The Australian share market ended the first week of August at its highest level since early June, ending in the green for the third consecutive week.
The market appears to have shrugged off concerns of a global recession, and the resulting potential pressure on energy prices, despite the BoE’s sandbag of a 0.5% rate hike aimed at runaway inflation and its warning of a long recession.
Geopolitical risks from the US-Taiwan-China imbroglio also did not appear to cut much ice with investors.
The ASX200, ASX300, and Ordinaries ended the week with gains of 1.01%%, 1.05%, and 1.07% respectively.
Table of Contents
Last Week In ASX Stocks
ASX Materials Index (ASX: XMJ)
The ASX Materials Index (ASX: XMJ) gained this week by 0.88% as iron ore prices appeared to stabilize at lower levels.
Sector majors BHP (ASX: BHP), South32 (ASX: S32), Rio Tinto (ASX: RIO), and Fortescue Metals (ASX: FMG) were down 0.41%, 1.54%, 1.39% and 0.82% respectively.
However Mineral Resources (ASX: MIN) bucked the trend and shot up 5.41%.
New energy miners IGO (ASX: IGO), Lynas Rare Earths (ASX: LYC), Allkem (ASX: AKE), and Pilbara Minerals (ASX: PLS) closed higher by 2.48%, 4.02%, 3.51%, and 1.06% respectively.
Lynas told investors it planned to invest $500 million to expand capacity at its Western Australia-based Mt Weld mine, which has deposits of rare-earths elements neodymium and praseodymium, in high demand for EVs and wind generation.
Moreover, a report last week showed that Australian lithium exports were at a record high. Amidst gold producers Newcrest Mining (ASX: NCM) fell 1.54%, while Evolution Mining (ASX: EVN), and Northern Star Resources (ASX: NST) shot up 0.37% and 2.87%.
ASX Energy Index (ASX: XEJ)
The ASX Energy Index (ASX: XEJ) slumped overy 4% for the week as investors weighed a recession and a drop in demand for energy, leading to a slump in crude oil prices.
Also weighing on the market was a surprise jump in US oil inventories.
Heavyweights Woodside Energy (ASX: WDS), Santos (ASX: STO), and Beach Energy (ASX: BPT) ended in the red by 3.93%, 5.71%, and 5.46% respectively.
Coal majors New Hope Corporation (ASX: NHC), Whitehaven Coal (ASX: WHC) and YanCoal (ASX: YAL) plunged 8.47%, 5.51% and 5.42% respectively.
On the other hand, Coronado Global (ASX: CRN) gained 2.08% but Stanmore Resources (ASX: SMR) slumped 11.48%.
ASX Industrials Index (ASX: XNJ)
The ASX Industrials Index (ASX: XNJ) gained marginally by 0.59% and underperformed the broad market.
However, industrial commodities makers Brickworks (ASX: BKW), ADBRI (ASX: ABC), and Boral (ASX: BLD) posted another green week and moved up by 0.89%, 2.33%, and 2.04% respectively.
Industrial majors Amcor CDI (ASX: AMC), Reece (ASX: REH), and Reliance Worldwide (ASX: RWC) lost 3.67%, 0.13% and 0.45% respectively; but Brambles (ASX: BXB) shot up 2.01%. In infrastructure players Transurban Group (ASX: TCL) was up a marginal 0.69% but Qube Holdings (ASX: QUB) fell 1.44%.
Amongst airlines Qantas (ASX: QAN) was down just 0.22% but Air New Zealand (ASX: AIZ) took off by a solid 3.67%.
ASX Financials Index (ASX: XFJ)
The ASX Financials Index (ASX: XFJ) trended higher this week by 1.67%.
Banking heavyweights Commonwealth Bank of Australia (ASX: CBA), Australia New Zealand Bank (ASX: ANZ), Westpac (ASX: WBC) and National Australia Bank (ASX: NAB) gained 1.31%, 0.70%, 2.57%, and 2.15% respectively.
Not to be left behind, regional banks Bank Of Queensland (ASX: BOQ) and Bendigo Adelaide (ASX: BEN) were up 1.61% and 1.34%.
