Market caps best week in two years, GQG outflows, AGL board members cut

The local sharemarket finished the week on a negative tone, falling 0.8 per cent, but it wasn’t enough offset the exuberance on Tuesday.

Only the energy sector managed to post a positive result on Friday, up 1 per cent, behind a rally in Origin (ASX:ORG) and Santos (ASX:STO) which gained 1.2 and 1.9 per cent.

The IT and healthcare sectors were the worst hit following strong employment data in the US. Whitehaven Coal (ASX:RHC) and New Hope Coal (ASX:NHC) surged to new record highs after gaining 4 and 1 per cent respectively.

Over the week, the S&P/ASX200 posted a significant 4.5 per cent bounce, best in close to two years, spurred on by the RBAs decision to slow the pace of rate hikes in October.

Every sector apart from consumer staples posted a strong gain, led by energy and utilities, up 10 and 6 per cent.

Karoon Energy (ASX:KAR) was a highlight, gaining 9 per cent on Friday and 24.2 per cent for the week after seeing a key royalty cut, while GQG Partners (ASX:GQG) shed 3 per cent after flagging significant redemptions from their global funds. 

US jobs data hits markets, Twitter deal to process, unemployment declines

US markets struggled to finish the week with the Dow Jones reversing strong gains to fall 2.1 per cent after a stronger than expected unemployment result.

US unemployment fell to just 3.5 per cent, adding 263,000 jobs, with investors concerned about the implications for further interest rate hikes.

The Nasdaq fell another 3.8 and the S&P500, however, across the week the Dow Jones managed to gain 2 per cent, The S&P500 1.5 and the Nasdaq 0.7 as a surge in the oil price boosted the energy sector. In fact, the weekly result was a 16 per cent gain for the old school commodity.

Central bankers appears fixated on hitting demand, with New York Fed President Williams suggesting a neutral rate of as high as 4.5 per cent.

Shares in Twitter were weaker after a judge delayed the acquisition trial, while Advanced Micro Devices (NYSE:AMD) sent the entire chip manufacturing sector lower after reporting a weaker than expected quarterly profit result. 

Market isn’t always right, coal continues, funds management remains tough

They say ‘the market’ is always right but this week once again proved that anyone seeking to predict even the very short-term should do so with extreme caution.

The decision by the RBA to hike rates by just 25 basis points sent a shockwave through the market, ultimately pushing the market off its bottom.

It is clear that something will need to give in light of the aggressive increase in rates.

Despite the growth in ESG investing, a surge in the price of oil and coal at the same time as a global energy crisis, has seen Australia’s coal miners reach record highs this week.

For better or worse, the sector will remain in existence for the foreseeable future, but is challenged at best.

GQG Partners was the latest fund manager to report outflows exceeding $1.5 billion, despite the company delivering some of the most impressive returns over the last 12 months.

It remains to be seen how strong the active managed fund sector will remain, but clearly some level of value is beginning to emerge.

Drew Meredith

Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.