The ASX struggled today, ending an 8-day upward streak and shedding 0.46% or 33.20 points to 7,204.00.
The pull back is unsurprising given the market’s buoyancy last week and a shortened trading period due to the Easter long weekend.
It’s still been a positive week for the ASX200, however, gaining 1.15% overall for the last five days and up 2.35% for the year.
The FTSE100 (+1.30%), Nasdaq (+0.59%) and S&P500 (+1.55%) shared in our success, although things were looking grimmer in Chinese and Japanese markets, with the Nikkei225 losing -1.25% over the week and the Hang Seng creeping -0.22% lower.
Commodities were overall down this week, although West Texas Crude was a standout, gaining 8.04% over the last five days alone although still down 0.17% for the month.
Precious metals were also mostly in the green, with silver (+3.62%), gold (+2.08%) and platinum (+3.28%) gaining while palladium slipped -0.73%.
Base metals were down more than 1.8% across the board, with tin (-5.97%) and zinc (-4.65%) suffering in particular.
In the news this week
What will the Easter weekend bring for the ASX?
Wealth Within chief analyst Dale Gillham offers his insights for the market heading into the long weekend.
Homeowners suffering from mortgage stress may not have had a good night’s sleep on Monday, given the impending RBA decision on interest rates on Tuesday.
But the good news came with a sigh of relief, as the RBA decided to keep interest rates on hold after 10 straight rises.
Rising interest rates can be positive, especially for the share market, as there is often a correlation between interest rates and how the stock market performs.
That said, the direction and strength of the correlation will depend on various factors, which may not always be evident or even consistent.
On the other hand, when interest rates are high, it can make borrowing more expensive for both consumers and businesses and this leads to lower spending and economic activity, which is what the RBA has been hoping for as it tries to rein in inflation.
This can negatively impact corporate earnings and lead to a decline in stock prices, although we are not really seeing this in the current environment, which suggests that interest rates are not overly high.
Often the RBA overshoots the mark on interest rates which is why it becomes a balancing act of not having rates too high to stifle growth, while at the same time keeping inflation in check.
Time will tell if they have got the balance right this time.
For investors, it’s important to note that the relationship between interest rates and the stock market is not always straightforward.
There are many other factors that can influence stock prices, such as a company’s performance, economic indicators, geopolitical events and investor sentiment.
I think right now the RBA has it right and that we will see good growth in the Australian stock market over the coming year, but again only time will tell.
The best and worst-performing sectors this week
The best-performing sectors include Information Technology up more than 3% followed by Energy and Consumer Discretionary, which are both up over 2%.
Worst-performing sectors include Materials down over 2% followed by Utilities, which is just in the green and Financials up more than 1%.
The best-performing stocks in the ASX top 100 include Evolution Mining up in excess of 7% followed by AMP and Northern Star Resources (ASX:NST), as both are up more than 5%.
Worst-performing stocks include Allkem and Pilbara Minerals, which are both down more than 5% followed by BHP (ASX:BHP) and Fortescue (ASX:FMG), as both are down over 4%.
What's next for the Australian stock market?
Last week the Australian stock market rose strongly closing higher every day and ending the week up 3.30%.
The beginning of this week was very similar with the market rising strongly on Monday, however, given it is a shorter week with Easter, the bulls were more cautious with the market only rising slightly on Tuesday and Wednesday.
It is now eight straight trading days in which the All Ordinaries Index has closed higher, therefore, it would not surprise me to see a few down days.
Next week is also a short week and I would expect volumes and volatility to be slightly lower.
The exciting part about what is unfolding is not what the market has achieved over the last eight days but what it will do in the next week, as this will set the tone for the coming month.
If any move down in the next week is short-lived in both time and price, then it will signal the bears have gone into hiding.
If this is the case, the bulls will push our market higher in the coming four to six weeks with the market is likely to rise up to 7,800 points or higher.
As I continue to say, I recommend investors be patient, as they will be more than rewarded when we get confirmation that the bull market has returned.
