The Match Out: Market takes a backwards step after a strong week, Tech and uranium stocks cop the brunt of selling

James Gerrish

Market Matters

Weakness into the weekend ruined what was a solid week from a markets perspective. The local index was up 154 points to yesterday’s close in the first four days, giving back around a third of the gains on the final day. A further escalation in tensions in Ukraine was largely to blame for the weakness and, as is often the case, traders have looked to take money off the table at the end of the week rather than risk two days of news flow without liquidity. Despite that, there was some support into the afternoon and the index finished +85pts from its lows around midday.

  • The ASX 200 finished down -40pts / -0.57% to close at 7110.
  • The supermarket stocks helped the staples sector higher, joined with the utility sector to be the only two to stay in the black on a weak day.
  • Tech was the hardest hit by the risk-off attitude.
  • Energy, which has been well supported throughout the conflict, took a breather today with the US Government working on a deal that would see more supply of oil. Brent crude hit its highest level since May 2012 before giving back some ground.
  • Bidders into the Zip Co (ASX: Z1P) capital raise earlier in the week were issued their shares before the market opened today. With the new shares already underwater at yesterday’s close, traders seemed happy to cut their losses, spurred on by UBS taking a knife to their rating and target price. Shares finished $1.72/-8.02% today.
  • Uranium stocks were extremely volatile – news broke around midday of a fire at a Ukrainian nuclear power plant with fighting nearby. We took the view that it's best to cut early and assess, given the extreme implications this could have on the uranium market. Uranium stocks closed well off their lows as reports around the extent of the damage came in better than feared, but the risk still remains.
  • The ASX200 finished +1.61% for the week with Energy and Materials both putting on more than 8%.
  • Gold is marginally higher in Asian trade at $1,939/oz
  • Asian markets are softer today as well. The Hang Seng, Nikkei and Shanghai Comp are all down around 2.5%
  • US Futures pointing to another weak night to finish the week. The S&P Futures are -0.6%, Nasdaq -0.7%.

ASX 200 chart


Opinions

A great podcast series

This week’s been a tough one for many and our hearts go out to all those Australians battling floods and, of course, the horrific scenes playing out in Ukraine. As I discussed with the kids last night, we should thank our lucky stars for how fortunate we are to live where we do!

Over the past few months, Shaw & Partners has been working on a Podcast Series, hosted by Gus Worland who runs a mental health charity that we support called Gotcha4Life Foundation. Gus is also on Triple M in Sydney hosting a bunch of shows.

Called “Not An Overnight Success,” the series dives into the mindset of successful people in the world of business, entertainment, sports and the life journeys that led them to where they are today.

No introduction necessary, Episode 1 was with Hugh Jackman - Click on the link to listen

Although not as well-known as Hugh, the guest for Episode 2 – Gavin Rubinstein, the best real estate agent in the country – was also insightful. I listened to this on my way home from work yesterday and got a lot from it – there is always something to learn from those with open minds.

Each Friday, I’ll list podcasts that were released during the week. There are some cracking episodes coming up, and the best part is we donate $10,000 per episode to the guest’s charity of choice.

Happy listening,

James.

Sectors this week (Source: Bloomberg)

Stocks this week (Source: Bloomberg)

Broker moves

  • Countplus Cut to Market-Weight at Wilsons

  • Zip Co. Cut to Sell at UBS; PT A$1

Major movers today

Have a great night,

James, Harry and the Market Matters team.

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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