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ASX200 market update: top three stocks to watch this week

We look at three stocks that could climb as a result of the Ukraine-Russia war.

Market wrap: ASX200 under pressure from Ukraine War; but some companies could see profits boosted by the conflict

Global equities remain under pressure as Russia’s invasion of Ukraine weakens sentiment and threatens global economic activity. The situation remains dynamic. However, the heightened uncertainty from a potentially protracted war is keeping investors from buying into equities as the outlook for growth and inflation is assessed. On a macro-level, the conflict is clearly bad for the global economy and stocks. However, there are areas of the Australian economy and ASX that could see some benefit from the consequences of this war. Here we look at three stocks that could rise as the war continues.

Top three ASX stocks to watch

Here are 3 stocks that have caught our eye and may be worth watching in the week ahead.

  1. Woodside Petroleum (WPL)
  2. Northern Star Resources (NST)
  3. GrainCorp (GNC)

Woodside Petroleum (WPL)

Energy prices are surging as fears that the war could disrupt production in Russia and lead to trade restrictions on Russian gas exports into Europe. Oil prices – for one – have hit fresh seven-year highs in recent days, placing a rocket under already flying energy stocks, with the price of Brent WTI both well above $US100 per barrel. Woodside Petroleum (WPL) hit fresh post-pandemic highs in recent days, powered too by some solid HY results in February, which itself was fuelled by tight global energy markets and improving demand as the global economy reopens following the pandemic. The trend for WPL shares remains skewed to the upside, with the next key level of technical resistance at around $31.50 per share. Support looks to be around $27.60.

Northern Star Resources (NST)

Sanctions on Russia’s financial institutions is sparking a flight to alternative stores of value, while diminished gold production threatens to choke off supply of the metal to global markets. The value of gold has exceeded $US1970 at stages during the war (so far), which when accounting for a relatively weaker Australian Dollar in the past 18 months, is pushing the XAUAUD above $A2600 and around levels not seen since August 2020. Northern Star Resources (NST) shares are reflecting some of this move – although it does remain below the price it was trading at when the XAUAUD was at that level. Right now, NST is challenging trendline resistance, which if broken could drive a push towards resistance at $11.00. Support sits at around $10.00.

GrainCorp (GNC)

Food insecurity and surging prices for agricultural commodities is a major risk from this war, with both Russia and Ukraine as major producers and exporters of grains. Wheat, for example, has hit a seven-year high in recent days. Food inflation could be a feature of the global economy in the short term with agricultural companies’ bottom lines set to benefit from the increase in prices. GrainCorp Ltd (GNC) could be one that sees such benefits. Its share price has been on an upward trend since the start of the pandemic. But the momentum behind that trend has increased as fears of food inflation has increased. GNC shares are currently testing resistance at $8.60, which if broken may open a run towards $9.00 per share. Support on the downside is around $7.60.

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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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