ASX Trading Wrap: Zip tumbles, coal and oil stocks surge
Rene Anthony
The war in Ukraine dominated headlines this week, and in financial markets, it prompted sharp rallies in a number of commodities. Elsewhere, the Australian economy defied the pessimism tied to the Omicron surge and roared well ahead of pre-COVID levels, while Zip acquisition of Sezzle went down like a lead balloon.
Which shares excelled?
With iron ore prices spiking back above US$150 a tonne this week, Grange Resources (ASX: GRR) led the way. However, its results were the true catalyst this week. The company reported a full-year profit of $321.6 million, which is more than 50% ahead of the prior corresponding period. Management was able to keep operating costs steady, building a sizeable cash position on the balance sheet and allowing the company to declare a special dividend of 10 cents per share.
The coal sector is seeing a resurgence of late, with prices skyrocketing to all-time highs on the back of robust demand for the commodity and an expected supply squeeze as countries seek to move away from Russian coal imports. Thermal coal prices more than doubled in a week, heading towards US$450 per tonne. This was a boon for the likes of Yancoal Australia (ASX: YAL), Whitehaven Coal (ASX: WHC), Coronado Global Resources (ASX: CRN), and New Hope Corporation (ASX: NHC).
Core Lithium (ASX: CXO) entered a supply deal with global EV giant Tesla (NASDAQ: TSLA), and investors lapped up the news. The company will supply the US electric car developer with 110,000 dry metric tonnes of lithium spodumene over four years, starting in the second half of 2023. This added to a positive week for the broader battery minerals space, with rallies also taking hold across AVZ Minerals (ASX: AVZ), Neometals (ASX: NMT), Lake Resources (ASX: LKE), Sayona Mining (ASX: SYA), Lynas Rare Earths (ASX: LYC), and several other peers from the sector. Among these names, Sayona announced it has doubled its Quebec lithium resource base, Neometals completed a dual-listing in London, and Lake Resources announced its modular demonstration plant has been shipped to its Kachi Lithium Project.
Soaring oil prices underpinned a rally among some of the most-popular ASX names from the energy sector this week, including Woodside Petroleum (ASX: WPL), Beach Energy (ASX: BPT), Karoon Energy (ASX: KAR), and 88 Energy (ASX: 88E). In response to the war in Ukraine, oil prices inched towards US$120 a barrel before paring some of those gains late in the week.
Rounding things out, BHP (ASX: BHP) and Rio Tinto (ASX: RIO) found favour amid stronger iron ore prices, and Selfwealth community favourite Pointsbet Holdings (ASX: PBH) (ASX: IHL) also made its way onto the winners' list.
Which shares dragged on the market?
Zip's Capital Raising and Sezzle Takeover: After starting the week with a trading halt to undertake a $200 million capital raising, shares in Zip (ASX: Z1P) never quite recovered once the stock resumed trading. Both the company's results and its grand ambitions in announcing a takeover of ASX-listed peer Sezzle (ASX: SZL) fell flat with investors. Despite institutions pouring into the capital raise at $1.90 per share, Z1P was trading well below that level on Friday morning as existing holders dumped the once-loved stock.
Insurance Industry Challenges: Insurers were also on the back foot this week, with the floods in Queensland and New South Wales expected to result in millions of dollars worth of insurance claims. Insurance Australia Group (ASX: IAG), QBE Insurance (ASX: QBE), and Suncorp (ASX: SUN) all felt the impact, and in the case of IAG, it was also on the receiving end of news that it faces lawsuits from Credit Suisse in relation to the collapse of Greensill.
Magellan's Funds Under Management (FUM) Update: The latest funds under management (FUM) update from Magellan Financial Group (ASX: MFG) still appears to be ringing in the ears of its shareholders, with the stock recording another major slide despite no price-sensitive news this week. However, last Friday the company unveiled an 11.4% decrease in its total FUM compared with just two weeks earlier, with $3.2 billion of fund outflows worrying onlookers.
City Chic and Life360 Struggles Continue: City Chic (ASX: CCX) and Life360 (ASX: 360) are still reeling after last week's significant share price declines, with both stocks again featuring on the list of the worst-performing ASX names this week. It comes after each stock shed more than 30% following their lackluster earnings reports last Thursday. Each stock is now well and truly in a multi-month downtrend, with the momentum likely spurring more investors to head for the exits over recent days.
Setbacks for Other Companies: Last but not least, there were also setbacks for the likes of Sandfire Resources (ASX: SFR), Fineos (ASX: FCL), Judo Capital (ASX: JDO), Credit Corp (ASX: CCP), plus fund managers Platinum Asset Management (ASX: PTM) and Australian Ethical Investment (ASX: AEF).
We'll be back next week with another Weekly ASX Trading Wrap Up - until then, have a great week!
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