ASX drops: US-China trade war spooks Australian stock market

The corporate earnings reports of some of Australia’s largest companies will be a major  focus for investors during the week, as the nation’s stock market attempts to ride out the ongoing global economic volatility.

Stock market crash
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The S&P/ASX200 closed last week in negative territory, having dropped 2.71% to 6585 points, while the All Ordinaries Index declined 2.67% to 6663.

Analysts attributed these declines to Australian investors becoming increasingly concerned by the potential fallout from the China and US trade war.

S&P and All Ords Movements (02/08/2019 to 09/08/2019)
  Closing Points % Change
S&P/ASX 200 (XJO) 6,585 -2.71%
All Ordinaries (XAO) 6,663 -2.67%
Prepared by Canstar. Points taken as of Monday open to Friday close.

 

Sector Movements (02/08/2019 to 09/08/2019)
  Closing Points % Change
Consumer Discretionary (XDJ) 2,535 -1.69%
Consumer Staples (XSJ) 12,043 -3.06%
Energy (XEJ) 10,469 -3.11%
Financials (XFJ) 6,251 -2.76%
Health Care (XHJ) 34,211 -4.49%
Industrials (XNJ) 6,820 -3.78%
Information Technology (XIJ) 1,274 -7.09%
Materials (XMJ) 13,576 -1.55%
Telecommunication Service (XTJ) 1,354 -0.78%
Utilities (XUJ) 7,999 -3.80%
Prepared by Canstar. Points taken as of Monday open to Friday close.


What stocks went down on the ASX? 

On the Australian market, the sell-off was widespread across the board, but information technology stocks contributed the most to the decline.

Canstar data shows that the IT sector of the local market lost 7.1%, while health care stocks dropped 4.45%, utilities were down 3.8%, industrials lost 3.78% and the energy sector slid 3.11%.

ASX 200 – Top 5 Share Price Losses (02/08/2019 to 09/08/2019)
Rank Company Closing Share Price % Change
1 Appen Ltd (APX) $25.43 -15.3%
2 Wisetech Global Ltd (WTC) $27.46 -14.1%
3 Clinuvel Pharmaceuticals (CUV) $26.86 -12.9%
4 HUB24 Ltd (HUB) $10.85 -10.0%
5 NRW Holdings Ltd (NWH) $2.08 -10.0%
Prepared by Canstar. Prices taken as of week to week close.

 

Analysts said the major IT sector decline was the result of tech stocks in the US being dumped on the Nasdaq as part of the market sell down.

Among the local tech stocks, machine learning developer Appen’s share price lost 15.3% for the week to close at $25.43 despite making no public announcements, while Wisetech Global slid 14.1% to $27.46.

ASX 200 – Top 5 Market Capitalisation Losses (02/08/2019 to 09/08/2019)
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 CSL Ltd (CSL) -$5,202,031,495 $220.02 -5.0%
2 BHP Group Ltd (BHP) -$4,507,152,633 $37.29 -3.9%
3 Commonwealth Bank (CBA) -$4,230,872,422 $79.42 -2.9%
4 Rio Tinto Ltd (Rio) -$2,680,181,065 $87.69 -7.6%
5 Transurban Group (TCL) -$2,434,521,494 $15.12 -5.7%
Prepared by Canstar. Prices taken as of week to week close.

 

At the top end of the ASX200, CSL lost $5.2 billion from its market capitalisation following a 5% decline in its stock price, and investors will be keen for an update from the company’s management when its full-year results are published on Wednesday. The global pharmaceutical company’s profit was predicted by CommSec to be at least $US1.91 billion for the past year.

Mining giant BHP lost $4.5 billion from its market capitalisation when its share price lost 3.9% and Commonwealth Bank dropped $4.2 billion, even though it reported an $8.49 billion net profit. The bank’s earnings for the past year were down 4.7% and below the consensus among financial analysts, which had expected an $8.8 billion profit figure.

What stocks went up on the ASX?

Gold miner Newcrest extended its recent positive run and added another $1.49 billion to its market capitalisation, with commentators saying that the market was moving towards gold as an investment strategy. Analysts say that Newcrest was benefiting from a combination of the relatively higher price of gold – almost US$1,500 an ounce last week – and a lower Australian dollar.

James Hardie and Suncorp were also among the best performers on the ASX last week, after both companies announced strong company performance for the 2018/19 financial year.

ASX 200 – Top 5 Share Price Gains (02/08/2019 to 09/08/2019)
Rank Company Closing Share Price % Change
1 Pinnacle Investment (PNI) $4.74 15.9%
2 Western Areas Ltd (WSA) $2.52 14.0%
3 James Hardie Industries (JHX) $21.68 9.8%
4 Lynas Corporation (LYC) $2.94 9.5%
5 St Barbara Ltd (SBM) $3.96 9.1%
Prepared by Canstar. Prices taken as of week to week close.

 

ASX 200 – Top 5 Market Capitalisation Gains (02/08/2019 to 09/08/2019)
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 Newcrest Mining (NCM) $1,498,527,012 $38.62 5.3%
2 James Hardie Indust (JHX) $853,581,744 $21.68 9.8%
3 Suncorp Group Ltd (SUN) $558,356,699 $13.80 3.2%
4 Evolution Mining Ltd (EVN) $534,576,962 $5.46 6.1%
5 Northern Star Resources (NST) $434,922,991 $13.27 5.4%
Prepared by Canstar. Prices taken as of week to week close.


What to look out for this week on the ASX

Corporate earnings are expected to be the major focus for investors in Australia this week, with reporting season underway.

A highlight will be Telstra’s numbers on Thursday, given it is the most commonly owned stock among retail investors. Commsec analysts believe the telco will report a $2.39 billion net profit after tax.

Gaming company Tabcorp will publish its full year profit tomorrow.

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