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Trading update

With the ASX200 finally closing firmly above 7000 points on Thursday, Australian investors have largely been rewarded for holding their nerve through Covid. While not yet above its February 2020 peak, 7000 represents a significant psychological milestone and ensures that investors who bought prior to January 2020 or after the market collapsed in late Feb/early March are largely in the black. The return to pre February 2020 levels has taken a little over a year; contrast this with the Global Financial Crisis, when the market peaked in September 2007 and didn’t bottom out til March 2009. The downturn itself took 18 months, while the return to the previous peak took over a decade (excluding the impact of dilutions and dividends). While painful, the Covid crash was sharp and extremely short in comparison.

On nabtrade, this milestone has been met with relatively little fanfare. Investors are still in holiday mode, with few movements sufficient to tempt them back to the trading screen. Trader favourite Zip Co (Z1P) fell nearly 7% on Thursday, after completing its $400m zero coupon convertible notes offering. Ordinarily a price fall of this size would bring out the buyers, but Z1P was a heavy sell on nabtrade, as investors contemplate the company’s future. The Zip share price is up 80% from 1 January, but well below its $14.53 peak earlier this year. Afterpay (APT) was also a sell on weaker volumes, its current $127 price an attractive take-profit threshold for many who bought in 2020 and missed the opportunity to sell when APT climbed to $160 earlier this year.

Closely held iron ore play Fortescue Metals (FMG) rose 3.5% on Thursday on the back of the iron ore price holding above $170; investors continued to take profits. BHP (BHP) and Rio Tinto (RIO) were also up more than 2.5%, and saw selling. The share prices for these three stocks are all trading below their 2021 highs, but strongly up on January 2020. South32 (S32) and Whitehaven Coal (WHC) both cracked the top 20 most traded stocks, the former a sell and the latter a buy. The mining sector continued to attract attention with Northern Star (NST), Pilbara Minerals (PLS) and Regis Resources (RRL) all featuring heavily in the trading volumes. Regis fell 15% on Thursday following the completion of its placement and institutional entitlement offer; the price fall attracted some buyers.

In the energy sector, popular small cap Vulcan Energy (VUL) has seen its share price rally strongly, but remains well off its 52 week high of $14.20 at $7.58. Small buyers have been tempted. At the larger end of the energy sector, Santos (STO) has seen selling as its price hovers above $7.

On international markets, Coinbase (COIN.NAS) listed on the Nasdaq, attracting huge volumes and rallying to $US425 before collapsing and closing at $US325, below its list price. Big names Tesla (TSLA.US), Microsoft (MSFT.US) and Palantir (PLTR.US) continue to dominate international trades, with investors largely continuing to accumulate.

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Gemma Dale , nabtrade

Gemma Dale is Director of SMSF and Investor Behaviour at nabtrade. This information has been provided by WealthHub Securities Ltd ABN 83 089 718 249 AFSL No. 230704 (WealthHub Securities), a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 (NAB). 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. All prices and analysis as at 15 April 2021.

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Gemma Dale

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