Weekly Wrap: Can the ASX Overcome Trade Turmoil? Investors Brace for Volatility
It was one of those weeks on the share market when the good news and the bad news fought for domination.
In the end, both had a reasonable claim to have won the week, with the Australian share market posting a weekly gain of 0.3% to record its second straight week of gains.
On the downside, worries about a high-stakes trade meeting in the coming week between the US and China, and the collapse of US trade talks with Canada, helped the ASX 200 index to close 0.2% lower on Friday, down 13.8 points to 9019 points.
That represented a pullback from the new record high set on Tuesday, although the fact that five of the 11 sectors finished positive showed the extent of the indecision.
The bias was towards growth as well with gains in technology shares offset by losses in defensive healthcare stocks.
Energy stocks follow oil upwards
Energy stocks were particularly strong as new US sanctions on Russia’s two biggest oil companies over the war in Ukraine led to understandable concerns about the security of oil supplies.
That was reflected by a 0.4% rise in shares in Beach Energy (ASX: BPT) $1.25 while shares in Woodside (ASX: WDS) also rallied 1% to $24.40.
Heading in the opposite direction were shares in Santos (ASX: STO) which fell 1.2% to $6.37 after chairman Keith Spence refuse to provide more details about the abrupt resignation of chief financial officer Sherry Duhe as he spoke to investors.
Shares in the big miners were also stronger, with Rio Tinto (ASX: RIO) up 1.5% to $231.82, and shares in BHP (ASX: BHP) also up 0.5% at $43.24.
Critical Minerals have a Boom Week
Following the deal with US President Donald Trump, critical minerals producers continued their incredible bull run, with shares in Mineral Resources (ASX: MIN) up 6.5% to $44.94, and shares in IGO (ASX: IGO) up 8% to $5.82.
Shares in Pilbara Minerals (ASX: PLS) climbed 9.1% to a one-year peak of $3.23 after positive quarterly results, meaning the lithium miner’s shares have nearly tripled since early April.
It was the opposite story for gold stocks after gold prices continued to retreat from a record high of US$4,381.21, which was set on Monday.
Among the biggest losers with shares in Newmont (ASX: NEM) which fell 4.4% to $127.15, with Evolution Mining (ASX: EVN) down 1.1% to $10.50.
It was a bleaker picture for the financial sector with shares in all four big banks falling, with ANZ (ASX: ANZ) down the most, losing 1% to $36.64.
Whitehaven Coal (ASX: WHC) fell 0.4% to $6.98 after quarterly results showed the company burned $200 million of cash over the three months to September 30 amid weak coal prices.
The week ahead
This week we should get some more indications about whether interest rates will keep trending down or not, both in Australia and the US.
The local measure to watch for is the Reserve Bank’s preferred measure of inflation, the trimmed mean consumer price index, which is released on Wednesday.
With the September quarter figure expected to come in at around 0.8% and the annual rate unchanged at 2.7%, anything more could threaten expectations of lower rates.
Similarly in the US, the GDP numbers for the September quarter are expected to show a bit of a slowdown to around 3% a year, which again might help to bring on another interest rate fall.
Shutdown makes rates call difficult
It will be a difficult time for the US Federal Reserve when it meets on Wednesday with the Government shutdown slowing down the release of economic figures and making it more difficult to get a read on what is happening in the economy.
Most pundits say the Fed will reduce official interest rates by 25 basis points, while the European Central Bank is not expected to move rates when it meets on Thursday.
The other big things to watch out for are the results from some of the US megacaps, including Alphabet, Meta Platforms, Apple, Amazon, and Microsoft, which will either confirm that the AI tech race is still on or might expose some cracks in the tech story.