The Australian share market shed all of its gains for 2020, as the index recorded its second-worst trading week of all time, only behind the record set during the Global Financial Crisis. With fears mounting over the spread of the Coronavirus outside China, and its impact on the global supply chain, stocks from every sector were savaged as the market flirted with a technical correction. By the end of the trading week, the ASX 200 lost 9.8%, plummeting to a six-month low of 6,441.20 points.
Which shares excelled?
It was slim pickings trying to find a winner last week, with only five stocks valued at more than $1bn posting a gain, in addition to the ‘GOLD’ ETF.
This group was led by InvoCare (ASX: IVC), which climbed 9% across the week and at one point was almost 20% up. The funeral services provider released its full-year results for 2019, reporting a 54.6% increase in net profit to $59.2m. An improvement in performance was attributed to a higher death rate arising from Australia’s aging population. The stock has sometimes been considered a ‘defensive’ investment option for investors, although its performance in recent months has been weighed down by the implementation of a $200m refurbishment program.
Meanwhile, AUB Group (ASX: AUB) also fared well on the back of its earnings result. The diversified insurance business upgraded its full-year adjusted net profit guidance from 8-10% to 16-18%, noting an improvement in its existing operations and an expectation that recent acquisitions will continue to drive growth. Management also announced that adjusted net profit during HY20 jumped 25.3% to $21.3m.
Elsewhere, Chorus (ASX: CNU) and NEXTDC (ASX: NXT) chalked up gains of 5.1% and 0.6% respectively, each spurred on by their half-year results announcements during the trading week. However, the duo were not alone, and perhaps even outshone, with Healius (ASX: HLS) also garnering attention from investors and climbing 3.8% after the pathology and diagnostics imaging business received a $2.1bn takeover offer from Partners Group.
Which shares dragged on the market?
The list of last week’s worst-performing stocks was headlined by 13 companies valued in excess of $1bn that lost more than 20% of their market cap. In fact, there were around 120 companies of this size that declined over 10% last week. The fall in blue-chip favourites like CSL (ASX: CSL), Woolworths (ASX: WOW), Wesfarmers (ASX: WES), the iron ore miners, and Big Four banks’ had the largest overall contribution towards the index’s slide.
With the Coronavirus wreaking havoc on travel movements all over the world, it was little surprise that travel website Webjet (ASX: WEB) sat atop of the list of stocks that were hit the hardest. WEB shares slumped 29.2% across the trading week, sinking to a 52-week low.
Reliance Worldwide (ASX: RWC) was in the thick of the selling action last week, diving 27.3% on news that the plumbing and heating products supplier took a bit profit hit during the half. The company reported that net profit after tax fell 22% to $50.1million, below the market’s expectations.
Link Administration Holdings (ASX: LNK) suffered a similar setback, with shares in the IT service management company collapsing 26.8%. The sell-off came as the company’s statutory net profit all but disappeared, dropping 85% to just $29m for the half. Furthermore, investors were spooked by comments from management that suggested FY20 will be a “transitional year” for the business.
Another stock that came under fire was PolyNovo (ASX: PNV), which dived sharply despite an 80% increase in revenue. Although the company’s sales growth has painted a positive picture, the company advised that its cash flow would still be inconsistent, fuelling a decline of 25.9% in the company’s share price.
The other high-profile stock that was crunched last week was Zip Co (ASX: Z1P), which sunk 25.5%. While other well-known names including the WAAAX stocks were mauled, each falling between 10-20%, Zip Co came in for particularly brutal treatment as its losses blew out around five-fold, even though the company achieved records across various operating metrics.
This week’s trading outlook
Another sharp fall is expected when the ASX resumes trading on Monday morning, with US stocks posting large losses once again on Friday evening.
While the US market pared some of its fall during Friday’s session, manufacturing data out of China over the weekend showed a glimpse of the huge disruption the Coronavirus has had on the Chinese economy. Further Chinese manufacturing data is expected after lunch on Monday.
The other development that will draw attention this week is the RBA rate decision, with analysts increasing their bets of a cut following the impact of bushfires and drought that has ravaged the country, in addition to the dramatic escalation of the Coronavirus. However, Australian GDP growth data is set to be released on Wednesday, which could give the RBA reason to adopt a wait-and-see approach.
While reporting season has by and large finished, there will still be the odd company announcing results to the market over the coming weeks. In the week ahead this includes Myer (ASX: MYR) as well as Fisher & Paykel Healthcare (ASX: FPH), both of which will release their interim reports on Wednesday.
This list of stocks trading ex-dividend this week continues to grow, which is also likely to weigh on the market as companies typically see a share price decline at least equivalent to the size of the dividend. The biggest dividend payments will come from:
- Fortescue Metals (ASX: FMG), $0.76 per share trading ex-dividend Monday
- Perpetual (ASX: PPT), $1.05 per share trading ex-dividend Wednesday
- ASX (ASX: ASX), $1.164 per share trading ex-dividend Thursday
- BHP (ASX: BHP), $0.9713 per share trading ex-dividend Thursday
- Rio Tinto (ASX: RIO), $3.4974 per share trading ex-dividend Thursday
Last but not least, our review of momentum stocks sees a dramatic increase in blue-chip names trading at a 52-week low on account of last week’s brutal sell-off, however, only Unibail-Rodamco-Westfield (ASX: URW), Vicinity Centres (ASX: VCX) and Coronado Global (ASX: CRN) are trading at an all-time low.
We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great week!
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