A mixed week of trading saw the Australian stock market end the week flat, as investors continued to assess the risks that the novel Coronavirus could have on the global economy and what stimulatory measures might be adopted by the Chinese government to preserve economic growth. With the Reserve Bank of Australia also keeping interest rates on hold, and even going as far as to expect economic growth to accelerate throughout the year, markets clawed back sharp losses from the beginning of the trading week, with the ASX 200 closing on 7,022.60 points.
Which shares excelled?
It was a positive week for quite a few of the market’s out-of-favour shares, with several companies paring a small fraction of their losses from the last 6 months. These included Costa Group (ASX: CGC), up 14.1%, Nearmap (ASX: NEA), up 13.9%, Elders (ASX: ELD), up 11.6%, Wisetech Global (ASX: WTC), up 11.7%, and Webjet (ASX: WEB), up 7.7%.
Oddly enough, not one of these companies released any price-sensitive news throughout the week. However, it could be a case of shareholders searching for a ‘bottom’ in the share price of each company in anticipation of a potential rebound.
Elsewhere, shares in Gold Road Resources (ASX: GOR) advanced 11.3% as momentum continues to build following the company’s quarterly activities report at the end of January. The stock has climbed over 17% since that piece of news was released to the market.
There were also strong gains for Harvey Norman (ASX: HVN) and Reliance Worldwide Corporation (ASX: RWC), which gained 7.1% and 5.8% respectively.
Last but not least, the remarkable run of Polynovo (ASX: PNV) continued yet again last week, with shares climbing 7.1% to close at a new all-time high. Investors responded favourably to an interview by the company’s CEO with Alan Kohler, detailing current operations and growth.
Travel booking website Webjet bounced back last week
Which shares dragged on the market?
Energy stocks were hit hardest last week amid expectations that demand for crude oil out of China has already fallen significantly. This put strain on the price of the commodity, which touched a yearly low. A wide range of stocks felt the impact, including Oil Search (ASX: OSH), down 11.6%, Beach Energy (ASX: BPT), down 10.9%, Origin Energy (ASX: ORG), down 5.6%, and Santos (ASX: STO), down 5.2%.
Oil Search also wore the brunt of an unfavourable geopolitical update. The company’s negotiations with the Papua New Guinea government regarding a new gas field development collapsed, sending investors scrambling for the exits.
A fall in the price of gold weighed on Kirkland Lake Gold (ASX: KLA) and OceanaGold Corporation (ASX: OGC), which declined 6.4% and 6.2% respectively.
Following the completion of its acquisition of the Australian & New Zealand Banking Group Pensions and Investments business, IOOF Holdings (ASX: IFL) saw its shares slip 10% across the trading week. Despite an upwards revision in cost synergies and earnings per share forecast from the transaction, a series of price target cuts were instigated by a trio of Australian brokers.
Finally, Treasury Wine Estates (ASX: TWE) suffered another disappointing week, as its shares featured among the worst-performers list for the second week in a row. The company shed 8.1% of its market cap last week as news emerged the firm could face a second class action relating to alleged market disclosure issues.
Energy stocks were a major drag on the index last week
This week’s trading outlook
Although US stocks ended Friday’s offshore trading session lower by a modest amount, ASX futures on Saturday morning were pointing to a flat open for the local market. Since then, with the official death toll from the Coronavirus passing that of the SARS epidemic from 2003, it remains to be seen how investors will respond to this development.
Market analysts will have their eyes on home loans data from December, which will be released on Tuesday. However, the market is more likely to be shaped by a series of high-profile companies that are reporting throughout the week, as earnings season ramps up.
Some of the key results are likely to come from Amcor (ASX: AMC), Commonwealth Bank (ASX: CBA), CSL (ASX: CSL), Telstra (ASX: TLS), AGL (ASX: AGL), Woodside Petroleum (ASX: WPL), Newcrest Mining (ASX: NCM) and National Australia Bank (ASX: NAB). Each of these companies are likely to sway the market, while their reports could also prove an opportunity for eagle-eyed traders or investors looking for some confidence and insight into the direction of each respective business.
After a poor week for the energy sector, oil shares are likely to stay in the spotlight as data emerges this week regarding US crude oil stockpiles. If stockpile numbers come in lower than forecast, it could help some of last week’s worst-performing stocks pare some of their losses.
Shares in Milton Corporation (ASX: MLT) and Resmed (ASX: RMD) will both be trading ex-dividend on Wednesday. They will be joined by Scentre (ASX: SCG) and Argo Investments (ASX: ARG), which will trade ex-dividend on Thursday and Friday respectively.
Entering this week trading at their all-time highs are Wesfarmers (ASX: WES), Coles Group (ASX: COL), Xero (ASX: XRO), REA Group (ASX: REA) and Cochlear (ASX: COH), with the recent bout of market volatility doing nothing to put a halt to the growing share price of each business. Shareholders in Viva Energy Group (ASX: VEA) and Virgin Australia Holdings (ASX: VAH) would be wishing for better times, as both stocks currently sit in the doldrums at an all-time low.
Telstra is one of several blue-chips to headline reporting season this week
We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great week!
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