CommBank(CBA.AU$ fell 4.87%, $Westpac Banking Corp(WBC.AU$ dropped 5.45%, $ANZ Group Holdings Ltd(ANZ.AU$ lost 3.76% and $National Australia Bank Ltd(NAB.AU$ shed 3.70%.
Insurance stocks however continued to drive higher with consumers being forced to pay increasing premiums for insurance cover. $QBE Insurance Group Ltd(QBE.AU$ gained 2.75%, $Suncorp Group Ltd(SUN.AU$ rose 1.41% and $Insurance Australia Group Ltd(IAG.AU$ lifted 0.16%.
In other sectors Consumer Discretionary stocks fell 1.07%, Healthcare dropped 1.80%, Industrials shed 2.69% and Energy lost 1.80%.
Communication Services stocks reported reasonable half yearly results but investors have been keen to take profits in the sector. Last week we saw $Seek Ltd(SEK.AU$ drop 5.46%, $REA Group Ltd(REA.AU$ lose 5.39%, $CAR Group Ltd(CAR.AU$ group fall 4.57% and $Domain Holdings Australia Ltd(DHG.AU$ drop 3.32%.
One stock in the sector, $Superloop Ltd(SLC.AU$, is currently under a takeover offer and is up 87% year to date. Last week it added further fuel to the fire by announcing a large contract win with $Origin Energy Ltd(ORG.AU$. Shares rocketed 20% higher last week alone.
In the IT sector, takeover target $Appen Ltd(APX.AU$ has seen the indicative bid withdrawn after potential acquirer, $Innodata(INOD.US$ from the US, suggested Appen had breached a confidentiality clause by announcing the bid to the ASX. Shares rose marginally over the week regardless.
Coal stocks finished lower with $Whitehaven Coal Ltd(WHC.AU$ dropping 8.97% and $New Hope Corp Ltd(NHC.AU$ losing 5.25%.
$Tabcorp Holdings Ltd(TAH.AU$ shares fell 9.38% on the shock resignation of its CEO for an alleged complaint he made inappropriate remarks. The stock has been in the doldrums for sometime as its spending on digital infrastructure is yet to pay off and its core totalisator business remains in structural decline.
$Bellevue Gold Ltd(BGL.AU$ increased its production numbers during February and its shares jumped 8.04% for the week. The gold price has retreated from record highs and gold stocks were generally weaker with market heavyweight $Northern Star Resources Ltd(NST.AU$ losing 5.06%.
In the week ahead the reserve Bank of Australia meets to discuss interest rate settings (Tuesday). The market largely expects the RBA to keep cash rates on hold at 4.35% but the RBA Governor was at pains to point out at the last meeting that interest rate hikes remain a live possibility. The Board of the Reserve Bank now also meets every 6 weeks as opposed to monthly so there will be some adjustment by all parties as the RBA has more data to make decisions on but less opportunities to make interest rate adjustments.
The US Fed meets this coming week (Wed) as does the Bank of England (Thur) and the Bank of Japan (Tues). The UK and the US are expected to remain on hold but Japan is tipped to scrap its Yield Curve Controls.
On a side note Japan is no longer in a technical recession with revised December quarter data showing flat rather than negative growth.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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