The ASX200 ended a choppy week down 2.6%, with the Middle East conflict weighing on equities. Energy was the only sector to finish higher, while rate-sensitive tech (-7%) and real estate (-5%) dragged on the index as surging oil prices reignited inflation fears. The influential materials sector also endured a tough week, retreating -4.7% as weakness in copper and gold stocks offset a bounce in iron ore names. However, the market’s largest stock, BHP, weighed heavily on the index, falling 5.7% over the week as a Chinese ban on its iron ore caused increasing angst. The moves on Friday night in the US point to more of the same next week, with gold and copper stocks coming under renewed pressure.
The winners and losers board was dominated by the fallout from the Iran conflict. Also, the insurance stocks featured among the top performers, while fund managers struggled, were two moves that caught our eye.
Winners: Yancoal (YAL) +27.3%, Lynas Rare Earths (LYC) +12.9%, Insurance Australia (IAG) +10.4%, Whitehaven Coal (WHC) +10.3%, Suncorp (SUN) +8.6%, Alcoa (AAI) +7.2%, Fortescue Ltd (FMG) +6.4%, and New Hope Corp (NHC) +6.2%.
Losers: Pantoro Gold (PNR) -32.7%, Helia Group (HLI) -24.6%, Iperionx (IPX) -23.9%, Northern Star (NST) -19.4%, Catapult Sports (CAT) -15.5%, Orica (ORI) -14.7%, HUB24 (HUB) -14.7%, Pinnacle Wealth (PNI -14.6%, and Netwealth (NWL) -13.9%.
The market remained fixated on developments in Iran, with the worst supply disruption in oil market history showing no signs of easing, leaving the global economy exposed to crude prices that have surged since the conflict began.
- Markets opened on Monday to huge volatility with oil spiking ~25%, causing weakness across equities with the ASX200 closing down 2.9%, even gold fell, as a rise in the $US and bond yields overwhelmed the safe-haven bid.
- The rising energy costs saw markets lean heavily towards another RBA rate hike this week as inflation fears gather momentum.
- The rest of the week was similar; any news around the conflict, which moved oil prices, impacted equities, although it was only some optimistic rhetoric from President Trump that gave some relief, albeit fleeting.
- In the US, on Friday night, the selling of the resource stocks gathered momentum as the $US dollar firmed across the board, with gold and copper names likely to struggle on Monday.
Overseas markets ended the week on the back foot as uncertainty gripped Wall Street, with stocks falling and oil rising as the war in Iran raged on. In Europe, the French CAC fell 0.9% and the UK FTSE 0.4%. In the US, as Brent Crude traded above $103, the S&P 500 and tech-based NASDAQ closed down 0.6%.
- The SPI Futures are calling the ASX200 to open down another 0.7% on Monday, around the 8550 area, with the materials and tech sectors likely to be under pressure at the start of the week.
