As local earnings season wraps up, the Australian share market had a disappointing week as macroeconomic issues weighed. Rising US bond yields on the back of concerns around inflation dented confidence, leading to an exodus out of tech stocks. By the end of the trading week, the ASX 200 closed on 6,673.30 points, down 1.8% since last Friday.
Which shares excelled?
Despite the market seeing some turbulence this week, there were actually quite a number of winners, albeit concentrated outside of the tech sector.
Shares in Sealink Travel Group (ASX: SLK) spiked 22.1% to a record high after its half-year result delighted shareholders. The company reported record revenue of $570.8 million in the December-half, albeit a large portion of this was generated by acquisition activity. Underlying NPAT climbed 231.9% to $48.1 million, while management also sounded an optimistic tone looking to the future.
Wireless internet provider Uniti Group (ASX: UWL) landed a knockout blow with its earnings report, declaring record revenue of $54.6 million, up 148% versus the prior corresponding period. The company’s EBITDA tripled to $29.3 million, and courtesy of its 15% gain this week, it hit a fresh all-time high.
Travel stocks were on the rise throughout the majority of the week as optimism builds following the roll-out of COVID vaccinations across Australia. Investors were prepared to overlook some of the dire earnings published in the sector this week, instead delivering big moves for Webjet (ASX: WEB), Auckland International Airport (ASX: AIA), Corporate Travel Management (ASX: CTD), Qantas (ASX: QAN) and Sydney Airport (ASX: SYD).
Lendlease Group (ASX: LLC) and Adbri (ASX: ABC), both seeing a pick-up in construction activity late in 2020 and into the new year, were also winners this week. The duo gained 11.9% and 10.9% respectively.
In M&A news, Bank of Queensland (ASX: BOQ) and AMP (ASX: AMP) struck separate deals that found the support of their respective shareholders. Bank of Queensland announced it will buy ME Bank for $1.33 billion, while AMP agreed to terms for the sale of its AMP Capital business to US investment firm Ares.
Other stocks to march higher this week were Nufarm (ASX: NUF), IDP Education (ASX: IEL), Unibail-Rodamco-Westfield (ASX: URW), Santos (ASX: STO) and Zimplats (ASX: ZIM).
Which shares dragged on the market?
Data analytics and investigative analysis business Nuix (ASX: NXL) headlined this week’s worst-performing stocks, slumping 34.2%. It came after the company’s inaugural report as a publicly-listed company fell short of market expectations. Revenue in the December-half eased 3.9%, while statutory losses totalled $16.5 million. A rising Australian dollar had a major impact on the USD-earning company, although management believes the firm will still hit its prospectus target on account of skewed earnings towards the second-half of the financial year.
BNPL stocks were also caught in the tech-wide sell-down, with Afterpay (ASX: APT), Sezzle (ASX: SZL) and Zip Co (ASX: Z1P) all shedding a sizeable portion of their market cap. In the case of industry frontrunner Afterpay, alongside its half-year report the company raised $1.5 billion via a convertible note offering where the conversion price of the notes, due in 2026, is over $194. Proceeds from the raise will be used to increase its stake in its US subsidiary business and drive growth in that market.
Shares in explosives company Orica (ASX: ORI) plummeted to a 52-week low as the company issued a profit warning. Down 15.9% for the week, management now anticipate that first-half EBIT will be lower by as much as $125 million on the back of lower mining activity in markets outside Australia and North America, the impact of COVID-19, plus a stronger Aussie dollar.
Another tech duo that reported this week and fell short of investor expectations were Seek (ASX: SEK) and Appen (ASX: APX). Seek’s decision to sell-down its stake in Chinese jobs marketplace Zhaopin surprised many, as did its decision to embark on a radical restructure and have Andrew Bassat hand over the reigns as CEO to former CBA boss Ian Narev. Meanwhile, Appen’s slowing revenue growth and a soft outlook amid currency headwinds proved worrying to shareholders.
Elsewhere, retailers were caught up in the sell-off this week, particularly those reliant on ecommerce such as Temple & Webster (ASX: TPW), Kogan (ASX: KGN) and JB Hi-Fi (ASX: JBH), although Super Retail Group (ASX: SUL) struggled as well.
In what was effectively its third earnings downgrade in the last six months, shares in A2 Milk (ASX: A2M) sunk 13.1%. The daigou channel continues to prove a source of difficulty for the company as Australia remains shut off to overseas tourists, most notably those from China.
Finally, last week’s high-flyer in Nearmap (ASX: NEA) came back to earth this week amid the tech rout, and there was some pressure on battery minerals stocks including Orocobre (ASX: ORE), Novonix (ASX: NVX), Pilbara Minerals (ASX: PLS) and Galaxy Resources (ASX: GXY).
We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great week!
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