ASX 200: What’s in store for the sharemarket after last week’s horror show?

Last week saw the biggest fall on the Australian sharemarket all year. Now, investors are now waiting to see what happens – and it seems like it’s off to a good start.

It was a quiet start to the week yesterday, with the market consolidating the modest gains it made at the end of last week.

The ASX recorded a lower volume of shares traded because of the public holiday in New South Wales, Queensland, the ACT and South Australia.

But it was able to maintain slight rises – yesterday improving 0.71% to 6,564 points – to keep up the momentum of last Friday.

 

Last week was a bad week on the sharemarket…

Despite the slight recovery in the past couple of days, Australia’s sharemarket last week recorded its worst week this year – down 3% – amid growing international trade fears and data pointing to a weaker-than-expected United States economy.

The S&P/ASX 200 fell 199 points to 6,517 with declines on four out of five days last week, generating losses of about $80 billion from the overall market. The broader All Ordinaries index recorded a similar fall of 2.75% to close at 6,636 on Friday. 

Financial stocks fuelled the declines, shedding 4.84% overall. The IT sector also lost 3.97% and energy shares fell 3.73%.

S&P and All Ords Movements (27/09/2019 to 04/10/2019)
  Closing Points % Change
S&P/ASX 200 (XJO) 6,517 -2.96%
All Ordinaries (XAO) 6,636 -2.75%
Prepared by Canstar. Points taken as of Monday open to Friday close.
Sector Movements (27/09/2019 to 04/10/2019)
  Closing Points % Change
Consumer Discretionary (XDJ) 2,628 -2.19%
Consumer Staples (XSJ) 12,227 -2.55%
Energy (XEJ) 10,396 -3.73%
Financials (XFJ) 6,208 -4.84%
Health Care (XHJ) 35,832 0.32%
Industrials (XNJ) 6,642 -1.98%
Information Technology (XIJ) 1,346 -3.97%
Materials (XMJ) 12,904 -2.81%
Telecommunication Service (XTJ) 1,232 -2.40%
Utilities (XUJ) 7,975 -2.05%
Prepared by Canstar. Points taken as of Monday open to Friday close.

 

But it has been a good year overall

On the whole, the ASX has still had a positive year in 2019, and despite the week’s declines it remains just 5% off the record high it reached in July.

The SPI Futures Index is up 0.4% today, indicating expectations the market was expected rise today despite falls on Wall Street.

Share prices have been swelling in 2019 as investors search for yield – ongoing returns through dividends – while the official cash rate has remained at historic lows and property prices were falling in capital cities.

What can we expect on the economic front this week?

Overnight, the US Federal Reserve Chair Jerome Powell reasserted the independence of the central bank in setting monetary policy.

And highly anticipated official talks will be held on Thursday between the US and China, in an attempt to thrash out their current trade impasse.

Australian surveys on consumer and business confidence will also give an insight into our local economy.

Last week the Reserve Bank of Australia cut the cash rate to an unprecedented 0.75%, still trying to stimulate more consumer spending.

What went down on the ASX?

There were lots of losers on the market this past week. The most significant weekly loss was from Galaxy Resources (GXY), which shed 12.6% to $0.94. The lithium miner continued to drop in value yesterday, at 0.5% lower, and its share price is down to about a third of what it was a year ago.

Travel company Webjet (WEB) suffered a second consecutive week of significant losses last week (closing 11.2% lower on Friday), following the collapse of UK business and travel partner Thomas Cook the prior week.

Pilbara Minerals Ltd’s (PLS) share price also suffered a double-digit decline of 10.8% to $0.29.

 

ASX 200 – Top 5 Share Price Losses (27/09/2019 to 04/10/2019)
Rank Company Closing Share Price % Change
1 Galaxy Resources (GXY) $0.94 -12.6%
2 Webjet Ltd (Web) $10.15 -11.2%
3 Pilbara Minerals Ltd (PLS)  $0.29 -10.8%
4 Speedcast Int Ltd (SDA)  $1.13 -10.0%
5 HUB24 Ltd (HUB) $11.31 -9.9%
Prepared by Canstar. Prices taken as of week to week close.

 

Banks plunge

The big four banks all lost significant ground, following the unprecedented official cash rate cut to 0.75% on Tuesday.

Australia’s biggest company by market capitalisation, Commonwealth Bank (CBA), experienced the biggest value loss last week. On Thursday, regulator ASIC announced the bank’s wholly-owned subsidiary CommInsure had been criminally charged with 87 counts of illegally ‘hawking’ life insurance products via unsolicited phone calls. Almost $6.7 billion was wiped off CBA’s value last week.

The National Australia Bank (NAB) lost 6.7% after it revealed it would pay another $832 million in remediation to customers in the wake of the banking royal commission.

Westpac and ANZ shares lost 5.1% and 5% respectively, in a week when all four of the big banks came under scrutiny for failing to pass on the RBA’s rate cut in full to their home loan customers.

 

ASX 200 – Top 5 Market Capitalisation Losses (27/09/2019 to 04/10/2019)
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 Commonwealth Bank (CBA) -$6,726,910,127 $77.59 -4.7%
2 National Aust. Bank (NAB) -$5,737,196,382 $27.85 -6.7%
3 Westpac Banking Corp (WBC) -$5,304,691,735 $28.42 -5.1%
4 BHP Group Ltd (BHP) -$4,418,777,091 $35.30 -4.1%
5 ANZ Banking Group Ltd (ANZ) -$4,053,456,440 $27.17 -5.0%
Prepared by Canstar. Prices taken as of week to week close.

 

What went up on the ASX? 

The ASX’s second-largest company by valuation, global biotechnology giant CSL (CSL), increased in value by 1.1%, adding $1.1 billion to its value after a positive broker upgrade. Health stocks were the sole industrial category to increase in value, climbing by 0.2% last week.

The week’s biggest mover was agricultural products company Nufarm Ltd (NUF), which announced its results and the sale of its South American business for around $1.2 billion. Investors liked the news and its price gained 45.5%.

Pharmaceuticals Mayne Pharma (MYX) and Clinuvel Pharmaceut (CUV) were in the top five gains of the week, rising 16% and 5.5% respectively. Mayne Pharma announced an international distribution deal. Its price dropped 3% yesterday.

 

ASX 200 – Top 5 Share Price Gains (27/09/2019 to 04/10/2019)
Rank Company Closing Share Price % Change
1 Nufarm Ltd (NUF) $6.49 45.5%
2 Mayne Pharma Ltd (MYX) $0.58 16.0%
3 Jumbo Interactive (JIN)  $26.90 10.2%
4 Northern Star (NUF) $11.70 6.6%
5 Clinuvel Pharmaceut (CUV) $26.02 5.5%
Prepared by Canstar. Prices taken as of week to week close.

 

Gold miners Newcrest Mining (NCM) and Northern Star (NST) also grew. Gold can often be seen as a “safe haven” during times of volatility.

ASX 200 – Top 5 Market Capitalisation Gains (27/09/2019 to 04/10/2019)
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 CSL Ltd (CSL) $1,125,558,636 $236.34 1.1%
2 Nufarm Ltd (NUF) $770,667,848 $6.49 45.5%
3 Northern Star (NST) $460,506,697 $11.70 6.6%
4 Newcrest Mining (NCM) $351,175,854 $35.47 1.3%
5 Spark New Zealand (SPK) $297,033,719 $4.24 3.9%
Prepared by Canstar. Prices taken as of week to week close.

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