Investment Solutions


Investment Solutions


Investment Solutions


Weekly ASX Share Trading Wrap Up

Rene Anthony

Sunday, April 12, 2020

Sunday, April 12, 2020

Local shares rose for the third week in a row, with under-fire REITs mounting a rally. The market was also supported by strong leads from the US, where the key S&P 500 index recorded its best weekly performance since 1974.

Local shares rose for the third week in a row, with under-fire REITs mounting a rally. The market was also supported by strong leads from the US, where the key S&P 500 index recorded its best weekly performance since 1974.

Australian shares touched a four-week high last week, with investors drawing some optimism from the prospect that new daily Coronavirus case numbers in the US may be nearing a peak. By the end of the shortened trading week, the ASX 200 climbed 6.3% to finish on 5,387.3 points. While the market is still down approximately 25% from its highs, it has rebounded 22% from the intra-day low posted on March 23, 2020.

Which shares excelled?

With its shares skyrocketing 85.2% last week, Mesoblast (ASX: MSB) was the market hottest stock. The sharp move came as the regenerative medicine company announced two price-sensitive pieces of news to the market. First, the business confirmed that it received FDA clearance for an Investigational New Drug application. The IND application is to treat patients with acute respiratory distress syndrome arising from COVID-19 with intravenous infusions of its product candidate. This was followed by news of a Phase 2/3 trial in a public-private partnership setting.Shopping centre REITs played catch up last week, staging a belated rally after being the target of relentless selling over the last month. The sector found some support as additional details emerged around rental tenancy conditions moving forward, but also because key Australian brokers took a liking to and upgraded two big names. Vicinity Centres (ASX: VCX) and Scentre Group (ASX: SCG) were those in line for a broker upgrade, in turn rising 31.2% and 29.2% respectively. Meanwhile, Stockland Corporation (ASX: SGP) leapt 26.4% and Unibail-Rodamco-Westfield (ASX: URW) rose 21.1%.Having completed its capital raising, Flight Centre (ASX: FLT) resumed trading last week and its shares took off. Despite a steep discount on new shares being issued by the company, the stock soared 29.6%. With a total of $562 million in fresh funds under its belt, and a large pipeline of store closures ahead, shareholders were more upbeat about the company prospects of riding out the Coronavirus pandemic.Back on the winner list in a big way were Virgin Money UK (ASX: VUK), Seven Group Holdings (ASX: SVW) and Polynovo (ASX: PNV). The three companies posted respective gains of 25%, 27.6% and 18.5%. While Seven Group withdrew its FY20 guidance, the company emphasised the role its different divisions are providing as essential services to Australians around the country. In the case of Polynovo, the company announced a record sales month in the US, a $9.3 million debt facility through NAB, and the results of a CE Mark Burn Study for its key product.There were also big moves from some of the market smaller-cap names, including the likes of Perenti Global (ASX: PRN), gaining 37.7%, Credit Corp Group (ASX: CCP), lifting 31.8%, and oOh!Media (ASX: OML), advancing 24.6%.

Which shares dragged on the market?

In what was a welcome change of events for shareholders of many companies, there was a sizeable drop in the number of large-cap companies recording a pullback last week.

In fact, Fisher and Paykel Healthcare Corporation (ASX: FPH) was one of the few names to see a big decline last week, with its shares dropping 11%. Although there was no price-sensitive news from the company, FPH shares have been one of the strongest performers across the ASX since the Coronavirus pandemic first gripped markets. This suggests that investors may have taken some profits off the table and moved into other stocks as risk tolerance slowly increases across the market.Surprisingly, there was another stock that has performed well in recent times that featured among the worst-performing shares from last week. Nextdc (ASX: NXT), which recently posted an all-time high, shed 5.8% of its market cap. Since the company just completed a capital raising at a discount of 15%, it is also likely that some holders may have sold their stock to lock in profits and take up the offer at the lower price.Elsewhere, there were modest losses for the likes of Aurizon Holdings (ASX: AZJ), down 3.6%, Brambles (ASX: BXB), down 2.8%, and Metcash (ASX: MTS), down 1.8%.

This week trading outlook

After the long weekend, the ASX will be playing catch up at the open on Tuesday morning. Since last Thursday trading session, the Federal Reserve announced another US$2.3 trillion to support the US economy in the wake of a further 6 million Americans filing for unemployment benefits. Meanwhile, Coronavirus case numbers have managed to slowly edge down from their peak, while OPEC+ agreed to terms for a cut in oil production.

Upcoming Economic Data:

  • In the week ahead, there is a slew of key economic readings set to be released, and the market will closely monitor this news.

Local Employment Numbers:

  • Locally, employment numbers will be released at 12:30 pm AEST on Thursday, with unemployment expected to rise to 5.4%.

China's Economic Data:

  • On Tuesday, China will release data on its trade balance, exports, and imports for March. However, the most significant focus will be on GDP growth data, scheduled for distribution on Friday. Some estimates suggest China's GDP may drop by as much as 6% in the first quarter, and any significant deviation from this estimate could impact intra-day trading.

Other Chinese Economic Indicators:

  • Additionally, there will be news regarding industrial production, retail sales, and house prices in China.

US Economic Reports:

  • The US will report on retail sales and industrial production, along with the weekly update on oil stock holdings and jobless claims.

Corporate Updates:

  • Afterpay (ASX: APT) is expected to provide a quarterly business update early Tuesday morning, attracting significant attention.

  • Treasury Wine Estates (ASX: TWE) could be in the spotlight as analysts and investors evaluate its proposal to potentially demerge its luxury Penfolds brand, announced last week.

  • Bank stocks like Commonwealth Bank (ASX: CBA) and NAB (ASX: NAB) could see increased focus after last week's volatility, particularly regarding the possibility of a deferral on bank dividends. The direction of these stocks may be influenced by the upcoming jobs report.

  • Oil shares, including Woodside Petroleum (ASX: WPL), are of interest due to the OPEC+ agreement and Woodside's first-quarter results announcement on Thursday. It's worth noting that news of a cut in oil production did not have an immediate impact on oil markets.

  • Rio Tinto (ASX: RIO) will detail its quarterly operations review on Friday morning, providing an early insight into the state of the iron ore sector.

China will release GDP data later this week[/caption]

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

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