The ASX has dipped today.
The S&P/ASX200 dropped 40.60 points or 0.57% to 7,093.70 to end the week. Over the last five days, the index has gained 1.61%, but is down 4.48% for the last year to date.
The bottom performing stocks in this index are Paladin Energy Ltd (ASX:PDN) down 14.83% and Zip Co Ltd (ASX:Z1P) down 9.83%.
The ASX did manage to halve its intraday fall, as demand for safe haven stocks (gold and oil have spiked again) eased.
The gut-wrenching news coming from the Ukraine is Russia’s attack on its nuclear plant.
Ukrainian foreign minister Dmytro Kulba tweeted that the plant was on fire and if it blew up it would be 10 times worse than Chernobyl.
However, Ukraine told the International Atomic Energy Agency the fire “has not affected ‘essential’ equipment,”. There is apparently, no change reported in radiation levels.
According to US Energy Secretary Jennifer Granholm the reactors are “being protected by robust containment structures” and are being safely shut down.
It’s hard to know where to look at the moment. Just when you thought the world was out of trouble with bushfires a memory and COVID fears fading, have Australia is underwater and war rages.
Stay safe.
Don’t panic sell
Regular Proactive commentator Dale Gillham gives his take on the market in these volatile times.
“This year has been a roller coaster for the Australian stock market given that it achieved a new all-time high before falling over 11% in January. February was a similar story, as the market rose strongly for two weeks before falling heavily over the next two weeks. This volatility together with the speculation around inflation, interest rates and now the Russian invasion of the Ukraine has caused some investors to panic and exit the market, while others have chosen to remain in the market to ride out the swings. But is this wise?
“I recently read an article from CNBC based on research from the Bank of America (NYSE:BAC) about the difficulties of timing the market, which showed the returns from each decade on the S&P 500 from 1930 to 2020. The research indicated that if you bought and held through that time your return would have been 17,715 per cent. They also provided returns on portfolios that excluded the best and worst 10 days in each decade.
“As justification for promoting a buy and hold strategy, investors are constantly told that if we miss the best 10 days when the market is rising our return will reduce substantially. However, since I launched my bestselling book “How to Beat the Managed Funds by 20%” over two decades ago, I have been educating investors that this assumption is incorrect and that the opposite is true because if you avoid the 10 worst days your returns would increase substantially. The research from the Bank of America now substantiates what I have been teaching our clients.
“While the buy and hold strategy achieved a return of 17,715 per cent, if you avoided the 10 best days each decade the return was a measly 28 per cent, which is why buy and hold is a marketable strategy in the financial services industry. But if you were out of the market on the 10 worst days, your return would have been a massive 3,793,787 per cent or over 21,000 per cent better than the buy and hold strategy.
“While I don’t advocate that investors panic and sell or react emotionally to news and speculation, it is obvious from the research that being a little more proactive with your investments by avoiding the large downturns in the stock market is a far better strategy for your portfolio in the long run.”
The best and worst performing sectors this week
The best performing sectors were Energy up over 10% followed by Materials up over 8%. Information Technology is up over 4%. The worst performing sectors were Consumer Staples losing over 2% and Healthcare and Financials, which are both just in the red.
The best performers in the S&P/ASX top 100 stocks include Lynas Rare Earths Ltd up over 14%, IGO Ltd, Woodside Petroleum Limited (ASX:WPL) and BHP Group Ltd, all up over 12%. The worst performing stocks were Magellan Financial Group Ltd (ASX:MFG) down over 10% and Insurance Australia Group Ltd and QBE Insurance Group Ltd, down over 7%.
What's next for the Australian share market?
According to Gillham, “In contrast to last week, the All Ordinaries Index has performed well this week rising over 2% and erasing almost all of the fall from the prior week. However, before you get too excited thinking the down move is over, it is still too early to call an end to the current pullback, therefore, once again I would urge investors not to get caught up in the emotions of the market.
“While it is possible that the market will continue to rise, there is also a possibility that the All Ordinaries Index could fall below 7,000 points before that occurs. To confirm the market is moving up, we need to see price rise above the recent high of 7,646 points.
If the market falls next week then it is highly likely we will experience further falls with the market falling below 7000 points. As I have indicated previously, now is the time to be patient and to be looking for good stocks at better prices when the market does settle.”