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Australian market ends winning streak, down 4.5% for the week

Oil’s price collapse dragged Australian energy shares lower with only gold miners providing much cover for investors.

ASX 200 Source: Bloomberg

Friday takes sting off early-week losses

ASX 200 shares ended a four-week winning streak as collapsing oil prices shattered investor optimism that the worst of the Covid-19 economic shocks were over.

The benchmark Australian index finished the week at 5,242.60 points. This was 4.5% down on Friday’s finish last week of 5,487.50 points. This itself came off the back of four straight weeks of gains, a rally of 23.7% from its nadir on 23 March.

The damage was done early in the week as West Texas Intermediate (WTI) crude turned negative. The ASX 200 lost almost 5% in the first two sessions of the week, before see-sawing on Wednesday and Thursday, followed by some modest gains in Friday’s session.

The falls were across the board. Healthcare shares were the biggest drag on the index, sliding 4.8%. Financials, which make up a big portion of the ASX 200, fell 4.2%, while Materials dropped 2.5%.

Interestingly, energy shares were not the biggest drag on the index, down around 3.7%. But they were all investors were talking about.

Q1 production with nowhere to go

Santos (STO) and Oil Search (OSH) snatched much of the focus this week as investors mulled over their latest quarterly results.

Santos surged 7.2% on Thursday after telling investors it was well positioned financially to ride out the oil price crash. Naturally, this was news investors latched onto.

To underline just how tumultuous this week was for Santos, and energy shares generally, the stock only finished up 1.1% for the week.

And it was the only major energy share in positive territory. Earlier in the week, Oil Search told investors that Q1 revenue had slumped 20%, even though production had increased 5%. That is the oil crisis in a nutshell. Oil Search shares finished the week at $2.61, down 4.7%.

Petrol company Caltex (CTX) finished at $22.43, down 4.8%, which was an improvement on falls earlier in the week after an $8.8 billion takeover offer from Canadian company Alimentation Couche-Tard was called off.

Meanwhile, Australia’s largest domestic oil and gas company Woodside Petroleum (WPL) ended the week down 3.4% to a$20.36, Origin Energy (ORG) lost 6.4% to $4.84 and AGL Energy (AGL) shed 3.2% to $17.10.

Domino’s Pizza (DMP) slumped 7.9% to $47.90, even though the company said same store sales had remained consistent post Covid-19. The company added that a higher number of stores needed short-term assistance than in an ordinary period.

Lynas (LYC), the world’s largest rare earths miner outside China, finished the week down 1.9% at $1.54, despite rallying 12% earlier in the week after telling the market initial funding for a facility in Texas had been secured from the US military.

Finally, some gold shares provided cover for investors. Evolution Mining (EVN) in particular was up 9.3% to $5.18 and Northern Star Resources (NST) jumped 4.1% to $13.19. Newcrest Mining (NCM), Australia’s largest gold miner, finished the week flat at $28.53.

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