ASX200 Afternoon Report May 2nd 2022

Australian flag

The ASX200 has kicked off the notoriously treacherous month of May, slumping by 1.33% (98 points) to 7336 as of 3.00 pm Sydney time.

The cause of today's weakness, a plunge on Wall Street on Friday night as investors continue to sweat over a long list of uncertainties that include elevated inflation, three central bank rate hikes this week, and Covid lockdowns in China. On top of the war in Ukraine and mixed earnings reports.

Leading falls on Wall Street, the tech-heavy Nasdaq closed ~5% lower for the session and finished the month of April 13.3% lower, its heaviest monthly fall since the Global Financial Crisis, October 2008.

Local tech stocks have followed suit. The worst of the performers Wisetech Global (WTC) fell 6.4% to $42.37, Tyro Payments (TYR) fell 6.2% to $1.18, Xero (XRO) fell 5.9%, Megaport (MP1) fell 5.76% to $8.18, Seek (SEK) fell (4.33%) to $27.15 and Appen (APX) fell 4.35% to $6.37.

Healthcare stocks are also in the firing line today. Cochlear (COH) fell 2.1% to $226.75, Fisher and Paykel Healthcare (FPH) fell 1.97% to $19.41, Sonic Healthcare fell 2% to $36.00, while biotech behemoth CSL fell 1.76% to $268.50.

Consumer discretionary stocks have eased ahead of tomorrow's RBA interest rate meeting, which should start the RBA's first hiking cycle since 2010.

Domino’s Pizza (DMP) fell 5.07% to $71.49, Star Entertainment (SGR) fell 1.9% to $3.11. Aristocrat Leisure (ALL) fell 1.66% to $33.10, and Harvey Normans (HVN) fell 1.67% to $5.01.

Travel stocks have bucked the trend as Qantas provided a trading update that predicts the nation's flag carrier will return to profitability in the second half of the 2022 FY. Qantas (QAN) lifted 2.95% to $5.76; Flight Centre (FLT) added 1.15% to $22.85, while Webjet (WEB) advanced 0.5% to 0.66%.

Soft activity data in China released over the weekend due to Covid lockdowns has weighed on resource and coal mining stocks. Yancoal (YAL) fell 3.4% to $5.15. Whitehaven Coal (WHC) fell 1.93% to $4.83, New Hope Coal (NHC) fell 0.28% to $3.50, Coronado Coal (CRN) fell 0.43% to $2.30.

Mineral Resources (MIN) fell 2.12% to $57.30, BHP Group (BHP) fell 0.56% to $47.74, Fortescue Metals (FMG) fell 0.2% to $21.59, while Rio Tinto (Rio) added 0.4% to $1113.25.

This week's OPEC+ meeting is expected to greenlight a modest 432k bpd oil output increase for June, which will do little to relieve a structurally undersupplied market and as Europe moves closer to an embargo of Russian oil imports.

Strike Energy (STX) added 2.27% to .34c, Beach Energy (BPT) added 0.9% to $1.64, Santos (STO) added 0.5% to $8.04. Woodside Energy (WPL) bucked the trend to lose 0.2% to $31.09.   

CoreLogic data showing a continuation of the slowdown in the Sydney and Melbourne property markets in April has taken its toll on the big banks. National Australia Bank (NAB) fell 1.27% to $32.22, Commonwealth Bank (CBA) fell 1% to $102.80. Westpac (WBC) fell 0.13% to $23.85. While ANZ added 0.1% to $27.33.

A tough day in the office for Lithium names. Pilbara Minerals (PLS) fell 6.3% to $2.67, Core Lithium (CXO) fell 5.5% to $1.33, Lake Resources (LKE) fell 3.8% to $1.90. Liontown (LTR) resources fell 1.71% despite signing a binding offtake agreement with LG Energy to supply spodumene from its flagship lithium project in Kathleen Valley.

ASX200 Daily chart May 2

Source Tradingview. The figures stated are as of May 2nd, 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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