Weekly ASX Share Trading Wrap Up

Weekly ASX Share Trading Wrap Up

As the curtain fell on a stellar year for the ASX, some investors opted to retreat to the sidelines and take profits. For some, however, it presented an opportunity to buy the dip, with markets clawing back some ground after news that the US and China have agreed on a date for their phase one interim trade deal ceremony. By the end of the trading week, the ASX 200 fell 1.3% to 6,733.50 points. The All Ordinaries drifted 1.2% to 6,855.20.

 

Which shares excelled?

For the second week in a row, gold stocks were a standout across the market as they traded strongly higher. The sector has found strength recently amid the surging price of gold, which has been led by a softening US dollar in recent weeks.

Many of last week’s top performers featured prominently once again, including Gold Road Resources (ASX: GOR), up 9.6%, Saracen Mineral Holdings (ASX: SAR), up 7.5%, and Northern Star Resources (ASX: NST), up 7%.

Lithium miners also fared well, with Pilbara Minerals (ASX: PLS) standing head and shoulders above its peers in a crowded segment. The company’s shares lifted 14.8% as investors warmed to the commodity after a long time where lithium fell out of favour. This meant other names like Galaxy Resources (ASX: GXY) and Orocobre (ASX: ORE) traded strongly as well, up 13.3% and 8.5% respectively.

 

Which shares dragged on the market?

The real estate and infrastructure sectors dragged on the market at the start of last week, with various shares trading ex-dividend. This drop was also compounded by an easing sentiment attached to increasing bond yields, which ultimately weighed on dividend stocks. As a result, heavyweight names like Sydney Airport (ASX: SYD) and Transurban (ASX: TCL) slid 5.6% and 4.4% respectively.

Some of the index’s US dollar-earning shares also performed poorly as currency headwinds left investors cautious. This meant supply chain logistics company Brambles (ASX: BXB) declined 3.1%, Amcor (ASX: AMC) sunk 2.8%, while building materials supplier James Hardie Industries (ASX: JHX) fell 1.8%. Health care giant Cochlear (ASX: COH) also struggled, dropping 3%.

Another segment which came under fire was the technology sector, where several high-profile names experienced heavy selling pressure. This included Appen (ASX: APX), down 4.9%, Technology One (ASX: TNE), down 3.9%, and WiseTech (ASX: WTC), down 3.4%.

All of these paled in comparison with Sezzle (ASZ: SZL), which ended as the week’s worst-performing stock. The buy-now-pay-later operator plummeted 33.6% following news that its application for a lending license in California had been denied by the local regulator. It was a bitter blow for Sezzle shareholders as it also became clear that rival frontrunner Afterpay (ASX: APT) received the green light from the same authority.

 

US dollar-earning stocks were under pressure last week as the Australian dollar rose

 

This week’s trading outlook

In the first full week of trading for the year, futures are pointing to a flat open for the ASX, however, tension between the US and Iran in the Middle East has escalated over the weekend and could introduce some volatility throughout the week ahead.

Gold and oil stocks are once again likely to be beneficiaries of the increasingly threatening rhetoric coming from both sides of the conflict. This means shares like Newcrest Mining (ASX: NCM) might garner attention. It could also prompt some investors to move from more ‘risky’ speculative bets or high-growth IT stocks towards ‘defensive’ shares.

Among the biggest news on this week’s calendar is the trade balance, due for release on Thursday morning, while retail sales from November are scheduled to be unveiled on Friday.

The trade balance may give an indication as to the state of the overall economy, which in turn could be used by observers to frame interest rate expectations. A surprise here is more likely to have broader implications for the market than any specific sector.

In contrast, shares like JB Hi-Fi (ASX: JBH), Kogan (ASX: KGN), Lovisa Holdings (ASX: LOV) and Premier Investments (ASX: PMV) could attract some buying volume if Friday’s data shows better-than-expected industry sales.

Entering this week with strong momentum are Domain Holdings Australia (ASX: DHG) and Perseus Mining (ASX: PRU), both of which are trading at their respective 52-week highs. Real estate business Domain has managed a steady climb across this timeframe, whereas Perseus Mining has seen a strong performance over the last few months propel it into the ASX 200.

Another duo of stocks benefitting from positive sentiment are Adelaide Brighton (ASX: ABC) and Air New Zealand (ASX: AIZ). Each company is currently trading at its highest price in a month.

Shareholders of Healius (ASX: HLS), Viva Energy (ASX: VVR) and Yancoal (ASX: YAL) are feeling the squeeze, with each stock trading at a monthly low. Although none of these businesses have released any meaningful news in the last few weeks to account for their falling share price, it appears buyers are sticking to the sidelines for now, as some investors potentially wait for a buying opportunity to emerge.

 

Retail sales data will be under scrutiny 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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