Weekly ASX Share Trading Wrap Up

Weekly ASX Share Trading Wrap Up

After the market’s strong start to 2020, momentum began to fall away last week as fears intensified over the novel Coronavirus outbreak gripping much of the world. Global markets began to ease amid concerns the virus could have implications on the global economy, particularly with China accounting for much of the world’s growth. The ASX 200 shed 1% to 7,017.2 points, while the All Ordinaries drifted 1.1% to end the trading week at 7,121.2 points.


Which shares excelled?

Faring better than the rest of the market, shares in Link Administration Holdings (ASX: LNK) gained 7.8% last week on the back of merger and acquisition news. The company announced a $266 million deal to buy the European loan servicing, advisory and asset management division of Pepper Group through a combination of debt and cash funding.

Another standout performer last week was Credit Corp Group (ASX: CCP), which surged 7.3% following the release of its results for the first half of the financial year. Underpinned by its US operations, the business raced to a record-high after topping forecast expectations, including 13% growth in its consumer loan book and a 15% increase in NPAT to $38.6 million.

Rounding out the week’s leading stocks were Afterpay (ASX: APT), TPG Telecom (ASX: TPM) and Janus Henderson Group (ASX: JHG). The three stocks gained 6.7%, 6.6% and 5.1% respectively, even though none of the trio released price-sensitive news to the market. Gains in each of the business’ took their shares to yearly-highs, with shareholders unperturbed by risk evidently creeping into the stock market.


Share registry provider Link topped the boards last week on M&A news


Which shares dragged on the market?

Market darlings were under fire last week, although it wasn’t just attributed to macro concerns, as shock downgrades also caught investors unaware.

The week’s biggest fall came from Nearmap (ASX: NEA), as the aerial imagery stock, one of the best performers in 2019, crashed 33%. The business cut its guidance for annualised contract volumes from a range of $116-120 million to $102-110 million, leading to a brutal sell-off.

Suffering a similar fate, shares in Treasury Wine Estates (ASX: TWE) plunged after management delivered an after-hours downgrade to the company’s first-half profits and full-year guidance. With the company citing issues in the US division of its wine distribution operations, shares in TWE fell by 26.3%, and in the process, wiped away several billion dollars from the business’ market cap.

Fear surrounding the Coronavirus continued to weigh on travel booking firms Webjet (ASX: WEB) and Corporate Travel Management (ASX: CTD), with the companies losing 18.3% and 13.8% respectively. The fall was compounded for Webjet amid a bearish research report from a leading Australian broker, however, even though the company refuted those assertions the next day, the recovery in its stock price was short-lived.

Elsewhere, selling pressure mounted on IDP Education (ASX: IEL), down 11.3%, and Insurance Australia Group (ASX: IAG), down 8.3%. The latter also featured among the worst-performing stocks the week before last, with investors appearing to reassess the company’s prospects after a downgrade to insurance margins.

Finally, having performed strongly since the turn of the year, a series of strong numbers in its first-half production report were not enough to spare Fortescue Metals Group (ASX: FMG) from a sharp fall. The company’s shares gave up 9.1% despite advising investors that it expects to hit the upper-end of its export guidance, with the likely reason being concerns over slowing demand out of China amid the Coronavirus.


Issues in the US market are weighing on Treasury Wines


Other trading developments

Eyeing exposure to the important US funds management space, Perpetual (ASX: PPT) announced a $54 million deal to acquire Trillium Asset Management. The Boston-based firm, which specialises in environmental, social and corporate governance investing, has approximately $5.5 billion in funds under management, broadening Perpetual’s investment capabilities.

Only one IPO made its way through the pipeline to a successful ASX listing last week, with shares in junior gold explorer Cobre (ASX: CBE) making their debut on Friday. Having raised $10 million from investors via 50 million shares priced at $0.20 each, the stock initially opened 15% higher before ending its first day of trading at $0.25, or 25% higher.


This week’s trading outlook

The headwinds look set to continue in the week ahead, with ASX shares poised for a steep fall at the opening bell on Monday morning.

The weak lead comes as US markets lost approximately 2% in Friday’s offshore trading session, with investors adjusting their risk appetite in response to the growing concern that the Coronavirus could shift from an epidemic to a pandemic and stunt global economic growth. This means that gold mining stocks may once again turn out to be one of the few bright spots across the board, while iron ore miners could find themselves under heavy selling pressure.

Interest rates will be in the spotlight on Tuesday, as the Reserve Bank of Australia meets for the first time in 2020. Analysts are expecting the central bank to hold rates steady, however, it could be the accompanying statement that provides a guide for any movement in the stock prices of the Big Four banks’. Meanwhile, Thursday’s retail sales data could prove a catalyst for volatility in shares like Premier Investments (ASX: PNV) and Super Retail Group (ASX: SUL), among others.

Reporting season will also start this week, with some high-profile names kicking things off. This includes Cimic Group (ASX: CIM) and Downer (ASX: DOW), both of which delivered a downgrade in the last fortnight, as well as AGL (ASX: AGL), News Corporation (ASX: NWS) and REA Group (ASX: REA). For income investors, Australian Foundation Investment Company (ASX: AFI) will trade ex-dividend on Friday, courtesy of a 10c fully-franked dividend.

Despite the fall in the market last week, Woolworths (ASX: WOW) and Wesfarmers (ASX: WES) were two examples of stocks that were trading at an all-time high, with shareholders appearing to favour the business models’ of diversified consumer businesses in a risk-off climate.

Momentum investors may also be taking a closer look at Commonwealth Bank (ASX: CBA), Resmed (ASX: RMD), Magellan Financial (ASX: MFG), Coca-Cola Amatil (ASX: CCL) and Spark New Zealand (ASX: SPK), each of which is trading at a 52-week high. Contrarian investors could be tempted to focus at the list of stocks trading at their 52-week low, including Insurance Australia Group (ASX: IAG), Viva Energy Group (ASX: VEA) and Regis Healthcare (ASX: REG).


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


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