Weekly ASX Share Trading Wrap Up

Weekly ASX Share Trading Wrap Up

For the first time in a month, amid significant volatility the ASX managed to eke out a gain across the trading week. However, while the US market advanced more than 10%, local investors were far more cautious and took profits where available, which resulted in the ASX 200 climbing just 0.5% to 4,842.40 points.

Despite the fact that the US has become the latest epicentre of the Coronavirus pandemic, and unemployment numbers exceeded 3 million, the US market gained ground due to a number of reasons. First, the Fed Reserve committed to an unlimited quantitative easing program. Second, the government pushed through a US$2 trillion stimulus package. Finally, President Trump raised the unlikely prospect of ‘reopening’ the economy by Easter.

 

Which shares excelled?

Last week’s respite was largely due to a rebound in some of the most-heavily sold stocks from recent weeks, with several companies finding some support among day-traders and long-term buyers.

With gains of 53.5%, Afterpay (ASX: APT) was the week’s top-performing stock, with the company seeing its share price swing drastically throughout the week. While no price-sensitive news was released, there was a flurry of buying activity from directors of the company as well as key institutional investors, which ultimately restored some confidence among shareholders.

Qantas (ASX: QAN) and Sydney Airport (ASX: SYD) also enjoyed a stellar week, rising 31.8% and 24.7% respectively. Both companies provided an update to the market, with Qantas indicating it had secured additional debt funding, in addition to recent government support, thereby providing it with increased liquidity. Meanwhile, Sydney Airport also reassured shareholders of its financial position, making note of its accessibility to more than $2 billion in available funds.

As investors appeared to eye out some defensive exposure, the above stalwarts from the industrials sector were joined on the winner’s list by a trio of peers from the same sector. This included Aurizon Holdings (ASX: AZJ), which saw its share price jump 19.8%, Qube Holdings (ASX: QUB), which increased 15.1%, and Transurban Group (ASX: TCL), which gained 12.8%.

After recently seeing their share prices hammered, Crown Resorts (ASX: CWN) and Skycity Entertainment Group (ASX: SKC) rebounded strongly last week with their stock prices leaping sharply. This came despite both casino and hotel operators scaling back their operations significantly in response to government-mandated restrictions.

Other stocks to feature on the winner’s list last week included Gold Road Resources (ASX: GOR), up 32.9%, WiseTech Global (ASX: WTC), up 22.9%, Breville Group (ASX: BRG), up 19.1%, Reliance Worldwide (ASX: RWC), up 17.7%, and Aristocrat Leisure (ASX: ALL), up 15%.

 

 

Which shares dragged on the market?

At the top end of the market, focusing on stocks in excess of $1 billion in value, there was a notable decline in the number of companies to see a sharp slide in their share price. The worst-hit was Invocare (ASX: IVC), with the company hit by the government’s restrictions on funeral proceedings. Invocare flagged that it is beginning to see an impact on its core business. Shares in the company traded lower by 23.8% across the trading week.

IDP Education (ASX: IEL) also suffered a setback, with its share price slumping 21.9%, although the company’s decision to defer the payment of its most-recent dividend actually helped firm the stock price at the back end of the week.

Elsewhere, Fletcher Building (ASX: FBU) was caught up in a sharp sell-off, with its stock diving 17.5%. While its operations have largely been unaffected over the last month, management expect government protection measures in Australia and New Zealand will now materially impact on the company’s operations and financial performance for FY20. The business has cancelled its interim dividend and suspended its on-market buyback program.

The share price of Vicinity Centres (ASX: VCX) continued to crater towards new lows, with the stock shedding another 15% last week. As Australian shopping centres continue to deal with the fallout of a reduction in foot traffic, rental disputes with tenants, and the looming prospect of a complete shutdown, the stock has lost 56% over the last month.

Another major name up against it last week was Bank of Queensland (ASX: BOQ). The regional lender fell 14%, significantly more than its banking peers. One of the possible reasons for the above-average fall might be the proportion of investors currently shorting the stock, with the number steadily increasing since late last year while the company has found itself refreshing its strategy.

Some of the other stocks that failed to find support last week were Premier Investments (ASX: PMV), down 12.9%, Perpetual (ASX: PPT), down 12.8%, Lend Lease Group (ASX: LLC), down 12.2%, JB Hi-Fi (ASX: JBH), down 11.9%, and CSR (ASX: CSR), down 10.2%.

 

 

This week’s trading outlook

The local market is likely to pick up its cues based on developments that took place over the weekend, with ASX futures sitting flat to start the week. Although US markets posted a sharp sell-off in the final hour of Friday’s offshore trading session, Australian markets had earlier gone in the opposite direction of the strong lead from the US. With the market regularly opening lower in recent weeks, it is distinctly possible that may be the case again if Friday’s pessimism continues.

Attention this week is likely to focus on stocks that have been raising capital amid the Coronavirus pandemic. The most well-known name on this list is Cochlear (ASX: COH), which completed an $880m institutional placement last week. With its shares trading a touch over $166, and the raise completed at $140 per share, the stock’s performance could have a large impact on the index. Other companies like Webjet (ASX: WEB) and Flight Centre (ASX: FLT) remain in suspension amid efforts to raise capital, with updates potentially due this week.

Given the extent of its share price volatility, Afterpay is likely to be another stock on watchlists this week, while retail-oriented shares and REITs may also be under the microscope as a stage three lockdown draws nearer.

On the news front, China’s manufacturing and services PMI data will be scrutinised closely. Although the country faced significant disruption due to the Coronavirus, much of the country’s manufacturing operations are now understood to be running once again. The US will also report on manufacturing activity for March, but it is US employment data that will be front and centre, including jobless claims, private-sector employment changes, non-farm payrolls, earnings and the unemployment rate.

REITs will also be under selling pressure this week as they trade ex-dividend. Australian and international ETFs like SPDR S&P/ASX 200 Fund (ASX: STW) and iShares S&P 500 ETF (ASX: IVV) will also be trading ex-dividend in the week ahead, as will the Selfwealth SMSF Leaders ETF (ASX: SELF) courtesy of its $0.3381 dividend.

 

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

 

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