Last August, that figure was $117 billion. The selling spread to the Australian equities portfolio, which had been one of the few bright spots this year. To make things worse, the ASX announced the same day that the fund manager will be exiled from the S&P/ASX100 on 20 June. Shares bounced on Thursday after Magellan appointed talisman Hamish Douglass as a consultant from October.
Elon Musk retracts threats to cut staff
The chief executive of Tesla sent an email to employees late last week saying that he would be cutting salaried headcount by 10 percent. Investors panicked at what might be a sign production would fall, and Tesla shares were down 9%. The tech billionaire used Twitter this weekend to soothe nerves, writing “total headcount will increase but salaried should be fairly flat.”
Kentucky Fried Cabbage?
KFC is feeling the sting of shortages and inflation just like us. The fast-food chain said it had decided to use a “lettuce and cabbage blend” in all products containing lettuce until further notice. Why? A lettuce shortage has driven prices 300% higher, to $10 a head. On the East coast, floods are destroying lettuce. Lover of Zingers will have to bide their time as KFC has not specified when supplies of lettuce will return.
This year, expect a cash rate above 2%
Analysts are scrambling to raise cash rate expectations after the Reserve Bank laid a few hawkish feathers. After the RBA shocked markets with a 0.5% hike the biggest since 2000 HSBC, JPMorgan, Westpac and Commonwealth Bank are now all penciling in another hefty 50 basis points in next month’s meeting. Commonwealth Bank has moved its expectations for the cash rate from 1.3% before the meeting to 2.1% in December.
Those who are being evicted by the ASX 200 in June rebalance
Appen, Platinum Asset Management and Tyro Payments are being kicked out of the S&P/ASX 200 in a reshuffle that comes amid the continuing resources boom. Three of the four new entrants are miners: Core Lithium, Lake Resources and coal digger New Hope. The amendments will go into effect on 20 June. The share prices of Appen, Platinum Asset Management, and Tyro Payments have struggled this year, dropping 38 per cent, 51 per cent, and 69 per cent respectively since January. Make room for the new as they say out with the old and in with the new.
Global gloom
Global economic watchmen the OECD and the World Bank are becoming more pessimistic on growth. The OECD, led by Mathias Cormann, cut world growth to 3 per cent in 2022 from 4.5 per cent. The World Bank says 2.9%. Yikes. Both institutions cite fallout from the war in Ukraine for driving inflation higher and slowing growth everywhere.
Commodity prices rally
A major commodity index reached a record high this week as natural gas and wheat prices rose sharply and traders grew anxious about supply disruptions as a result of Russia’s invasion of Ukraine. The Bloomberg Commodity Index, which includes 23 commodities, is higher by 37% this year. Brent crude prices rose 4.6% this week as demand was boosted by easing covid restrictions in China.
Market Recap with AAP: ASX has its worst week in more than two years
Another massive sell-off has left the Australian stock market facing its biggest weekly loss in more than two years, and the lowest close in 14 months.
The benchmark S&P/ASX200 index closed up Friday down 87.7 points to 6,932.0, a fall of 1.25%. The ASX200 dropped 4.24% for the week, its worst performance since the week ending 24 April 2020, having fallen every day except Wednesday. Its close was the lowest since April 7, 2021.
“Certainly quite a pullback,” said CommSec market analyst Stephen Daghlian.
“To be frank, it’s not overly surprising based on what we saw from the Reserve Bank, which on Tuesday raised interest rates more aggressively than many people were expecting.”
The financial sector tumbled 9.0% for the week, its worst loss since March 2020, the onset of the pandemic.
The big banks all surrendered their early gains to finish down on Friday, with the largest, Commonwealth, near a one-year low at $93.78. CBA was down 1.2% on the day and 10.7% week-to-week.
Westpac was down 1.5% at $20.85, ANZ lost 1.2% to $23.07 and NAB eased 0.7% to $28.06. The stock is down 10.3% over the past five days for National Australia Bank.
Property was Friday’s worst performing sector, down 2.9%. The sector is also on pace for its worst week since March 2020 with a 7.0% decline. Every sector was down, with energy the one area that has been holding up recently falling 1.6 percent as Brent crude traded near US$122 a barrel. Woodside slipped 1.6% and Santos dropped 1.5%.
Tiny Bubs Australia was one of the few bright spots on the market, surging 9.2% to 65 cents after it said the US government-chartered air cargo flight of baby formula would be purchased by US supermarket behemoths Krogers and Albertsons. Bubs formula is being brought in on an emergency basis to help address a huge infant food shortage in the US.
