Market sells off ahead of Christmas break

Market sells off ahead of Christmas break

It was an incredibly bearish week for global equities as markets entered the final trading days for 2022. The selloff in equities was largely due to Federal Reserve Chairman, Jerome Powell, signalling that the peak cash rate may peak at 5.1%. This came after some softer inflationary figures. Furthermore, recessionary fears and bearish sentiment has certainly become more notable in recent weeks. This desire for continued interest rate hiking to continue may be more evidence that a recession will occur as pressure is placed back on companies and their profitability in 2023.

For the week, the S&P500 fell by 2.09% and failed to break through its 50-week moving average. The Dow Jones was slightly more resilient dropping by 1.66%, whilst the Nasdaq and big technology felt the brunt of the selloff, slipping by 2.93%. The ASX200 fell just 0.89% in comparison, although it has not yet traded since the US’s Friday sell off.

The commodity market outperformed equities with Brent Oil jumping 3.36% to $79.37 a barrel as the price found some support. Gold on the other hand proved to be more volatile with the price ending relatively flat at $1792 an ounce.

Stocks In the Spotlight

AMP Limited (AMP)

The financial services company that operates in Australia and New Zealand has seen a steady rise in its share price over the last few weeks. In fact, the share price is trading at almost two years highs at $1.40. The company has seen a rise in price alongside the rest of the financial sector over the last 6 months and has stayed so far resilient in the recent equities sell off. There has been no specific price catalyst for AMP, rather the company has maintained consistent and profitable performance despite potential troubles in the coming months relating to its mortgage and wealth management service streams.

Norwest Energy, (NWE)

The Perth oil and gas company holds one of the largest gas projects in the country at Lockyer Deep. The share price rocketed to multi year highs after an off market takeover offer was made by Mineral Resources, (MIN), an experienced and diversified mining company has seen its own share price steadily increasing. MIN already owns 19.9% of the company and the deal values the NWE at just over $400 million and $0.06 per share. MIN has proceeded in multiple acquisitions in prior years providing strong returns for the shareholders of the companies that have been acquired. The share price was last trading at $0.059 just below the offer price.

A2 Milk, (A2M)

The New Zealand Milk company has finally seen its share price track upwards after a long consolidation. After the price peaked in July 2020 at almost $20 it took a long path to finally find its bottom at near $4.00. Much of the recent growth has come from its potential growth I the SA which earlier this year was facing significant baby formular shortages. This has led to higher sales and profit projection for 2023 and beyond. In addition, as the global economy, may potentially enter a recession consumer staple items such as milk and other staples will most likely be less affected by the slowing growth. The company’s shares are currently trading at $6.74.

Weekly Ex Dividend dates

19 December

KPG – Kelly Partners Group

20 December

MTS – Metcash

SGLLV – Ricegrowers Ltd

VEU – Vanguard All-World-Ex-US-Shares Index ETF

21 December

IVE – Ishares MSCI Eafe ETF

IJP – Ishares MSCI Japan ETF

IZZ – Ishares China Large Cap ETF

IXJ – Ishares Global healthcare ETF

IAA – Ishares Asia 50 ETF

IVV – Ishares S&P500 ETF

IXI – Ishares Global Consumer Staples ETF

IOO – Ishares Global ETF

IEM – Ishares MSCI Emerging markets ETF

IEU – Ishares Europe ETF

IJR – Ishares S&P500 Small Cap ETF

IJH – Ishares S&P500 Mid Cap ETF

23 December

Vanguard US Total Market Shares Index ETF

Key Economic Events -Australian Eastern Standard Time

Tuesday

TBA – JPY Monetary Policy Statement

TBA – JPY BOJ Press Conference

Thursday

12:30am – CAD CPI m/m

12:30am – CAD Median CPI y/y

12:30am – CAD Trimmed CPI y/y

2:00am – USD CB Consumer Confidence

Saturday

12:30am – CAD GDP m/m

12:30am – USD Core PCE Price Index m/m