Stock market continues dramatic slide as trade war dampens spirits

The Australian stock market last week shed at least $55 billion as global investors grew increasingly cautious about the damage a trade war between the United States and China could have on the world economy.

The S&P/ASX200 last week lost 2.71% to close at 6,406 points, while the broader All Ordinaries dropped by 2.66% to 6,486 points.

S&P and All Ords Movements (09/08/2019 to 16/08/2019)
  Closing Points % Change
S&P/ASX 200 (XJO) 6,406 -2.71%
All Ordinaries (XAO) 6,486 -2.66%
Prepared by Canstar. Points taken as of Monday open to Friday close.

What shares went down on the Australian stock market?

Canstar data showed that energy stocks contributed the most to the broader market decline, as the sector decreased by 5.05%. Analysts say that falling oil prices are helping to fuel the slump, and is one of a number of economic impacts from the ongoing US-China trade tensions. In the latest development in the trade saga, US President Donald Trump announced last week that he would delay planned tariffs on some Chinese goods, which led the oil price to rally somewhat. However, it wasn’t enough to ward off a subsequent oil price fall, as talk intensified about the possibility of a US recession. Commentators there noted there had been a “bond yield inversion” – a possible signal that an economic downturn was imminent. Analysts say this led to a market-wide sell off of stocks across many sectors in the US and around the world.   

Sector Movements (09/08/2019 to 16/08/2019)
  Closing Points % Change
Consumer Discretionary (XDJ) 2,492 -1.73%
Consumer Staples (XSJ) 11,863 -1.49%
Energy (XEJ) 9,940 -5.05%
Financials (XFJ) 6,055 -3.14%
Health Care (XHJ) 34,833 1.82%
Industrials (XNJ) 6,653 -2.44%
Information Technology (XIJ) 1,233 -3.26%
Materials (XMJ) 13,052 -3.86%
Telecommunication Service (XTJ) 1,286 -5.02%
Utilities (XUJ) 7,843 -1.95%
Prepared by Canstar. Points taken as of Monday open to Friday close.

 

Telco stocks were not far behind and fell by 5.02%, which was primarily driven by Telstra reporting its 2019 net profit fell by 40% to $2.1 billion. Investors were also told by Telstra chief executive Andy Penn that Telstra faced major headwinds in the year ahead which would further threaten the telco’s profitability. 

The Canstar data showed that the materials, information technology and financial stocks also dragged down the markets.

Commonwealth Bank’s share price dropped by 5.4% during the week, which  some commentators said was likely the result of the stock paying out its final dividend for the financial year, as well as impacts from their full-year earnings results being lower than expected

ASX 200 – Top 5 Market Capitalisation Losses (09/08/2019 to 16/08/2019)
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 Commonwealth Bank (CBA) -$7,612,029,880 $75.12 -5.4%
2 BHP Group Ltd (BHP) -$3,299,353,561 $36.17 -3.0%
3 Telstra Corporation (TLS) -$2,497,592,550 $3.77 -5.3%
4 Woodside Petroleum (WPL) -$1,834,857,036 $31.21 -5.9%
5 Newcrest Mining (NCM) -$1,813,601,922 $36.26 -6.1%
Prepared by Canstar. Prices taken as of week to week close.


BHP lost $3.2 billion from its market capitalisation as its shares dropped 3%, which analysts said was the result of a weaker iron ore price. 

The mining group will report its full year results tomorrow and Commsec has forecast that BHP’s net profit will be around $10.16 billion.

Investors are expected to monitor BHP chief executive Andrew Mackenzie’s presentation tomorrow for the company’s view on the prospect of a trade war between the US and China unfolding in the next few months. BHP’s future profits are heavily influenced by the iron ore price, which is expected to weaken if the Chinese economy slows as a result of reduced trade activity.

ASX 200 – Top 5 Share Price Losses (09/08/2019 to 16/08/2019)
Rank Company Closing Share Price % Change
1 Ooh!Media Ltd (OML) $2.93 -29.1%
2 Orocobre Ltd (ORE) $2.39 -20.6%
3 Blackmores Ltd (BKL) $66.91 -19.9%
4 Pact Group Holdings Ltd (PGH) $2.22 -18.7%
5 Galaxy Resources (CXY) $1.13 -15.4%
Prepared by Canstar. Prices taken as of week to week close.


The performance of Ooh! Media on the Australian market will be closely scrutinised this week, after the stock slumped by 29.1% last week. The outdoor advertising group said its full year net profit, to the end of the 2019 calendar year, would be down by at least 17%, as a result of a tougher Australian economy.

What shares went up on the Australian stock market?

ASX 200 – Top 5 Market Capitalisation Gains (09/08/2019 to 16/08/2019)
Company $ Change in Market Cap Closing Share Price % Change in Share Price
CSL Ltd (CSL) $3,344,163,104 $227.40 3.4%
Fortescue Metals Group (FMG) $1,231,585,967 $7.66 5.5%
REA Group (REA) $468,904,329 $100.20 3.7%
James Hardie Industries (JHX) $402,466,004 $22.59 4.2%
Insurance Australia (IAG) $369,767,454 $7.84 2.1%
Prepared by Canstar. Prices taken as of week to week close.


On a positive note in the Australian market, CSL rallied by 3.4%, after the global biotechnology company reported its full year profit came in at $US1.19 billion, up 17% on the same time last year.

ASX 200 – Top 5 Share Price Gains (09/08/2019 to 16/08/2019)
Rank Company Closing Share Price % Change
1 Super Retail Group Ltd (SUL) $9.75 13.9%
2 Credit Corp Group (CCP) $27.27 11.1%
3 JB Hi-Fi Ltd (JBH) $31.05 11.1%
4 Harvey Norman (HVN) $4.57 6.5%
5 Domain Holdings Aus (DHG) $2.93 6.2%
Prepared by Canstar. Prices taken as of week to week close.


Elsewhere, Fortescue Metals rose by 5.5%, REA Group gained 3.7%, James Hardie increased by 4.2% while Insurance Australia Group jumped by 2.1%.

Several well-known retail brands were also strong performers for the week, despite an overall lacklustre level of business confidence, as highlighted in the NAB Monthly Business Survey

Super Retail Group lifted by nearly 14%, in the same week it reported a 7% jump in EBITDA for the financial year. The group includes the Supercheap Auto, Rebel and BCF stores. Home entertainment retailer JB Hi-Fi was up more than 11%, also driven by a lift in profit.

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