CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Why are ASX retail giants tumbling? What’s next for Wesfarmers and Woolworths?

Wesfarmers share price fell 7% in a week, while Woolworths shares pulled back despite announcing an encouraging new deal.

Source: Bloomberg

Last week, mounting concerns over an economic recession were reaffirmed by the lacklustre retail sector in the US which hit investors with more pain and pushed the S&P 500 to the brink of a bear market. Australia's retail shares were not an exception. Many of the sector's most prominent players lead the sell-off. The new week ahead may bring more surprise to the industry and the market as more household names are due to report their earnings, including Costco, Best Buy, and Macy's.


The Wesfarmers share price is the sector’s worst performer, recording a 6.31% weekly fall and reaching its lowest level since October 2020. Wesfarmers is the owner of Bunnings, Kmart, Target, Officeworks, and the online site While the multiple fronts are often taken as a major competitive advantage for the group, the tough times haved turned the strength into a bittersweet burden.

One of the major problems for Wesfarmers is the Catch Group, which was acquired for $230 million before the start of COVID lockdowns. While the two-year battle with the virus has initally delivered a boom for online retail operators, its earnings before tax (EBT) remains to stay in the red zone with $43-45 million loss for the six months leading to December 31, 2021.

The concern for this sector is mounting as surging inflation is compounded with fading demand, acerbating the downtrend. Similar worries are spreading to Kmart, which reported a glass-dropping 63.4% shrink in earnings for the same period.

According to the daily chart, a boost from last Friday’s ASX jump has brought the price back to the $47 mark. However, as long as the $47.80 (representing the March and April low) level isn’t exceeded, the long-term downtrend remains in play with the descending trend line (in the weekly chart) intact as significant resistance power in the near term. On the flip side, current support sits at 45.88, which, if broken through, could see the price pulled back to the lowest level in 20 months.

Source: IG
Source: IG


While suffering headwinds across the industry, Woolworths has proposed to acquire a majority hold in ASX-listed online marketplace The supermarket giant has offered MyDeal shareholders $1.05 per share, a nearly 60% premium on its recent price.

The top household name in Australia is looking to enhance its marketplace capabilities through the coverage of MyDeal. If Woolworths’ proposition is successful, the new addition will also help Woolworth complement its weakest link, BIG W, the only sector to report a decline in sales in the recent earnings.

Woolworths share price has broken through the two-month long trend line, with the Relative Strength Index flatting in oversold territory, reflecting the extreme weakness in buyer’s sentiment. The bearish pressure may grow further if the prices keep moving towards the floor level, below $35, as seen back in mid-February. On the other side, the 100-day moving average should be the imminent target for the supermarket giant to strike for.

Source: IG

Take your position on over 16,000 local and international shares via CFDs – and trade it all seamlessly from the one account. Learn more about trading share CFDs with us, or open an account to get started today.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

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. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.