ASX Weekly Market Outlook and the Top Movers Last Week

The week been saw the All Ordinaries [ASX:XAO] pull back heavily at the end of the week, falling 199 points on Friday.

Quite a lot more volatility seeped into the Aussie stock market this week, with some large swings in price throughout.

Closing at 6,108 points, the market looks to be slowly building a downtrend.

ASX XAO Share Price Chart - ASX Outlook

Source: Optuma

ASX outlook for the week ahead

The week coming may have a lower open — based on the large movement down last Friday and the overall uncertainty regarding the economy right now.

After 11 weeks of moving sideways we may finally be starting to see the direction the market will take.

With it being announced officially last week that Australia is now in a recession, the first in 29 years, the All Ords may just be in for a move down.

With such a large overall drop on the All Ords this week been, there weren’t many gains out there to be had.

Sydney Airport [ASX:SYD] moved up 6.53%, as did AMP Ltd [ASX:AMP] and Adbri Ltd [ASX:ABC], pushing up 8.30% and 6.02% respectively.

On the downside, IOOF Holdings Ltd [ASX:IFL] fell away sharply, pulling back 22.46%.

While Medibank Private Ltd [ASX:MPL] pulled back 9.61%.

Taking a look at the sectors, again few gains were recognised with only the Industrials making notable gains of 1.75%.

While Information Technology fell back 7.24%, so too did Consumer Staples and Financials, declining 4.02% and 3.34% respectively.

A broader outlook for the ASX

The big word for me this week is fear.

Fear and greed are two main drivers of human nature, and something both those traits have in common with the COVID-19 virus is — they are contagious!

Over the last couple of months the All Ords fell into somewhat of a holding pattern, just going sideways.

Traditional companies such as Qantas Airways Ltd [ASX:QAN] plummeted in price and the global travel industry fell in on itself, while new heavyweights emerged like Afterpay Ltd [ASX:APT] — as their business model proved popular in a lockdown.

ASX BNPL Stocks - APT Price Chart

Source: Optuma

Now, a quick look across the ‘buy now, pay later’ sector (BNPL), and they are all starting to fall away in recent times.

Harvey Norman Holdings Ltd [ASX:HVN] and JB Hi-Fi Ltd [ASX:JBH] — two other standout performers of the market — also fell back last week, losing 2.47% and 2.68% respectively.

These declines in price indicate that the spending may be drying up.

It had been reported that the household savings rate in Australia increased to 19.80% in the second quarter of 2020, from 5.50% in the first quarter.

Simply — if people are saving their money then there is less overall capital in the consumer system.

Less spending means less earnings for companies — which in the current climate may have a huge impact on companies large and small as we walk into the unknown waters of a recession.

Regards,

Carl Wittkopp,
For Money Morning

PS: Four Well-Positioned Small-Cap Stocks: These innovative Aussie companies are well placed to capitalise on post-lockdown megatrends. Click here to learn more.


Carl Wittkopp writes for Money Morning and has a diploma in Financial Planning. He specialises in technical analysis.

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