ASX Trading Wrap: Square sinks, Xero disappoints and lithium stocks hit a wall

Growth stocks have rallied on Friday, but there was no escaping the carnage across the tech sector this week, with a number of high-profile ‘darlings’ smashed on the back of a dismal showing from the Nasdaq index. Tech isn’t the only sector feeling the heat, with all 11 ASX sectors in the red this week.

 

Which shares excelled?

One of the few names to make a good impression this week, Judo Capital (ASX: JDO) bucked the trend as the SME-oriented challenger bank unveiled robust growth across its loan book. It saw a 4.1% increase in gross loans and advances (GLAs) on March’s closing balance, reaching $5.56 billion at the end of April. Management also reaffirmed the company’s guidance from its November IPO, with the company citing the rate hike cycle as a tailwind for its margins.

Another stock bucking the trend was TPG Telecom (ASX: TPG), which posted positive performances in three consecutive trading sessions to start the week. That was sparked by news the telco has reached a binding agreement to sell 100% of its passive mobile tower and rooftop infrastructure to OMERS Infrastructure Management. The company expects to receive net cash proceeds of around $890 million as a result of the deal.

Two of the market’s most well-known food stocks held up amid the market ruction this week. Both Domino’s Pizza (ASX: DMP) and Inghams (ASX: ING) grinded out a small win, although neither had any developments to report. What’s more, both these stocks were floating around 52-week lows before rebounding, so it may have been a case of investors deeming these names ‘oversold’ and buying into the relief rally.

Shares in Orica (ASX: ORI) bounced back after a poor start to the week after it reported its half-year results to the market. The company, which specialises in manufacturing explosives, reported a 25% increase in revenue for the half. At the same time, underlying earnings before interest and tax (EBIT) soared 58% to $245 million, with the company declaring a dividend of 13 cents per share despite net profits falling into the red due to a tax hit.

 

ASX Trading Wrap: Square sinks, Xero disappoints and lithium stocks hit a wall

 

Which shares dragged on the market?

With valuations for growth names wearing extra scrutiny at the moment, there was little respite for the battery metals and lithium sector, even though losses were pared today. While the cohort has been one of the standouts since the beginning of the pandemic, profit taking and risk-off sentiment over the last month has seen sharp pull-backs in a number of names. Sayona Mining (ASX: SYA), Novonix (ASX: NVX), Firefinch (ASX: FFX), AVZ Minerals (ASX: AVZ), Lake Resources (ASX: LKE) and Liontown Resources (ASX: LTR) all feature among this week’s worst-performing mid-to-large cap stocks.

Magellan Financial (ASX: MFG) has been caught up in this week’s sell-off given its exposure to international markets. The fund manager, which has been out of favour over recent months given its underperformance, also made the move to appoint a new CEO and Managing Director in David George, while also selling its stake in restaurant business Guzman y Gomez for $140 million. Neither of those developments did anything for the stock price, which entered Friday nearly 15% down across the course of the trading week.

Tech shares wore the brunt of this week’s down-turn, with the sector continuing its recent slide in the wake of a bear market for the Nasdaq in the US. Afterpay owner Square (ASX: SQ2) was one of the biggest casualties, at one stage shedding as much as 30% of its market cap before a strong Friday rally helped trim its losses.

Megaport (ASX: MP1) was another name faring poorly, but you could be excused for missing the memo as the Thursday sell-off in Altium (ASX: ALU) and Xero (ASX: XRO), where the duo dived 16.7% and 11.6% respectively, was the talk of the market. Of the trio, Xero was the only one to announce any price-sensitive news, with its FY22 disappointing shareholders. Despite revenue surging 29%, further reinvestment into operations weighed on the accounting software firm, which posted a loss to the tune of NZD$9.1 million, compared with NZD$19.8 million profit a year ago.

Even after today’s rally, Link Administration (ASX: LNK) has found itself a long way off the price of its current takeover bid, with the portfolio administration provider slumping during the first half of the week as investors question whether it will be acquired after all. The company’s suitor, Canada’s Dye & Durham, previously offered $5.50 per share for Link, but its own share price has come under fire lately and left the potential acquirer with a loan that would dwarf its market cap.

Among other shareholders that will be disappointed this week are those invested in uranium pair Boss Energy (ASX: BOE) and Paladin Energy (ASX: PDN), platinum group elements (PGE) explorer Chalice Mining (ASX: CHN), iron ore miner Grange Resources (ASX: GRR), and mineral sands producer Iluka Resources (ASX: ILU), with a number of commodity industries taking a hit on concerns about a slowdown in the global economy.

 

We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great week!

 

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