The ASX200 ended a tough week down -2.2%, extending March’s retreat to -8.4% with more losses likely on Monday. Materials (-7.1%) and Tech stocks (-4.2%) continued to lead the decline, as fears around global growth and inflation escalated as the war dragged on with no end in sight, and oil prices looked increasingly comfortable above $US110. On Friday night, selling intensified into the U.S. afternoon session after Reuters reported Iraq had declared force majeure on oilfields operated by foreign companies, while President Trump said he was not seeking a ceasefire with Iran. Now entering its fourth week, roughly in line with Trump’s initial timeframe, the conflict is nonetheless unsettling Washington, as Iran’s ability to disrupt oil markets with relative ease continues to drive global angst.
Energy stocks dominated the winners’ enclosure, while on the “wrong” side of the ledger, gold names experienced a sharp unwind of the crowded complacency-bullish position:
Winners: Telix Pharma (TLX) +12.9%, Sims Ltd (SGM) +10.9%, Viva Energy (VEA) _10.3%, Woodside Energy (WDS) +9.7%, Beach Energy (BPT) +9.5%, WEB Travel Group (WEB) +8.3%, Worley Ltd (WOR) +8%, and Ampol (ALD) +7.3%.
Losers: IperionX (IPX) -33.1%, Vault Minerals (VAU) -21.5%, Regis Resources (RRL) -19.4%, Bellevue Gold (BGL) -15.9%, Deep Yellow (DYL) -15%, Northern Star (NST) -14.9%, Emerald Resources (EMR) -14.5%, and Ramelius Resources (RMS) -14.3%.
The market remained fixated on developments in Iran, even as the RBA hiked rates, 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 more than 50% since the conflict began.
- The gold stocks started the week on the back foot, even while the precious metal held above $US5,000, around 10% higher than its price this morning.
- The RBA hiked rates 0.25% on Tuesday, but the split vote offered some brief encouragement that the board wasn’t overly hawkish.
- Unfortunately, by the end of the week, increasing inflation fears had the futures market pricing in an additional three rate hikes by Christmas.
- On Thursday and Friday, selling intensified across the miners as gold plunged below $US5,000 and global growth hopes evaporated as the conflict drove oil prices ever higher.
Overseas markets ended the week on the back foot as uncertainty gripped Wall Street, with stocks falling and oil remaining above $US110 as traders/investors struggle to see an endgame for Trump et al. In Europe, the German DAX and EURO STOXX 5 both closed 2% lower, making 11-month lows in the process. In the US, the tech-based NASDAQ fell 1.9% while the Dow fared better, only retreating ~450 points, or 1.0%.
We’ve maintained a bullish stance on the ASX, believing it will be trading higher come Christmas, but the pullback by the miners has been deeper than we expected, except the gold stocks, which have been following the MM script pretty closely.
- The SPI Futures are calling the ASX200 to open down another 1.8% on Monday, following Friday’s weak session on Wall Street.
