Weekly ASX Share Trading Wrap Up

Weekly ASX Share Trading Wrap Up

After a run of six consecutive weekly advances, the ASX finally slumped lower last week on the back of heavy late-week selling. Negative sentiment was first driven by the US Federal Reserve pouring cold water on the hopes of a swift rebound for the US economy. Adding to the anxiety was an increase in Coronavirus case numbers and hospitalisations in a number of US states, sparking concerns as to whether lockdowns may need to be reinstated. The ASX 200 fell 2.5% to 5,847.80 points.

 

Which shares excelled?

For the second week in a row, Zip Co (ASX: Z1P) was a standout stock. On the back of strong trading the week prior, the buy-now pay-later company continued to see buying support early in the week. The company also released its May trading update on Friday, however, despite strong growth, the result was overshadowed by the market-wide sell-off. Nonetheless, Zip Co lifted 11.7%.

IPH (ASX: IPH) was a top performer among the ASX 200 last week, jumping 6.6%. The company has paid NZ$7.9m for its acquisition of Baldwins, a New Zealand intellectual property firm which delivered approximately NZ$2m in EBITDA throughout FY20. On the back of the news, one leading Australian broker upgraded the stock, providing it with further momentum to defy the market rout on Thursday.

After completing a $100m placement, shares in Kogan (ASX: KGN) raced ahead by 6.2%. The company has flagged that it will use the funds to provide it with financial flexibility. Kogan intends to expand its customer base and potentially acquire complementary growth opportunities. The raising was completed at $11.45 per share, however, Kogan’s shares ended the week on $13.15.

As the lockdown lifted in New Zealand, so too did the share price of Genesis Energy (ASX: GEN). The NZ electricity, natural gas and LPG utilities provider moved 4.4% higher, despite no news to come out of the company.

Revealing a special fully-franked dividend in the range of $0.49 to $0.52, TPG (ASX: TPM) bounced 3.9% after featuring as one of the market’s worst-performing shares the week prior. The dividend relates to the telecommunications company’s merger with Vodafone Australia. The record date for the special dividend will be 1 July, 2020.

Coca-Cola Amatil (ASX: CCL) and Newcrest Mining (ASX: NCM) rounded out the list of stocks that enjoyed a solid trading week, up 3.8% and 3.6% respectively. A positive exploration update from Newcrest was well received by shareholders, while a rise in the price of gold also helped its cause.

 

 

Which shares dragged on the market?

Despite a fast start to the shortened trading week, many stocks came unstuck as the week progressed. Investors largely repositioned their portfolios by reducing exposure to riskier narratives.

Having found some support in the market across the last couple weeks, that momentum suddenly swung against Unibail-Rodamco-Westfield (ASX: URW) as its shares were pummelled 14.2%. On Friday the company was turfed from the ASX 100 index, further underlining the shopping centre operator’s sharp fall from grace.

Orocobre (ASX: ORE) dived 12.9% last week on no news, however, lithium miners have been prone to sharp swings in momentum when sentiment in the market fluctuates between risk-on and risk-off. Another resources stock under pressure was Whitehaven Coal (ASX: WHC). Amid weak demand for coal the stock sunk 12.2%.

Shares in Webjet (ASX: WEB) crashed 12% as optimism around the resurgence in travel stocks began to fade. Many airline and travel stocks in the US were hit hard by the sell-off during the week, while Australia’s state borders are set to mostly remain closed until mid-to-late July.

Perpetual (ASX: PPT) was sold down heavily, with the stock shedding 11.9%. It comes as market volatility began to dampen sentiment for investment managers. These type of companies often have a difficult time mitigating fund outflows as markets tumble like they did on Thursday and Friday.

Rounding things out, there were also big losses for the likes of CSR (ASX: CSR), down 11.2%, EML Payments (ASX: EML), down 10.5%, and Bingo Industries (ASX: BIN), down 9.6%.

 

 

This week’s trading outlook

Shares are poised for a weak start on Monday morning, despite US markets posting strong gains on Friday evening. ASX futures failed to track the extent of the Dow Jones’ gain once the ASX closed for trading at 4pm, which suggests some market makers may be waiting for a clearer sign from the US as to whether last week’s sizeable sell-off is the beginning of another leg down in the market. US futures have also started the week opening as much as 1.2% lower.

Local housing data and unemployment figures will be on the agenda in the week ahead, with the national unemployment rate tipped to rise to as high as 7.7%. China and the US will both release retail sales and industrial production data, while the latter is also set to document building permits and housing starts.

Among the few companies still paying dividends, Orora (ASX: ORA) is set to trade ex-dividend on Friday, with the materials packaging business recently declaring a partly-franked $0.373 dividend.

Investors betting on further weakness in equities might well begin to look at some of the inverse ETFs designed to profit from a falling market, including the Betashares Australian Strong Bear Hedge Fund (ASX: BBOZ) and the BetaShares US Equities Strong Bear Hedge Fund – Currency Hedged (ASX: BBUS).

 

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

 

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