ASX200 Afternoon Report April 11th 2022

Australian flag
Tony Sycmore
By :  ,  Market Analyst

The unrelenting march higher in bond yields, a surge in new virus cases in China and higher than expected Chinese inflation data have combined to rattle regional equity markets to start the new week. Suddenly, the start of Q2 2022 resembles the shaky opening weeks of Q1 2022.

In Hong Kong, the Hang Seng Index fell by 2.64%. In Tokyo, the benchmark Nikkei 225 index fell by 0.6%. While U.S. equity futures, led by the tech-heavy Nasdaq, dropped by 0.80% to 14215.

Seemingly unworried by the weekend announcement of a general election the ASX200 bolted out of the gate before paring almost 40 pts of early gains to finish 7 pts higher at 7485.

Unable to escape the intensifying heat of rising bond yields, local I.T. stocks have again run foul of investors looking for the exit door. Tyro Payments (TYR) dropped 3.5% to $1.50, Appen (APX) fell 2.67% to $6.55, cloud computing company Megaport (MP1) fell 2.48% to $12.59, Afterpay owner Block (SQ2) fell 2.30% to $164.43 and is now 17% below its $196.00 high from March 30. While Altium (ALU) lost 1.45% to $33.28.

Cost of living pressures and concerns that households may commit to a spending lockdown due to the uncertainty of the Federal Election has weighed on consumer-facing stocks. Webjet (WEB) dropped by 1.8% to $5.29. Aristocrat Leisure fell 1.50% to $32.90, Wesfarmers (WES) dropped 1.4% to $48.33, and Domino’s Pizza (DMP) slid 0.85% to $80.02.   

A fall in crude oil futures to below $96.00 p/b on concerns over slowing demand from China lockdowns and the release of strategic energy reserves weighed on local energy stocks.

Origin Energy (ORG) dropped by 1% to $6.48. Woodside Petroleum (WPL) fell by 1% to $32.07, AGL Energy (AGL) dropped 0.8% to $8.38.  Beach Energy (BPT) and Santos (STO) rose by 1% and 0.7%, respectively.

In Asia, a slide in iron ore futures has weighted on the big miners. Fortescue Metals (FMG) dropped 3.1% to $21.15; Rio Tinto (Rio) fell 1% to $117.72. BHP Group (BHP) fell 0.23% to $51.82. Conversely, key coal miners continue to benefit from EU sanctions on Russian coal imports. New Hope Corporation (NHC) added 0.26% to $3.86, while Whitehaven Coal added 0.9% to $4.53.

The Big Banks remain one of the main beneficiaries of higher rates, providing, of course, bad debts don't balloon. Commonwealth Bank (CBA) added 1.07% to $106.51, National Australia Bank (NAB) added 1% to $32.80, ANZ added 0.76% to $27.71, and Westpac (WBC) added 0.4% to $24.20.

The Lithium space remains lively. Lake Resources (LKE) surged 9% as they signed a non-binding agreement with Ford for approx. 25,000 tonnes of Lithium per year from their project in Argentina. Allkem (AKE) added 0.76% to $13.19 as it pursues a 10% stake in the global lithium chemicals market. Elsewhere, Avz Minerals (AVZ) fell 4.46% to $1.07. Vulcan Energy (VUL) dropped 4.2% to $9.06, while Galan Lithium (GLN) fell 3.27% to $2.07.

The AUDUSD is trading lower at .7441 (-0.26%), extending its retreat from last week's .7661 high as U.S. yields march higher and iron ore trades lower in Asia on concerns over softer demand from China from Covid lockdowns.

 

ASX200 Daily Chart 11th of April

 Source Tradingview. The figures stated are as of April 11th, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

 

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