Global markets finished strongly on Friday and the ASX has kicked things off in much the same fashion to start the new trading week.
The S&P/ASX 200 share index opened up 0.5% at 7,032 this morning – less than the 2.4% projected by futures on Friday night.
The Dow Jones Industrial Average closed 2.5% higher on Friday, the S&P 500 gained 2.2% and the Nasdaq added 1.6.
In Europe, major benchmark indices were up more than 3% while Asian markets were also broadly higher.
It seemed investors had reacted favourably to sanctions imposed on Russia as it continues to bomb Ukraine.
All that said, US stock-index futures tumbled late Sunday after President Vladimir Putin raised Russia’s nuclear alert level following those sanctions and “aggressive statements” by NATO, including that the US and its allies on Saturday would remove Russian banks from the SWIFT interbank messaging network.
“Western countries aren’t only taking unfriendly actions against our country in the economic sphere, but top officials from leading NATO members made aggressive statements regarding our country,” Putin said in televised comments.
Some experts are now speculating about runs on Russian banks (the value of the ruble is sinking against the US dollar).
Sanctions against Russia’s central bank have also been mooted.
These tensions mean fears of nuclear warfare, whether by design or mistake, may be all too real.
The one bright spot is that Ukraine has agreed to meet with Russia in Belarus for talks, however, a quick resolution to the conflict seems slim.
Here’s what we saw to end the week (source Commsec):
- The Aussie dollar rose from lows near US71.85 cents to highs near US72.36 cents and was near US72.32 cents at the US close.
- Global oil prices ended lower on Friday by around 1.3%. OPEC+ producers meet on Wednesday to consider output targets.
- The Brent crude price fell by US$1.15 a barrel or 1.2% to US$97.93 a barrel.
- The US Nymex crude price fell by US$1.22 or 1.3% to US$91.59 a barrel.
- Over the week Brent crude rose by US$4.39 a barrel or 4.7% with Nymex crude up by US52 cents or 0.6%.
- Base metal prices fell by between 0.6-1.6% on Friday with nickel down the most. Copper was flat and lead rose 1.1%.
- Over the week metals rose 0.4-2.7%. But copper fell by 0.9%.
- The gold futures price fell by US$38.70 or 2.0% to US$1,887.60 an ounce.
- Spot gold was trading near US$1,887 an ounce at the US close.
- Over the week gold fell by US$12.20 or 0.6% an ounce.
- Iron ore fell by US$3.50 or 2.6% to US$133.45 a tonne.
- Over the week iron ore fell by just 5 cents.
Australian markets
Best and worst performing sectors last week
The best-performing sectors included Consumer Staples up over 4%, followed by Utilities up over 1% and Energy, which was just in the green for the week.
Worst-performing were Information Technology down over 9%, followed by Consumer Discretionary down over 6% and Materials down over 4%.
The best performers in the S&P/ASX top 100 stocks included Cochlear Limited (ASX:COH) over 12% higher, Endeavour Group Ltd over 11% and Northern Star Resources Ltd (ASX:NST) up over 10%.
The worst performing stocks were Domino’s Pizza Enterprises Ltd which fell more than 20%, followed by Reliance Worldwide Corporation (ASX:RWC) Ltd down over 12%, Virgin Money UK and IGO Ltd down over 10%.
What's next for Australian market?
As we do each week, we asked Wealth Within founder and chief analyst Dale Gillham his take on the market and where it is heading.
“The All-Ordinaries Index continued to fall away and was down over 3%.
“Despite this, I would urge investors and traders not to get caught up in all the chatter about the market. Currently, it is down around 9% since it achieved a new all-time high in January and I believe we can expect further falls.
"That said, while it is still possible the All Ordinaries Index could fall below 7,000 points, I don’t believe we will have to wait long before the market finds support and starts to rise again.
“It is times like these that investors and traders get tested and their emotions can run high, which causes many to make errors in judgement. Now is the time for a cool head rather than chasing the market or looking to grab a quick bargain. Instead, you should be looking for good stocks at better prices when the market does settle.
“As I have said previously, I still believe the Australian market will do well in 2022.”
US market
Rose for a second straight day on Friday.
A fall in the oil price allayed concerns about rising energy costs. The Dow Jones gain of 2.5% was the biggest gain since November 2020.
Over the week the Dow Jones fell 0.1%; the S&P 500 index rose 0.8%; and the Nasdaq gained 1.1%.
European markets
Rebounded on Friday on diplomatic hopes that now seem to be fading.
Bargain hunters were active.
Banks rose 4.3%, regaining half the previous session losses. Shares in Porsche SE were 3.8% higher and Volkswagen gained 5.2% on the back of a possible Porsche listing.
The pan-European STOXX 600 index rose 3.3% after falling the same amount the previous day (down 1.6% over week).
The German Dax index rose by 3.7% with the UK FTSE index up by 3.9%.
In London trade, shares in Rio Tinto rose by 3.7% and BHP lifted by 5%.