This year’s top 10 stories included a peek into AustralianSuper’s international equities build out in London, AMP’s move to slash employee benefits, and plenty of hard-hitting analysis of the issues that matter in institutional investment. But the real story is how readers helped shape all of that coverage.
Orbis’ Stuart Place is riding from Melbourne to the Moon and Back to fund a treatment for the “monster of a disease” that his youngest son was born with. The investment industry is rallying behind him.
Local market posts another positive week, iron ore surges, energy crisis beckons
The local market finished the week on another positive note, despite the return of concerns about the aggressiveness of central banks around the world, with the S&P/ASX 200 posting a 0.9 per cent gain on Friday.
It was propelled by the materials sector, with copper and iron ore miners benefitting from the loosening of lockdowns but more importantly and acceleration in domestic infrastructure and stimulus.
Champion Iron (ASX:CIA) added 8.1 per cent and BHP (ASX:BHP) 2.5 per cent with the lithium miners also benefitting from the rally. Technology shares also gained close to 2.3 per cent, but healthcare underperformed once again, finishing slightly higher after Healius (ASX:HLS) dropped 8.7 per cent on an earnings downgrade.
The company has flagged more difficult second half trading conditions, but will still see a 100 per cent jump in earnings on the back of running 15,000 daily COVID-19 tests.
Friday’s gain represented the gain for the week, with returns of more than 3 per cent from both the energy and materials sector delivering another positive period. The standout was Beach (ASX:BPT) and A2 Milk (ASX:A2M) which both gained more than 10 per cent whilst the lithium miners were smashed on falling pricing expectations.
Positive economic news means bad news for the market, Tesla’s concerns and growing hyperbole
Global markets couldn’t keep the positive streak going beyond one week, with all three US benchmarks falling on Friday.
The technology sector was the biggest detractor, dragged down by Tesla (NYSE:TSLA) which fell another 9.2 per cent. This meant the Nasdaq fell 2.5 per cent, with the S&P 500 and Dow Jones slightly better, falling 1.6 and 1.1 per cent as energy companies gained on the surging oil price.
Tesla’s fall appears to be driven by comments from CEO Elon Musk, who announced a freeze on all hiring and 10 per cent staff cuts across the business, the latest in a trend of job cuts across tech businesses.
The comments hit despite US payrolls smashing expectations, with experts predicting 328k new jobs, but 380k being taken.
This positive news for the workforce is seen as negative news for the economy, as it will likely force the Fed to continue to hike interest rates. Musk also said he has a “super bad feel” on the economy, which followed similar hyperbole from JP Morgan CEO Jamie Dimon, who talked of an “economic hurricane”.
On the positive side was sportswear maker Lululemon (NYSE:LULU) which fell just 0.6 per cent after reporting a 32 per cent jump in revenue but flagging it was not immune from supply chain and inflation challenges.
Shares in American Airlines (NYSE:AAL) fell more than 7 per cent after the company increased revenue guidance but also flagged higher energy costs as a hit to profits.
Over the week, the Dow Jones delivered a 0.9 per cent loss, the S&P 500 1.2 and the Nasdaq 1 per cent.
Walking into an energy crisis, lithium and the power of themes, more casino pain
While I will be clear and highlight that I am not an expert, all reports, along with the massive jump in electricity pricing in Australia suggest the country is walking headlong into an energy crisis of our own making.
Despite having abundant resources and watching Europe suffer under the same struggles, Australians look set to face higher energy costs and more volatile electricity at the same time they face higher interest rates.
Poor planning, or short-term planning, is the likely culprit. Thematic stocks have been among the hardest hit in 2022, with technology companies operating in fast growing sectors dropping like flies.
This week it was all about lithium, which had seemed to attract diehard supporters that suggested the price of lithium could never fall.
As with all commodity sectors, the market will ebb and flow between surplus and deficit, with higher prices attracting more supply, yet the near vertical trajectory of lithium stocks for the last 12 months was clearly unsustainable.
Finally, the Star Casino group was this week said to have been ‘unsuitable’ to hold a casino license, just like Crown in Melbourne, due to massive deficiencies in their basic processes and governance.
This in the era of ‘ESG’ focused investing suggests a lot more needs to be done before providing capital to these types of companies.
