ASX200 afternoon wrap 7th of March 2022

The spillover was most evident in gold which cracked the psychologically important $2000 level for the first time since July 2020 and in energy markets where Brent crude oil soared 18% to more than $139 a barrel, building on its 21% gain of last week.

Russia supplies over 11% of the world’s oil and 17% of the world’s natural gas, and in response, the S&P/ASX200 Energy sector closed a whopping 5% higher today. Woodside Petroleum (WPL) added over 9% to close at $34.29. Beach Energy (BPT) closed 6% higher at $1.765, while Santos (STO) closed 5.48% higher at $8.19.

The immediate pain of higher energy prices has been felt most acutely in the travel stocks that were starting to see glimmers of hope after a torrid two years following the onset of Covid19.

The rising cost of jet fuel that eats into margins and concerns that Russia’s invasion of Ukraine will see travellers delay trips to Europe, yanked the rug from under Qantas shares which closed 8.33% lower at $4.51. Flight Centre closed 4.38% lower at $16.95.

Elsewhere the S&P/ASX200 Info Tech sector fell by a chunky 4.68%, reflecting the high beta nature of the sector, and as the tech-heavy Nasdaq futures traded almost 2% lower during the Asian session. Leading the declines Block (SQ2) closed 10.12% lower at $137.47, Appen Ltd (APX) closed 4.80% lower at $6.75, and Zip Co Ltd (Z1P) finished the day 4.07% lower at $1.65.

Wheat futures on the Chicago Board of Trade (CBOT) are locked limit up for the second session in a row and have rallied almost 40% during March. Ukraine and Russia account for about 30% of the world’s traded wheat, prompting a global panic to secure increasingly scarce food supplies. Elders Limited (ELD) closed 1.91% higher at $12.25.

Despite the action elsewhere, it was a mixed day for the S&P/ASX200 Materials sector. BHP Group (BHP) closed back above $50.00 at $50.30, Rio Tinto (Rio) fell -0.68% to close at $125.70, while Fortescue Metals Group (FMG) was the best of the big three miners adding 1.72% to close at $19.53.

Reflecting signs of stress in European Bank credit spreads, a result of the unprecedented sanctions on Russia, the S&P/ASX200 Financial Sector closed the day -1.59% lower.

The Commonwealth Bank (CBA) was again the best performer, despite closing -0.16% lower at $94.45, Westpac (WBC) lost 2.25%, National Australia Bank (NAB) lost -1.70%, ANZ lost 1.09%, and Macquarie Group (MQG) fell 3% to close at $174.77.

Source Tradingview. The figures stated are as of March 7th, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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