The ASX made some marginal gains today, up 0.07% but mostly unchanged.
Only four sectors were in the green by the end of the day, led up by the Materials sector rising 1.40%, while Consumer Discretionary took the biggest hit, falling 1.27%.
What are the best and worst performing sectors this week?
Dale Gillham of Wealth Within shares his insights for the week:
The best performing sectors include Materials and Information Technology up over 2% followed by Industrials up over 1%. The worst performing sectors include Energy down over 2% followed by Utilities and Consumer Discretionary, which are both just in the green for the week.
The best performers in the S&P/ASX top 100 stocks include Magellan Financial group up over 12% followed by Mineral Resources up over 8% and Fortescue Metals up over 7%. The worst performing stocks include James Hardy down over 5% followed by Woodside Petroleum and Harvey Norman down over 4%.
What's next for the Australian stock market?
The All-Ordinaries Index has again continued to rise with the current move up lasting 16 days and over 7% so far. That said, this bullish momentum has slowed a little this week, so don’t be surprised if we experience a few down days in the coming week. The Australian stock market is now well above the high of 7,646 points and less than 1.5% away from achieving its highest close ever.
While it is typical for investors to speculate on smaller cap stocks, this year that strategy hasn’t really worked as the ASX top 20 has risen over 3% and the ASX 50 is up over 2%, while the Small Ordinaries Index is down over 5%. I do believe this trend will continue, therefore, I would advise investors to stick to the top 50 stocks in the Australian market if they want to achieve some good profits.
ASX200 outperforms S&P500 by biggest margin in over three years
The large share of mining stocks in the ASX is cited as one reason many investors seek to diversify outside of the Australian market, but this time it’s proven to be an advantage.
The dominance of commodities – and especially critical metals – has pushed the ASX’s performance to new relative heights, climbing 0.7% during the March quarter and thoroughly smashing the American S&P500, down 3.4% with only one session left in the quarter.
This is the largest margin the ASX has beaten the US market by since the December quarter of 2018 – led up predominantly by the BHP Group – while the S&P500 was hindered by surging inflation, tightening Federal Reserve policy, and the Russian invasion of Ukraine.
The mining sector added 270 points to the benchmark index this year, followed by financials with a 105-point upswing and a skittish energy sector with just under 70 points.
Australian dollar enjoys commodity-driven climb
The Australian dollar is also climbing on the back of the commodity “super-cycle” as some are calling it, gaining 3.4% just this month to steady at $0.7510 US dollars.
New Zealand’s currency has also been climbing, firming 2.9% for the month after hitting a four-month high of $0.6990 overnight.
“If we are right the war leads to a structural increase in energy prices, there is more upside to AUD this year,” CBA currency strategist Carol Kong said.
“We expect AUD/USD will soon break above its resistance near $0.7516 and lift higher to $0.7673.”
The Australian dollar’s boost has been partially actioned by yen flowing into the economy from the Bank of Japan, aggressively moving in the bond markets to keep yields near zero.
In contrast to losses earlier in the year, the Australian 10-year yields have climbed 63 basis points to 2.791% this month.
Given the ASX’s strength in the commodities sector, and the effect a rising Australian dollar can have on pricing, international commodity markets are likely to continue to climb unless the Aussie dollar settles back down.
On the small cap front
Latin Resources Ltd was 54.26% higher
Firefinch Ltd was 11.96% higher
European Lithium Ltd was 8.93% higher
Moho Resources Ltd was 7.69% higher