ASX WEEKLY REPORT FOR 29 APR TO 3 MAY 2024
There was a lot for investors to digest last week starting with the Middle East inching slowly towards a ceasefire agreement, the US Fed sounding less hawkish despite the “lack of further progress” in getting inflation down, a cooling jobs report out of the US and some good US earnings results in the first quarter.
Global sharemarkets were mostly positive last week and this helped the S&P/ASX 200 to gain 0.70% and the All Ordinaries Index to rise 0.77%.
In the US the Dow Jones rose 1.14%, the Nasdaq gained 0.97% and the S&P500 lifted 0.55%. The much-watched volatility indicator, the VIX, fell 10.25% to 13.49 suggesting investors are relaxed and comfortable with the macro investment picture.
Elsewhere, Japan’s Nikkei rose 0.79%, Hong Kong continued its recent strong form rising 4.67% and China gained 0.52%. European stocks fell 0.48%.
The Middle East relative calm saw Oil prices drop sharply with Brent Crude losing 6.11% to $US82.82 a barrel and West Texas Intermediate falling 6.84% to $US 77.99 a barrel. Safe haven buying in Gold evaporated with the price per ounce falling 1.07% to $US2310.
Longer term interest rates dropped with Australian 2y bonds shedding 12bps to 4.07%, Australian 10y bonds falling 15bps to 4.81%, US 2y bonds losing 19bps to 4.81% and US 10y Treasuries dropping 18bps to 4.50%.
The Australian Dollar gained nearly a full cent to close the week at $US0.6612.
The best performing sectors were the interest rate sensitive Real Estate sector (+3.18%), IT (+2.35%), Consumer Discretionary (+2.16%) and Financials (+1.33%). IT stocks bumped higher on the back of some good movements in the US including $Apple(AAPL.US$ that announced a $US110 billion share buyback – the highest buyback in US history.
The worst performing sector last week were Consumer Staples (-2.28%), Energy (-1.81%) and Materials (-0.30%).
In other commodity news the Iron Ore price gained 7.14% but this did little to help $BHP Group Ltd(BHP.AU$ (-1.71%) or $Rio Tinto Ltd(RIO.AU$ (-1.23%). Fortescue rose a modest 0.23%.
$Amcor PLC(AMC.AU$ shares rose 10.12% as its third quarter earnings beat estimates. Shares are trading at their highest levels since September last year.
The weakening gold price saw heavyweight $Newmont Corp(NEM.AU$ slide 5.60%, $Northern Star Resources Ltd(NST.AU$ drop 5.10% and Evolution Mining shed 7.90%.
Uranium miner $Paladin Energy Ltd(PDN.AU$ saw its shares rise 17.78% on the week – up 57% YTD and 152% over the past year – after the company released its quarterly production update.
In Health, $ResMed Inc(RMD.AU$ profit rose 29% in a strong bounce back from its earnings downgrade late last year. Shares are now up 55.7% from their $21.14 lows in October to close at $32.91.
$Pro Medicus Ltd(PME.AU$ shares hit yet another record high closing the week at $113.52, up 3.78% on the week. Pro Medicus is an Australian success story in medical diagnostics and imaging that is up 88% in the past 12 months.
Real Estate Trusts benefit when interest rates fall and last week was no exception. $Goodman Group(GMG.AU$ shares climbed 5.91%, $Stockland Corp Ltd(SGP.AU$ gained 1.85% and $Scentre Group(SCG.AU$ rose 1.61%.
Financial stocks had a strong week despite analysts suggesting bank stocks were fully valued. The $National Australia Bank Ltd(NAB.AU$ result was well received with the share price gaining 2.66%. This fed into the other majors with Westpac gaining 2.84% and $CommBank(CBA.AU$ lifting 1.98%. $ANZ Group Holdings Ltd(ANZ.AU$ was close behind rising 1.75%. Westpac and ANZ report this coming week.
$Perpetual Ltd(PPT.AU$ shares went into a trading halt early last week on news that Private Equity Group KKR was preparing a bid for the Corporate Trust and Wealth parts of the business. Shares only rose 2.5% from their lows the previous Friday.
Shares in $Graincorp Ltd(GNC.AU$ rose 1.69% as news emerged that activist fund HMC Capital had accumulated a substantial 5% stake in the company. Shares are up nearly 22% since their recent lows on 14 February.
$Megaport Ltd(MP1.AU$ shares fell 5.18% on the week despite the company upgrading earnings forecasts. Analysts were however unimpressed suggesting recurring revenue was weak.
Mining services business $Worley Ltd(WOR.AU$ was the focus of attention last week as major shareholder, the Dubai-based Sidara (formerly Dar Group) sold 19% of the company in a block trade at a price of $14.35. Shares had been trading at $16.13 prior to the trade.
Shares in automotive parts business $Bapcor Ltd(BAP.AU$ were sold heavily last week with the share price falling 19.29%. The company announced another heavy downgrade of earnings saying that retail trading conditions were very soft. Not helping shareholders was the decision by the CEO-elect to withdraw from the position two days before he was due to start.
The takeover for $Namoi Cotton Ltd(NAM.AU$ continues with French commodities giant Louis Dreyfus increasing their bid from an earlier $0.51 a share back in November 2023 to $0.60 a share. Louis Dreyfus is a 17% holder of the stock. Louis Dreyfus was trumped back in March by Singapore-based Olam that bid $0.59 a share. Olam already owns Queensland Cotton. Shares in Namoi rose 20% to close at $0.72 suggesting there is more to run in the takeover battle.
In the week ahead we will be watching the RBA on Tuesday where it is expected to leave the cash rate on hold but markets will be watching for more hawkish language after recent increases in inflation. March quarter Retail Sales are out on Tuesday.
The Bank of England announces its rate policy decision on Thursday and more quarterly earnings reports are expected from the US.
*The data sheet has the Friday Australian market closing prices rather than closing US prices.
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