The ASX200 has endured a tough start to March, historically the second-weakest month for the Australian market over the past decade. By Friday’s close, even after posting a fresh all-time high on Tuesday, the market had retreated 3.7%, with the previously high-flying materials stocks weighing heavily. The onset of war in the Middle East caused significant volatility across financial markets, with oil soaring, bonds falling amid inflation fears, and rate-sensitive stocks being dragged lower. Stocks exposed to economic growth were also battered, with copper names leading the declines. Conversely, the energy sector was understandably strong, and some tech names benefited from bargain hunting, as we saw some noticeable reversion from more economically sensitive value stocks to growth across the ASX.
Winners: Magellan Financial (MFG) +36.5%, Viva Energy (VEA) +18.6%, Karoon Energy (KAR) +17.5%, WiseTech Global (WTC) +10.9%, Santos (STO) +10.4%, Woodside (WDS) +8.6%, Whitehaven (WHC) +8.6%, and Xero (XRO) +5.4%.
Losers: Deep Yellow (DYL) -17.5%, Sandfire Resources (SFR) -15.4%, Capstone Copper (CSC) -14.8%, Westgold (WGX) -14.5%, Bellevue Gold (BGL) -11.5%, Regis Resources (RRL) -10.2%, BHP Group (BHP) -9.6%, and Mineral Resources (MIN) -9.5%.
The market-focused news was primarily on Iran, with a little macro-economic news thrown in:
- Markets opened on Monday to the headlines that the US and Israel had launched attacks on Iran – the ASX shrugged off the news, closing higher as the resources surged on the news.
- The ASX cracked on Tuesday, delivering its first triple-digit fall for the week after hawkish comments from Michele Bullock turned this month’s RBA meeting into a live event – futures are now pricing in a 35% chance of a rate hike.
- Wednesday saw another day of triple-digit losses as miners were smacked for a second day on fears that the Iran War would slow global economic growth – the popular copper stocks were front and centre.
- The market limped into the weekend, just managing to avoid its third day of triple-digit losses, but miners remained weak as fears took hold that the war would drag on, stoking inflation and growth fears.
- On Friday night, oil popped ~8% as the Middle East fighting escalated while a surprisingly weak US jobs report increased fears around the underlying US economy, which has commenced an expensive war.
Friday night saw the UK FTSE down 1.2% while the German DAX fared better, closing down 0.9%. In the US, the S&P 500 closed down 1.3% while the small-cap Russell 2000 Index took the wooden spoon, ending the session down 2.3% as a ~8% pop in oil weighed on the index.
- The SPI Futures are calling the ASX200 to open down 1.8% following the weak session on Wall Street, with the miners and financials both likely to struggle.
