Ahead of a critical deadline marking the next round of US-China trade tariffs, market activity remained rather subdued for most of the week. However, a last-minute breakthrough between the two countries has led to an interim deal being struck, sending stocks higher. By Friday’s close of trade, the ASX 200 and All Ordinaries both gained 0.5%, finishing the week on 6739.7 and 6844.6 points respectively.
The US Federal Reserve also held interest rates steady this week, suggesting a steady period of fiscal policy throughout 2020 and perhaps longer. On the local front, it was corporate chatter that occupied most of the news, headlined by a fiery Westpac AGM.
Which shares excelled?
Some of the week’s best-performing stocks were companies exposed to the results of the UK election, with the Conservative Party claiming a landslide victory. Stocks that surged on the news included Virgin Money UK (ASX: VUK), Bravura Solutions (ASX: BVS) and Pendal Group (ASX: PDL).
Miners also had a strong week thanks in part to renewed optimism in the commodities space. SOUTH32 (ASX: S32) was a beneficiary of this, as well as its ongoing share buy-back scheme. The diversified metals and mining company saw its shares advance 13.4% during the week.
Similarly, Fortescue Metals Group (ASX: FMG) had a stellar week, with the stock climbing 8.2%. Iron ore prices rallied strongly after Chinese government officials indicated that they would be looking to keep the country’s economic growth within a “reasonable range”.
Rare earths miner Lynas Corporation (ASX: LYC) rocketed higher as well, releasing two critical pieces of news. First, the company announced that it will build a new processing plant in Kalgoorlie. Secondly, the miner advised shareholders that it has bid on a project to develop a processing facility on behalf of the US Army. Lynas shares ended the week 25.9% higher.
In other news, medical device manufacturer Polynovo (ASX: PNV) put on a huge rally as its key product received approval for sale throughout the UK and EU. The stock leapt 9%.
Finally, Nufarm (ASX: NUF) and Monadelphous Group (ASX: MND) were two stocks back in favour, each putting on a strong performance throughout the week.
The UK election paved the way for strong gains in certain stocks
Which shares dragged on the market?
Trading downgrades dominated the week, with some late-season confessions disappointing the market.
Viva Energy Group (ASX: VEA) slumped 7.7% during the week as the oil supplier cut its profit guidance. The company cited a variety of reasons for the reduction, primarily lower retail margins caused by greater competition and more pronounced movements in the price of oil.
Meanwhile, McMillan Shakespeare (ASX: MMS) indicated its forecast NPAT for FY20 is expected to be lower than that of FY19, sending investors reeling. The salary packaging and novated solutions business argued poor consumer confidence and difficult trading conditions are hurting the business. By Friday, the company’s shares had lost 7.3% of their value.
Estia Health (ASX: EHE) was another stock to miss the mark, informing shareholders that occupancy rates at its aged care homes have fallen. The company also downgraded revenue and EBITDA expectations, warning that sentiment would be weighed down by the ongoing Aged Care Quality Royal Commission.
Elsewhere, the REIT sector fell sharply, with the likes of Charter Hall Long Wale REIT (ASX: CLW) and Centuria Industrial REIT (ASX: CIP) weighing on the index. The developments came as each company announced news with regards to equity placements.
Finally, Pro Medicus (ASX: PME) slumped 6.6% despite releasing no news during the week.
Novated lease business McMillan Shakespeare lost ground this week
Other trading developments
As alluded to earlier, the story of the week focused on the Westpac (ASX: WBC) AGM. Amid a barrage of scathing criticism, the bank received a historic second ‘strike’ over pay, leading to a vote on the board. While that vote ultimately did not pass, the AGM made clear the frustration among shareholders following revelations Westpac allegedly breached anti-money laundering laws.
Another piece of news doing the rounds this week was the shock departure of A2M (ASX: A2M) CEO Jayne Hrdlicka. Having been with the company for just 18 months, Mrs Hrdlicka signalled that travel requirements were becoming a burden on her personal life. The company’s previous Managing Director, Geoffrey Babidge, has returned as interim CEO.
On Wednesday, Webjet (ASX: WEB) shares spiked 9.7% as the online travel platform became the centre of speculation it could be a takeover target. While the company sought to distance itself from any deal being on the table, investors were cheerful about the prospect.
Another series of IPO companies started life on the ASX this week, with their performance shown below.
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The trading week ahead
In what will be the final week of the year for local economic news data, the investment community will likely centre its attention on Tuesday’s RBA meeting minutes. Next week is also set to provide an indication regarding the state of the job market from November, plus home loan and sales data.
The last set of AGMs will also take place next week. Among those set to update shareholders are Woolworths (ASX: WOW), ANZ (ASX: ANZ), NAB (ASX: NAB), Orica (ASX: ORI) and Incitec Pivot (ASX: IPL).
We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great weekend!
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