The ASX is set to dip today. The S&P/ASX 200 closed 0.04% lower on Friday, but in positive news was 2.8% higher for the week.
The benchmark erased morning losses on Friday after the market opened 0.5% lower in a day that left the index seesawing between a loss and a gain for much of the day.
On Friday, the communication services sector was the biggest drawdown, falling 1.3%, while utilities and energy shares fell 1.2%. Real estate shares fared best among the 11 sharemarket sectors, up 0.9%.
It was a similar trend on Wall St.
Stocks finished lower, snapping a three-day rally following disappointing economic data and a weak earnings report from Snap Inc (NYSE:SNAP).
The market may follow suit this week with reports from Apple Inc (NASDAQ:AAPL) and Microsoft Inc expected next week.
The S&P 500 fell 37.32 points, or 0.9%, to close at 3,961.63 after briefly trading above the 4,000 shortly after the open. The Nasdaq Composite dropped 225.50 points, or 1.9%, to 11,834.11, while the Dow Jones Industrial Average finished 137.61 points, or 0.4%, lower at 31,899.29.
As with the ASX, despite the Friday fall, the three benchmarks won the week. The S&P 500 and Dow Jones Industrial Average recorded their biggest weekly gain in a month and the Nasdaq notched its largest advance since July 8. All three U.S. benchmarks have now risen during two of the last three weeks.
Lombard Odier Asset Management head of macro research Florian Ielpo said: “The message of the week is clear: bulls clearly took control of markets. For now, sentiment is in the driver seat and the previously excess pessimism is now resulting in a relief rally: investors cannot complain about that.”
Here’s what we saw (source Commsec):
- The Euro rose from lows near US$1.0132 to highs near US$1.0250 and was near US$1.0210 at the US close.
- The Aussie dollar rose from lows near US68.95 cents to highs near US69.73 cents and was near US69.25 cents at the US close.
- The Japanese yen rose from near 137.95 yen per US dollar to near JPY135.63 and was at JPY136.05 at the US close.
- Global oil prices eased on Friday. Reuters reported "The European Union said it would allow Russian state-owned companies to ship oil to third countries under an adjustment of sanctions agreed by member states this week."
- The Brent crude price fell by US66 cents or 0.6% to US$103.20 a barrel.
- The US Nymex crude price shed US$1.65 or 1.7% to US$94.70 a barrel. Over the week Brent rose by 2% while Nymex fell by 3%.
- Base metal prices were higher on Friday except lead which was flat. Over the week metals rose 0.7-14.2% with nickel up the most and tin up the least.
- The gold futures rose by US$14.00 an ounce or 0.8% to US$1,727.40 an ounce. Spot gold was trading near US$1,726 an ounce at the US close. Over the week gold rose by US$23.80 or 1.4%.
- The iron ore futures price rose by US$1.10 or 1.1% to US$104.46 a tonne. Over the week iron ore rose by US$1.39 or 1.3%.
Australian markets
Best and worst performing sectors last week
The best performing sectors included Information Technology over 6% followed by Materials, Financials and Communication Services, up over 3%. The worst performing sectors included Healthcare, just in the red, Consumer Staples, just in the green and Industrials up over 1%.
Best performers in the S&P/ASX top 100 stocks include Iluka Resources Ltd (ASX:ILU) up over 18%, Block Inc (NYSE:SQ) up over 14% and Nine Entertainment Group Ltd up over 11%. The worst performing stocks were Cochlear Limited (ASX:COH) down more than 3% followed by Insurance Australia Group Ltd and Amcor CDI (NYSE:CDI), both down over 2%.
What's next for Australian stock market?
According to Wealth Within founder and chief analyst Dale Gillham, “Once again, we have seen that things can change quickly in our market, and more recently this has meant strong falls. However, the good news is that instead of the market falling, the All Ordinaries Index was up 2.8% for the week, which means the Australian market is now trading at levels it was four weeks ago.
“But before you get too excited, the move this week was achieved on low volumes, which indicates a lack of support for the rise, therefore, it may not be sustainable. Yet again, I must say that it is still too early to tell if the low of 6,581 on June 20 will hold and if the All Ordinaries Index has stopped falling.
“For this to occur, we need to see price rise consistently, given that over two of the past four weeks it has closed lower than it opened for the week. A move up this week will start to allay my reservations, but I will not be convinced until we see the next down move.
“The All Ordinaries Index will fall away for one of two weeks in the next month, and how far and long it falls will tell us whether the low of June 20 will hold. As always, I urge investors to be patient because as we continue to experience, things can change quickly and jumping in too early could result in a poor outcome.
US market
Snap Inc weighed down on social media and ad tech firms, with shares falling by 39.1%. Shares in Meta Plaforms fell 7.6% and Alphabet (Google) lost 5.6%.
Snap was caught by disappointing second quarter results, with poor growth attributed to a slowing economy, weak demand for its ad services, Apple’s privacy update and competition from companies like TikTok.
“The market has experienced a selloff due to multiple compressions, not due to lower earnings. The recent earnings in social media are a reminder that there is earnings risk in these pummeled sectors ... which still may not be priced into the market,” BNY Mellon (NYSE:BK) Wealth Management head of equities Alicia Levine said.
“Further, there is macro risk to earnings in general after weak US and European PMI’s.”
B. Riley Wealth chief market strategist Art Hogan says low expectations have been priced in.
Expectations heading into the reporting cycle are ultra-low and well priced in most sectors. Another potential positive is that market participants may have reached a peak in pessimism at the same time that inflation has likely peaked. With pessimism at a peak, and inflation receding, the market may be at the ever elusive capitulation point and see more constructive action in the second half.”
European markets
Europe ended the week well.
Real estate, utilities and food and beverages sectors rose while banks and energy fell. The pan-European STOXX 600 index rose by 0.3% to be up 2.9% on the week - the best weekly gain in two months.
The German Dax index and the UK FTSE index both rose by 0.1%.
The Italian sharemarket rose 0.1% despite a snap election being called for September 25.
In London trade, shares of Rio Tinto rose by 1.7% with BHP shares up by 2.8%.