Wealth managers Magellan (ASX: MFG), AMP (ASX: AMP), Pendal Group (ASX: PDL), and Platinum Asset Management (ASX: PTM) all reached higher by 1.42%, 6.88%, 1.24%, and 1.08% respectively.
Insurers Suncorp (ASX: SUN), QBE Insurance (ASX: QBE) and Insurance Australia Group (ASX: IAG) built on last week’s gains and moved up 4.67%, 4.15% and 3.02% respectively.
Interestingly, diversified financial services majors Macquarie Group (ASX: MQG) closed in the red by 0.78%.
ASX Consumer Discretionary Index (ASX: XDJ)
The ASX Consumer Discretionary Index (ASX: XDJ) shrugged off the previous week’s blues and gained 1.28% this week.
Amongst hospitality companies Star Entertainment (ASX: SGR) was off a solid 6.63% while Skycity Entertainment (ASX: SKC) gained 4.65%.
Travel companies Webjet (ASX: WEB), Corporate Travel Management (ASX: CTD), and Flight Centre (ASX: FLT) went up by 0.39%,10.36% and 3.30% respectively.
Temple and Webster (ASX: TPW) and Kogan (ASX: KGN) lost ground on profit-taking after last weeek’s runaway gains and closed 5.66% and 19.40% in the negative.
However, peers Nick Scali (ASX: NCK), Harvey Norman (ASX: HVN), and JB Hi-Fi (ASX: JBH) shot up 1.45%, 4.33% and 3.82%, respectively.
While appliance maker Breville (ASX: BRG) had another good week and was up 4.93%, food brands Dominos (ASX: DMP) and Collins Foods (ASX: CKF) fell 2.02% and rose 1.65% respectively.
ASX Consumer Staples Index (ASX: XSJ)
The ASX Consumer Staples Index (ASX: XSJ) trended higher this week with a gain of 1.03%.
Sector heavyweights Coles Group (ASX: COL), Woolworths (ASX: WOW), and Wesfarmers (ASX: WES) moved up 0.21%, 1.24%, and 2.16% respectively.
Food producers Bega Cheese (ASX: BGA), and Costa Group Holdings (ASX: CGC) ended with gains of 9.14%% and 0.19%; however, GrainCorp (ASX: GNC) plunged 10.33% and Tassal Group (ASX: TGR) ended unchanged.
Amongst processed food makers Bubs Australia (ASX: BUB) ended flat but A2 Milk impressed with a rise of 11.95%.
A2Milk squashed local media reports that it was close to winning an approval from the FDA to sell baby formula in the United States.
ASX All Technology Index (ASX: XTX)
The ASX All Technology Index (ASX: XTX) gained this week too, and was up 1.74% amongst platform companies REA Group (ASX: REA) and RedBubble (ASX: RBL) lost 2.04% and 2.18%, but Carsales (ASX: CAR) and Domain Holdings (ASX: DHG) went up by 3.74% and 3.09% respectively.
Saas players Xero (ASX: XRO) and WiseTech Global (ASX: WTC) clocked gains of 0.76% and 4.85% respectively.
Though Appen (ASX: APX) had another dismal week and dropped 24.14%, Nuix (ASX: NXL) gained 11.94%.
Appen said it will post its first half-year loss since going public in 2015, due to weak demand for digital advertising and rising costs.
BNPL hit it out of the park (again) this week with Block (ASX: SQ2), Sezzle (ASX: SZL), and Zip Co (ASX: Z1P) all recording gains of 10.38%, 8.90%, and 5.50% respectively; however, MoneyMe (ASX: MME) was the odd man out and fell 11.52%.
Block said it has slowed hiring and will cut its 2022 investment target by $US250 million, after a slump in bitcoin prices pushed the digital payments company into a loss for the second quarter.
Link Administration (ASX: LNK) was down 2.28%.
In semiconductor and data center companies Altium (ASX: ALU) was up 1.05% while NextDC (ASX: NXT) gave up 1.18%.
