Chalking up its sixth consecutive weekly gain, the ASX jumped higher last week amid improving investor sentiment and a slew of economic data that largely fared in line with or better than expected. The ASX 200 advanced 4.2% last week, with the key benchmark index finishing on 5,998.70 points. The market has now soared 32% since its close on March 23, 2020.
Which shares excelled?
By far the talk of the town last week, Zip Co (ASX: Z1P) leapt 50.4% higher. The company’s stunning rise came as it announced it would acquire New York-based buy-now pay-later company QuadPay. As the company looks to turbocharge its expansion plans, the move is set to pit it directly against Afterpay in the lucrative US market. Zip’s news also sent a wave of buying through the rest of the segment, including smaller players like Openpay (ASX: OPY) and SplitIt (ASX: SPT), which also announced their own business updates.
Unibail-Rodamco-Westfield (ASX: URW) is looking to put a line through its tumultuous 2020, rallying 28% last week. Management released an update that highlighted 65 of the company’s 90 shopping centres throughout the world have reopened, with foot traffic significantly higher. By the middle of June, it anticipates 87% of all stores will be open, with more to follow once US states lift restrictions.
The government’s new HomeBuilder scheme put a rocket under the price of building materials suppliers. Adelaide Brighton (ASX: ABC) and Boral (ASX: BLD) were the most-prominent beneficiaries, with their share prices lifting 27.6% and 16.1% respectively.
There was another positive week for travel industry stocks as the prospect of short-haul travel draws closer by the week. Air New Zealand (ASX: AIZ) gained 19.8%, Flight Centre (ASX: FLT) surged 17.7%, and Qantas (ASX: QAN) added 16%. These were just the frontrunners in this segment, with various other names also recording strong performances for the week. The positive sentiment even extended to the leisure segment, with casino operators Skycity Entertainment Group (ASX: SKC) and Star Entertainment Group (ASX: SGR) also outperforming.
A week after the Big Four dominated the headlines and drove the market sharply higher, the nation’s regional banks also recorded heavy buying interest. Shares in Bendigo Bank (ASX: BEN) and Bank of Queensland (ASX: BOQ) increased 19% and 17.2% respectively.
Which shares dragged on the market?
For the second week running, gold stocks headlined the market’s worst-performing shares. In fact, each of the top five from this list were gold miners, including Gold Road Resources (ASX: GOR), Perseus Mining (ASX: PRO), Saracen Mineral Holdings (ASX: SAR), Silver Lake Resources (ASX: SLR) and Northern Star Resources (ASX: NST).
A trading update buried in an after-hours announcement from Nufarm (ASX: NUF) was enough to send its shares plunging the following day. The company highlighted some of the challenges that are starting to take hold relating to demand and currency movements in light of COVID-19. Shares in Nufarm shed 8.7% across the trading week.
Traders seemingly repositioned their portfolios away from health care stocks and towards growth stocks last week. Some of the health stocks that were caught up amid the rebalance were Pro Medicus (ASX: PME), down 8%, Mesoblast (ASX: MSB), down 6.8%, Polynovo (ASX: PNV), down 6.6%, plus Fisher & Paykel Healthcare (ASX: FPH), down 6%.
Last but not least, TPG Telecom (ASX: TPM) was another noticeable laggard. Shares in the telecoms giant plunged 7.2%, despite there being no news from the company. With shares entering the week at their highest level in more than 18 months, the allure of profits may have enticed some holders to cash out their holdings.
This week’s trading outlook
The ASX is set to jump higher when trading resumes Tuesday morning. It comes after overseas stocks soared Friday evening following an overwhelmingly better-than-expected US employment report. In total, the economy added 2.5 million jobs in May, when it was anticipated that more than 8 million jobs would be lost.
In the week ahead, Australian business and consumer confidence levels are expected to show a modest improvement from their last readings, while China will report on inflation, car sales and lending activity. The US will also report on a range of matters, with the Fed convening on interest rates, however, no activity is expected on that front.
The miners will again be poised for a positive start to the week. It follows news that a Brazilian court has suspended operations at Brazilian iron ore miner Vale’s projects. The impact is set to potentially cut its supply by 10%, which would only serve to strengthen iron ore prices. On Monday, offshore futures for iron ore rose 5.5%.
On the back of broad risk-on appetite, the fanfare around payments companies may continue into the week. If so, this could prove favourable to the likes of Afterpay (ASX: APT) and Zip Co.
Similarly, it may be déjà vu for investors if the performance of travel stocks in the US is anything to go by. With US airline and travel booking stocks soaring late last week, there might be interest in the likes of Webjet (ASX: WEB), Corporate Travel Management (ASX: CTD) and Qantas.
Finally, New Zealand telecommunications infrastructure operator Chorus (ASX: CNU) will begin trading this week with a full head of steam. A largely overlooked company among retail investors, which has also been quiet in terms of announcements in recent weeks, its resilience has helped it navigate through COVID-19 to trade at all-time highs.
We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great week!
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