Markets are volatile - how are investors responding?
While floods have devastated south east Queensland and northern New South Wales, and the crisis in Ukraine shows few signs of abating, global sharemarkets remain volatile but relatively resilient. The ASX200 rose over 1% on Thursday, and is down just 0.5% over 5 days, while the S&P500 is down over 2% over the same period. Investors are responding to a surge in oil prices and wild trading in commodities, including a spike in the nickel price of such magnitude that the London Metal Exchange was forced to suspend trading.
The surge in oil prices, fetching around $US110 a barrel at the time of writing, has seen local energy stocks including Woodside Petroleum (WPL) and Santos Ltd (STO) enjoy a long-awaited day in the sun. Woodside is up nearly 20% in the last month, while Santos is trading around levels seen mid last year after a period of weakness. Investors have been selling Woodside on strength, and buying into Santos, albeit in relatively small numbers for the latter. Beach Energy (BPT) has also seen selling although its recent surge has failed to recover the stock’s previous 52 week high, while long term investors bought Betashares Crude Oil ETF (OOO).
Woodside Petroleum shares (WPL.ASX) over one month
Source: nabtrade
Energy security fears arising from Russia’s invasion of Ukraine have driven up demand for stocks in producers and hopefuls in industrial metals that supply the infrastructure for renewable energy, including lithium, cobalt, nickel and rare earths. Nickel Mines (NIC) saw active trading – and a trading halt – on Wednesday after a dramatic fall in its share price as investors worried it would be caught up in the short squeeze on one of its major shareholders (and customers). Core Lithium (CXO) remains a popular active trade, while Allkem (AKE), the combined Orocobre-Galaxy Resources lithium play continues to attract buyers. Gold, the traditional safe haven, is closing in on an all time high; cautious investors have put their faith in the physical gold ETF (GOLD).
Outside resources, Thursday’s rally, following Wednesday’s 1% gain, saw a return to strength in the big four banks, with the financials sector up 2% over 5 days. Commonwealth Bank (CBA) was a nearly 90% sell as it closed in on $100, finishing Thursday at $99.75. Nab (nab) shares closed just 1c short of $30, a key threshold for many investors, and also saw heavy selling, as did Westpac (WBC). Macquarie Group (MQG) has been mixed as it hovers around $185, while Magellan Financial Group (MFG) continues to find buyers when it fell below $14.50 on Wednesday.
On global markets, one investor has purchased a share in Berkshire Hathaway (BRK.US), Warren Buffett’s legendary investment company. This is notable because a single Class A share costs nearly $US490,000 – over $AUD660,000. Berkshire Hathaway has sizeable holdings in Apple stock, as well as Bank of America and Coca Cola, so it offers a concentrated portfolio of large cap US equities. Buffett’s reputation has faded a little as his disinterest in high PE tech stocks has led to underperformance over the last decade, but a 20% fall in the Nasdaq from its peak may lead to a re-rating of the world’s most famous stock picker – one high net worth investor certainly thinks so.
Analysis as at 10 March 2022. This information has been provided by WealthHub Securities Ltd the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 (NAB). Whilst all reasonable care has been taken by WealthHub Securities in reviewing this material, this content does not represent the view or opinions of WealthHub Securities. Any statements as to past performance do not represent future performance. Any advice contained in the Information has been prepared by WealthHub Securities without taking into account your objectives, financial situation or needs. Before acting on any such advice, we recommend that you consider whether it is appropriate for your circumstances.