ASX Healthcare Index (ASX: XHJ)
The ASX Healthcare Index (ASX: XHJ) finally made a move after a flat couple of weeks and closed up by nearly 2%.
Healthcare providers Ramsay Healthcare (ASX: RHC) and Healius (ASX: HLS) put on 5.22% and 4.38% respectively while Fisher and Paykel (ASX: FPH) lost 2.77%.
Ramsay Healthcare has officially terminated its funding agreement with health insurance giant Bupa; and Bupa patients may now face significant out-of-pocket costs at Ramsay hospitals.
Healthcare equipment makers Sonic Healthcare (ASX: SHL) and CSL Ltd. (ASX: CSL) shot up 1.57% and 1.65%; however, Resmed CDI (ASX: RMD) and Cochlear (ASX: COH) gained 0.59% and 3.03%.
Biotech firms Imugene (ASX: IMU) and Mesoblast (ASX: MSB) were up 1.19% and 3.89% respectively.
ASX Real Estate (A-REIT) Index (ASX: XPJ)
The ASX Real Estate (A-REIT) Index (ASX: XPJ) corrected by 0.40% this week.
Among sector majors, Mirvac Group (ASX: MGR) and Scentre (ASX: SCG) lost 2.09% and 0.35%.
Stockland Group (ASX: SGP) was up 1.04% while Vicinity Centres (ASX: VCX) was flat.
Meanwhile, Goodman Group (ASX: GMG) was up 1.02%.
ASX Telecom Index (ASX: XTJ)
The ASX Telecom Index (ASX: XTJ) gained 2.35% for the week.
The sector was a sea of green as Telstra (ASX: TLS), Chorus (ASX: CNU), and TPG Telecom (ASX: TPG) rose 3.06%, 1.67%, and 1.88% respectively; however, Uniti Group (ASX: UWL) ended flat.
Megaport (ASX: MP1) corrected after last week’s rally and lost nearly 9%.
ASX Utilities Index (ASX: XUJ)
Lastly, the ASX Utilities Index (ASX: XUJ) woke up from its slumber over the past weeks and gained 1.36%.
Among sector majors, APA Group (ASX: APA), AGL Energy (ASX: AGL), and Origin Energy (ASX: ORG) surged 2.65%, 2.03% and 0.17% higher.
| AUGUST 2022 | 8 | 9 | 10 | 11 | 12 |
|---|---|---|---|---|---|
| ANNUAL REPORT | AZJ, KPG, SUN, TCl | CGF | AQZ, CBA, CNW, IAG, MLT, MTB, NWS | ADA, AGL, DOW, FSA, GDF, MGR, PAF, PGF, TWD | BBN, G6M, RYD |
| INTERIM REPORT | BBL, CRN, RKN | BFG, DVN | AMP, QBE, SMR, AMP, QBE, WDS | TIA | |
| PRELIMINARY REPORT | AZJ, CLW, ELO, SUN, TCL, AZJ, SUN | CDM, CGF, CPU, LOM, CLW, CPU, NWS | AQZ, ARF, CBA, CNI, CNW, IAG, MIN, NWS, TGG, CBA, MIN | ADA, AGL, CQE, DOW, FSA, GMG, HIT, ICT, MGR, PAF, PGF, PXS, TLS, ARF, MGR, TLS | BBN, RYD, TLS, AVH, IAG |
| QUARTERLY REPORT | – | – | – | – | – |
New ASX Listings
August 11 – Bayrock Resources Limited (ASX: BAY) – Ordinary shares of $0.20 each aggregating $12 million. Mineral exploration.
August 12 – Australia Sunny Glass Group Limited (ASX: AG1) – Ordinary shares of $0.35 each aggregating $7.5 million. Australian-based holding company which (through its wholly-owned subsidiaries) operates a glass production and supply business and provides glass supply solutions for structural building facades.
Economic and Market Outlook
Last week’s data prints
Caixin’s China manufacturing purchasing managers’ index (PMI) slipped to 50.4 in July from 51.7 in June amid a softer rise in new orders and subdued demand.
