The share market closed out its worst week since 2020 with a modest rebound as fighting in Ukraine and weak US futures capped risk appetite.
An early relief rally mostly petered out as investors awaited evidence the worst of the Ukraine market volatility was over. TheS&P/ASX 200finished seven points or 0.1 per cent ahead for the session after rising 55 points in early action.
Afterpay’s parent company propelled the tech sector to its best gain in more than a decade. Gold miners retreated with precious metal prices. The last major week of the interim earnings season wrapped up with well-received results from Block, Paladin Energy and Harvey Norman.
What moved the market
The ASX 200 slumped to its heaviest points loss since September 2020 after Russia invaded Ukraine. The Australian benchmark declined 224 points or 3.1 per cent. The decline surpassed the worst week of last month’s rates tantrum.
A wild overnight recovery on Wall Street failed to encourage Australian investors as weakening US futures suggested second thoughts heading into tonight.S&P 500 futures were down 20 points or 0.46 per cent as the Australian market closed.
Overnight, the Nasdaq Composite swung more than 6.5 per cent from its opening low to a closing gain of 3.34 per cent. The S&P 500 gained 1.5 per cent. The Dow turned an 800-point opening loss into a gain of 92 points or 0.28 per cent.
Today’s Australian action never looked like mirroring US volatility. City Index senior market analyst Matt Simpson said investors appeared “shell-shocked“.
“With the element of surprise behind us, markets are now trading in a shell-shocked way, confined to low pockets of volatility well within yesterday’s ranges. And we may find that pattern persists heading into next week as investors absorb the info, regroup and wait for the next catalyst. But I think this week’s catalyst will be hard to match,” he said.
Kalkine Group CEO Kunal Sawhney said investors should think twice before selling on the current market weakness. History shows past conflicts had a fleeting effect on markets, provided they remained localised.
“Investors should note that the past events of invasion usually have had only short-term effects on stock markets. Thus, they should closely watch the unfolding situation before taking any commitment. It may not be a good idea for investors to move out of quality stocks in panic,” he said.
The outbreak of war in Ukraine tainted what started out as a bright interim corporate earnings season. While most companies in the first few weeks rallied upon reporting, this week’s reporters found it harder going as the sinking tide lowered most boats. Supply-chain issues continued to dog many pockets of the market.
Winners’ circle
Yesterday’s worst ASX performers were today’s best. The tech sector bounced 8.14 per cent off a 20-month low. The S&P/ASX Emerging Companies Index climbed 2.76 per cent.
Tech stocks have been under pressure all year as investors bet the cost of borrowing to fund growth will be significantly higher as interest rates normalise. US tech led the overnight recovery as market rates adjusted to the prospect central banks may be more cautious if the Russia-Ukraine crisis dents global growth.
Block led the rebound in tech after beating The Street’s estimates for revenues and profits. The Afterpay parent jumped 32.49 per cent on news Q4 profits increased 47 per cent year-over-year to US$1.18 billion.
The recovery brought relief to Australian investors who had seen the value of their shares drop by more than a third since the takeover.
Other growth stocks rallied strongly on the prospect of lower-rates-for-longer. Life360 bounced 22.01 per cent, Tyro Payments 10.92 per cent and Appen 8.67 per cent. Imugene gained 6.82 per cent, Telix Pharmaceuticals 7.23 per cent and Codan 6.6 per cent.
Uranium miner Paladin Energy jumped 12.41 per cent after slashing its first-half loss to US$11 million from US$25.4 million in H121.
A 25 per cent jump in full-year net profit to $116.7 million helped construction materials provider Adbri rise 7.64 per cent.
Harvey Norman firmed 3.21 per cent despite a 6.2 per cent dip in half-year sales as pandemic tailwinds eased and lockdowns caused extended store closures. Reported profit declined 6.7 per cent, cushioned by higher property valuations.
An upgrade to full-year guidance boosted property investor Charter Hall 3.69 per cent. The company raised its earnings per share forecast to growth of no less than 112 cents per security from previous guidance of no less than 105 cents. The increase came after the group doubled first-half profits.
Rare earths miner Lynas climbed 6.93 per cent following a record first half. Net profit jumped to $156.9 million from $40.6 million in H121 amid strong customer demand.
Mesoblast edged up 0.93 per cent off a 23-month low after cutting its cash spend ahead of resubmitting its flagship product to US regulators for approval. The company had US$94.8 million cash in hand at the end of the quarter.
Among other companies reporting, Ardent Leisure jumped 17.16 per cent, Genworth Mortgage 1.03 per cent and PointsBet 0.84 per cent. Mayne Pharma fell 2 per cent, Medibank 3.79 per cent and Bravura Solutions 11.9 per cent.
Doghouse
Logistics specialist Brambles eased 0.81 per cent as a warning about an on-going pallets shortage overshadowed a profit upgrade. The company expects elevated timber prices and supply-chain issues to continue until next year. Despite the headwinds, the firm raised its full-year underlying profit outlook to growth of 3-5 per cent from previous guidance of 1-2 per cent.
Health and beauty retailer BWX tanked 26.41 per cent after reporting a first-half loss of $2.3 million. The result was impacted by one-off costs relating to acquisitions.
Vitamins retailer Blackmores skidded 10.54 per cent a day after warning of on-going supply-chain disruptions and product shortages.
An 8.1 per cent drop in first-half profits helped knock Kogan down 6.24 per cent. The online retailer blamed supply-chain disruptions and fluctuating consumer demand.
Magellan slid 10.11 per cent after reporting $3.2 billion in net outflows in two weeks. The fund manager received notice of intent to redeem an additional $2.1 billion.
Gold miners retreated after the yellow metal failed to hold a 17-month high. St Barbara lost 8.87 per cent, Gold Road Resources 5.52 per cent and Northern Star 5.57 per cent. Newcrest eased 3.05 per cent.
Other markets
In Asia,the Asia Dow gained 0.95 per cent, China’s Shanghai Composite 0.54 per cent and Japan’s Nikkei 1.64 per cent. Hong Kong’s Hang Seng faded 0.16 per cent.
Oil pushed back above US$100 a barrel. Brent crude firmed US$2.23 or 2.35 per cent to US$101.31 a barrel.
Gold fell further from its overnight 17-month high. The yellow metal declined US$13 or 0.67 per cent to US$1,913.30 an ounce.
The dollar rebounded from a sharp overnight drop. The Aussie firmed 0.5 per cent to 71.96 US cents.