ASX 200 finishes the week flat after Friday’s brutal sell-off

We examine one potential catalyst behind Friday's sell-off as well as the market movers from the week that was.

ASX 200 weekly wrap

Australia 200 shares spent the week steadily building up a 5% gain that was erased in two hours on Friday morning as May got off to a horrid start.

Risk sentiment was smashed as US President Donald Trump threatened new tariffs on China, underlining how finding someone to blame for Covid-19 was a higher priority for America than harmonious trading with the world’s second largest economy.

ASX 200 shares plunged 5% on Friday to finish the session at 5,245.90 points. While the result meant a fifth weekly gain in the last six, it was lineball. The ASX 200 was just 0.06% higher than it was a week ago, when it closed at 5242.60 points.

Just the day before, the ASX reached a reassuring milestone – it’s first monthly gain in the last three. The ASX 200 Financials index held its ground, up 0.4% for the week, while Healthcare weighed 2.9% and Materials fell 2.3%.

It would’ve been worse if it wasn’t for energy.

Brent lifts Aussie energy shares

Energy shares were the only stocks that really held any gains during the week, thanks largely to the recovery in Brent crude futures, which were trading around US$24.00 a barrel late in the week.

Woodside Petroleum Ltd (WPL), Australia’s largest independent oil and gas company, finished the week at $21.13, up 3.8%. Rival Santos Ltd (STO) performed slightly better, up 5.1% to finish the week at $4.56, while Oil Search Ltd (OSH) did even better, up 8.4% to $2.83.

Energy services company WorleyParsons Ltd (WOR) was the standout, surging a remarkable 20% to end the week at $8.28.

Origin Energy Ltd (ORG), one of Australia’s biggest gentailers (generator and retailer), reported a 7% decline in electricity volume in its Q3 results and a 17.7% decline in revenue from its stake in the Australia Pacific LNG (APLNG) joint venture as lower contracted LNG sales hit home.

Origin shares still finished the week up 8.9% to $5.27, while rival gentailer AGL Energy Ltd (AGL) fell 4.0% to A$16.42.

Meanwhile in financials, National Australia Bank Ltd (NAB) kept the sector in positive territory, up 2.4% to finish at $16.14.

On Monday the lender, one of Australia’s ‘big four,’ surprised the market by bringing forward its interim earnings from 7 May, which included a 51% decline in cash earnings to $1.4 billion. NAB also slashed its dividend and launched a $3.5 billion capital raise.

Meanwhile, Australia & New Zealand Banking Group Ltd (ANZ) finished the week down 1.7% to $15.75 and Commonwealth Bank of Australia (CBA) lost 0.1% to $58.84. Westpac Banking Corp (WBC), which flagged a $2.2 billion Covid-19 impairment in its upcoming results, rose 0.1% to $15.34.

In materials, BHP Group (BHP) lost 2.3% to $29.85, Rio Tinto Ltd (RIO) 5.4% to $82.59. Blood plasma giant CSL Ltd (CSL) lost 4.8% to $298.76.

Gold stocks provided little defence for risk averse investors. Newcrest Mining Ltd (NCM) lost 11.9% to $25.15 after announcing a $1.1 billion capital raise, while Evolution Mining Ltd (EVN) tumbled 8.9% to $4.72.

How to trade the ASX 200

What do you make of the current situation: do you see bullish or bearish opportunities? Whatever your opinion, you can trade indices, currencies and equities – both LONG or SHORT – with IG’s easy to use trading platform now.

For example, to buy (long) or sell (short) the ASX 200 index using CFDs, follow these steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘Australia 200’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. 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. See full non-independent research disclaimer and quarterly summary.

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