Oil pushes on as Russian shelling sparks fire at Ukraine nuclear power plant: ASX up 1.6% over week

Market Reports

by Melissa Darmawan

The Australian sharemarket snapped its 5-day winning streak, closing higher for the week to notch its best weekly performance in a month.

Stocks fall, safe-havens rose

Weakness in Australian shares deepened on news of a fire at Ukraine’s largest nuclear power plant after Russian shelling prevailed towards midday. Investor’s concerns of elevated radiation were eased following International Atomic Energy Agency confirming that the fire didn’t affect essential equipment and no victims were hurt. The news was enough for the ASX 200 to stage a recovery to ease its losses by the closing bell.

As stocks sunk and safe havens rose, commodities are set to hit its biggest rally since 2020, while the Russian sharemarket remains shut for the country’s longest ever halt.

Following a weak lead from Wall St, the performance on the local bourse also had a defensive feel. Consumer staples was the best performer up 1.2 per cent amid its ability to pass on rising costs to consumers. Gains were seen in classic bond proxies such as utilities, adding 0.7 per cent and healthcare eking out a gain as Asia Pacific treasury yields dipped except for South Korea after announcing record number of Covid-19 cases.

Leading the losses is information technology down 3.6 per cent, followed by consumer discretionary, and energy both erasing 1.1 per cent each. Property and financials followed lower. Materials shed the least, down 0.4 per cent, but in a broader context, the sector has posted its best week since April 2016 with a stellar gain of 8.1 per cent.

CSL & Piedmont Lithium rally

CSL (ASX:CSL) added 0.3 per cent to $253.80 on news that its offer period to pick up Vifor Pharma shares closed with 74 per cent of shares tendered. The biotech giant flagged that its regulatory sign-off for the takeover is on track, suggesting that remaining conditions will be satisfied. The deal is earmarked to be complete by mid this year.

Lithium developer Piedmont Lithium (ASX:PLL) rallied 6.7 per cent to 80 cents as investors enjoyed the news that its partner, Sayona Mining (ASX:SYA) has doubled its Sayona Quebec lithium resource estimate for the North American Lithium and Authier Projects. Piedmont Lithium has a 25 per cent stake in the North American Lithium and Authier projects.

The jolt in the market rippled with the biggest effects seen in European markets as Wall St futures head south. Investors are concerned about what it means for inflation as central banks walk a fine line to hunt down inflation and not punish growth.

Recessionary risk?

Jim Bianco wrote on Twitter that “not every recession is led by a 50 per cent rise in crude. But every 50 per cent rise in crude has led a recession”. So part of what is causing the recession risk has been the surge in commodity prices. So it poses the question, is this what markets are on track to see?

Asian markets are weak with Japan's Nikkei off session lows after falling around 3 per cent in the morning while Hong Kong Hang Seng’s is tracking to the downside dragged lower by technology shares. Meanwhile, China is likely to unveil its lowest economic growth target in more than three decades when top leaders meet tomorrow for a key political meeting. The move is likely to put pressure on the government to step up fiscal stimulus to spur demand and jobs.

What's ahead

Investors now prepare for the big jobs report tonight after Fed Chair Jerome Powell advocated a 25 basis point hike this month at its upcoming Fed meeting after testifying to financial lawmakers. Mr Powell recently said to Congress that the labour market was "extremely tight" amid the jobless rate having edged lower to 3.9 per cent though he forecasted annual wages growth to rise.

After a stunning 467,000 jobs were added into the US economy in January after its revision, economists expect a deceleration to 400,000 jobs for February. However, since the Fed has already made its mind about the tightness of the jobs market, the figures will look to reconfirm their view for this month's rate hike as the war in eastern Europe takes market participants' attention.

At the closing bell, the S&P/ASX 200 was 0.6 per cent or 40.60 points lower at 7110.80. Over the week, the local bourse is up 113 points or 1.6 per cent.

Wall St

Over the last four trading days, the Dow Jones lost 0.8 per cent, the S&P 500 lost 0.5 per cent and the Nasdaq lost 1.2 per cent.

Futures

The Dow Jones futures are pointing to a fall of 187.00 points.
The S&P 500 futures are pointing to a fall of 27.00 points.
The Nasdaq futures are pointing to a fall of 97.00 points.
The SPI futures are pointing to a fall of 35 points when the market next opens.

Best and worst performers

The best-performing sector was consumer staples, up 1.2 per cent. The worst-performing sector was information technology, down 3.6 per cent.

The best-performing stock in the S&P/ASX 200 was Perseus Mining (ASX:PRU), closing 3.1 per cent higher at $1.82. It was followed by shares in Newcrest Mining (ASX:NCM) and Gold Road Resources (ASX:GOR).

The worst-performing stock in the S&P/ASX 200 was Paladin Energy (ASX:PDN), closing 14.5 per cent lower at $0.73. It was followed by shares in Block (ASX:SQ2) and PolyNovo (ASX:PNV).

Asian markets

Japan's Nikkei has lost 2.34 per cent.
Hong Kong's Hang Seng has lost 2.64 per cent.
China's Shanghai Composite has lost 0.80 per cent.

Commodities and the dollar

Gold is trading at US$1936.12 an ounce.
Iron ore is 5.5 per cent higher at US$153.00 a ton.
Iron ore futures are pointing to a rise of 2.1 per cent.
Light crude is trading $1.36 higher at US$109.03 a barrel.
One Australian dollar is buying 73.53 US cents.

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