I suggest investors look at the top 20 stocks on the market, as several look like they are setting themselves up for a nice run, but remember, we need to wait for confirmation that the bull run has returned.
For now good luck and good trading.
Has Australia’s property market hit bottom?
Property expert, buyer’s agent and author of Positively Geared and Buy Now, Lloyd Edge, thinks that may well be the case.
He points to the fact that property prices in Sydney rose by 1.4% in March, indicating that we may have already seen the bottom of the market cycle for now.
Recent research commissioned by Aus Property Professionals says Australians are of a different mind however; some 67% of respondents believe that it’s inevitable that Australia’s “property bubble” will burst soon.
Only 33% of people said they didn’t believe this to be the case.
Of those who believe the “bubble” will burst, most (62%) believed it would occur within the next five years, 21% thought it would pop within the next 12 months and 17% said the next 10 years or more.
“It’s unsurprising that the sentiment towards property is mostly negative right now, especially with all the pessimistic talk lately,” Edge said in response to the research.
“However, keep in mind that in order for a major housing market crash to happen we would need much higher unemployment rates and a huge oversupply of property.
“None of these things are occurring right now.
“Inflation figures have fallen for a second month in a row, there is no sign of a recession at this stage and jobs data remains strong.
“There is also unlikely to be further decline in property prices this year, as the market is stabilising as interest rate increases start to level off.
“There are still plenty of buyers in the market and a lack of supply, which is keeping prices up.”
The last year or so has been a difficult one for mortgage holders, who’ve weathered ten consecutive interest rate rises since May last year and may need to absorb another next month.
Something of a fixed rate mortgage cliff appears to be looming and it’s expected that some 800,000 home loan fixed rate terms will end in the second half of this year, doubling or tripling interest rates from about 2% to 5% or 6% – experts are predicting a wave of defaults or urgent sales.
The RBA downplayed risks of a fixed rate mortgage cliff, as it’s being termed.
“Borrowers with fixed-rate loans have faced or will face large, discrete increases in their loan payments when their fixed-rate terms expire,” The RBA’s bulletin read.
“Loans that are yet to roll off will face the largest increases, although these borrowers have also benefited the most from avoiding higher loan payments to date and have had more time to prepare for the rise in mortgage payments.
“Although higher mortgage payments will strain the finances of some borrowers, most are facing higher interest rates from a position of strength, with very low rates of mortgage arrears, a very low unemployment rate and a high rate of participation in the labour market.”
Only time will tell whether that is enough.
Small cap wins for the week
OD6 Metals surges 46.3%
OD6 Metals Ltd (ASX:OD6) has lauded very high-grade rare earth recoveries at its Splinter Rock Project near Esperance in WA with shares soaring by 46.3% over the course of the week.
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Chimeric Therapeutics soars 27.1%
Chimeric Therapeutics Ltd (ASX:CHM) shares climbed 27.1% after its CHM 1101 glioblastoma abstract was selected for presentation at the 2023 Annual Meeting of the American Society of Clinical Oncology (ASCO), which is being held from 2-6 June 2023 in Chicago, Illinois.
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Queensland Pacific Metals leaps 22.7%
Queensland Pacific Metals Ltd (ASX:QPM) shares gained 22.7% after the company entered into a binding asset sale agreement to acquire the Moranbah Project in northern Queensland from the Arrow Energy Group and AGL Energy (ASX:AGL) (ASX:AGK) Ltd and signed a collaboration agreement with leading German companies Plinke, Andritz Separation and Siemens for the supply of equipment for the TECH Project.
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Azure Minerals jumps 19.2%
Azure Minerals Ltd (ASX:AZS) shares leapt 19.2% over the week after an ongoing lithium-focused drilling campaign at the Andover Project in the West Pilbara region of WA continued to deliver “substantial widths” of spodumene-bearing pegmatite.
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Kazia Therapeutics gains 14.2%
Kazia Therapeutics Ltd (ASX:KZA, NASDAQ:KZIA) stock rose 14.2% this week after the company readied to showcase data for its paxalisib and EVT801 pipeline molecules to scientists from the American Association for Cancer Research (AACR) later this month.
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