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FIVE at FIVE AU: ASX dips dragged down by BHP acquisition news; keep an eye on healthcare sector

Published 26/04/2024, 01:13 pm
© Reuters FIVE at FIVE AU: ASX dips dragged down by BHP acquisition news; keep an eye on healthcare sector
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The S&P/ASX200 is lower today, dropping 101.60 points or 1.32% to 7,581.40. The index has lost 0.79% for the last five days, but is virtually unchanged over the last year to date.

The bottom-performing stocks in this index are Healius Ltd and Super Retail Group Ltd, down 5.20% and 5.04% respectively.

BHP (ASX:BHP) Group Ltd (LSE:BHP, ASX:BHP) falls weighed on the bourse and all sectors were in the red at time of writing, with real estate leading the dive and the mining and banking sectors also having a difficult time.

BHP was down 4.4% at around 1pm to $43.23, as investors reacted to its $41 billion bid for rival Anglo American (JO:AGLJ)'s assets. BHP is attempting to reshape its global copper footprint.

BHP said in a statement: “The combination would bring together the strengths of BHP and Anglo American in an optimal structure. Anglo American would bring its assets and long-term growth potential. BHP would bring its higher margin cash generative assets and growth projects along with its larger free cash flows and stronger balance sheet.

“The combined entity would have a leading portfolio of large, low-cost, long-life Tier 1 assets focused on iron ore and metallurgical coal and future facing commodities, including potash and copper. These would be expected to generate significant cash flows and the combined entity would have the financial capacity to support value adding growth projects at the optimal time, while continuing BHP’s commitment to shareholder returns.”

CBA was 1.6% down at $113.21, Westpac had lost 2% to $25.67, NAB had fallen 1.1% at $33.64 and ANZ was down 1.8% to $28.02.

Declines have followed a sharp fall on Wall Street overnight after the US reported slowing economic growth, hotter-than-expected inflation numbers and a plunge by Meta shares.

US Treasury yields hit their highest level in more than five months amid expectations the Federal Reserve may wait before cutting interest rates.

What are the best and worst-performing sectors this week?

The best-performing sectors include Healthcare, up over 3% followed by Information Technology and Financials, up over 2%. The worst-performing sectors include Energy, down over 2%, followed by Industrials and Materials, slightly up over half of a per cent.

The best-performing stocks in the ASX top 100 include Cleanaway Waste Managements Ltd, Block Inc (NYSE:SQ) and Lendlease Group Ltd, all up over 6%. The worst-performing stocks include Bellevue Gold Ltd (ASX:BGL), down over 11%, followed by Brambles (ASX:BXB) down over 7% and Northern Star Ltd, down 4%.

What's next for the Australian stock market?

Wealth Within chief analyst Dale Gillham runs his eye over what to expect next in the Australian market.

“This week, the buyers have wrestled back control with the market up over 1% so far. Interestingly, the buyers stepped in around the 7,800 level, which also happened back in February of this year. For now, it's clear that there is support from the buyers around 7,800, but with the way the market fell last week, don't be too quick to assume that the market will resume the uptrend to make a new all-time high.

“That said, we cannot completely discount the possibility of making a new all-time high before April bids us goodbye. We know historically April has been the market's strongest month and is volatile; so, with only three trading days remaining, technically a 3% rise to a new high quite is possible.

“Regardless of what plays out, we know the market typically makes its mid-year low in the May/June period, so I am still anticipating a move down over the next few weeks. During a down phase, most stocks are prone to fall and all too often I see traders wrongly assume that all stocks will fall. If you are looking to buy, the trick is to know which sectors to look at to find stocks that have a higher probability of bucking the trend.

“Right now, I would encourage you to look to the Healthcare sector, as historically it has shown that it holds up the best when the market is falling. Some notable names to watch include CSL, Cochlear and ResMed.”

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