Overall growth momentum softened since June amid slower upturns in output and total new work, Caixin said.
The RBA on Tuesday hiked the cash rate by 0.5 per cent to 1.85 per cent, the fourth hike in as many months, and in line with market expectations.
But the bank’s governor, Philip Lowe, said Australia’s economy would grow slower this year and in coming years than the RBA had forecast in its May statement on monetary policy.
Australia generated a trade surplus of a record A$17.67 billion in June, higher than forecasts of A$14 billion, and May’s reading of A$15.96 billion, driven largely by iron ore and coal exports.
In the latest US Manufacturing ISM Report On Business, the July Manufacturing PMI registered 52.8 percent, down 0.2 percentage point from the reading of 53 percent in June.
This figure indicates expansion in the overall economy for the 26th month in a row after a contraction in April and May 2020.
New Zealand employment was mostly flat in Q2, below expectations of a 0.4% rise.
Unemployment rate ticked up from 3.2% to 3.3%, against expectation of a fall to 3.1%.
Labor force participation rate dropped -0.1% to 70.8%.
Overall, the figures indicated a continuing tightness in the country’s labour market.
According to the US Labor Department, non-farm payrolls rose by 528,000 during July versus the revised figure of 398,000 in June.
Analysts had expected the reading to slide to 250,000.
The unemployment rate also ticked slightly lower to 3.5%.
The robust labor market data raised speculation that fears of an imminent recession may be premature, despite slowing GDP numbers.
However, for the markets, this raised the fear of larger rate hikes in the future.
This in ASX Week
- Monday, August 15: China Industrial Production YoY July
- Tuesday, August 16: US Building Permits July
- Wednesday, August 17: New Zealand RBNZ Rate Decision / US Retail Sales + Core Retail Sales MoM July
- Thursday, August 18: Australia Employment Change July / US Philadelphia Fed Mfg Index (Aug)
- Friday, August 19: US Existing Home Sales July
Forex Outlook
AUD/USD
AUD/USD closed at 0.69109, below the previous weekly close of 0.69876, after touching a high of 0.70520.
The RBA’s widely anticipated 50-basis point hike to 1.85% was tempered with a somber economic outlook that put paid to any bullish aspirations for AUD/USD.
Even a record, consensus-busting trade surplus of A$17.67 billion for the month of June did not prevent the pair from sliding lower for most of the week, and reaching a low of 0.68700 before closing a shade higher.
The pair was also on the back foot following the snap back of the Dollar Index from its recent negative performance that took it to a low of 105.
Moreover, the whopping NFP data has put front-and-center the thought of further strength in the US dollar resulting from unbridled rate action by the Fed.
Governor Michelle Bowman suggested that the Fed should keep considering large hikes similar to the recent 0.75% increase if inflation is to be dented.
Across the pond, the BoE expects headline inflation to peak at 13.3% in October and to remain at elevated levels throughout much of 2023, before falling to its 2% target in 2025, while the MPC now projects that the U.K. will enter recession from the fourth quarter of 2022, and that the recession will last five quarters.
This is clearly a “risk-off” signal from the central bank of a major developed economy, and does not bode well for the AUD/USD, which is expected to seek lower levels, despite the apparent strength of the Australian economy.
AUD/NZD
AUD/NZD ended the week at 1.10683 and well below the previous week’s close of 1.11023.
The pair has hammered a multiple top in the range of 1.11750, which is also the upper line of a sideways rectangle pattern playing out since May 2022.
A resurgence in the US Dollar has stymied the prospects of resource-heavy, ‘risk-on’ currencies such as the AUD and NZD.
Between the two currencies, the AUD is better placed given recent economic data, and the muted employment figures out from New Zealand.
The New Zealand economy is also facing consumer angst as a survey from the Financial Markets Authority shows only one-fifth of Kiwis feel financially secure, and 63 percent say inflation is increasing faster than their ability to save.
House price declines are gathering pace too.
It is expected that AUD/NZD will therefore meet support at the lower line of the upward sloping trend channel, but face resistance at the 1.11750 horizontal line.
