The selling pressure continued on Wednesday with the S&P/ASX 200 (ASX: XJO) falling 0.8% as uncertainty around the world continues to grow.
Recent winners in energy and materials led the sell-off, down 3.6% and 3.3%, respectively, with BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) among the hardest hit, falling 3.7% and 4.3%.
Nickel up 100% in two days
Among the strangest moves in recent days has been the 100% jump in the price of nickel, to over US$100,000, as another short squeeze plays out, with Russia a key producer. Interestingly Australia’s Nickel Mines Ltd (ASX: NIC) fell another 10%.
ASX defensive stocks outperform
As has been the case in previous crises, when things look their worst money flocks into the ‘defensive’ sectors of the market like healthcare and groceries. This is driven by managers who are forced to remain fully invested at all times seeking to identify the least risky parts of the market.
This time has been no different, with the healthcare and consumer staples sectors outperforming, adding 1.9% and 1.8%, respectively. The highlights were Woolworths Group Ltd (ASX: WOW), CSL Limited (ASX: CSL) and Coles Group Ltd (ASX: COL) which were up 3.4%, 2.8% and 1.9% each.
Business confidence improves
Businesses appear to be becoming more confident despite the difficult geopolitical backdrop, with NAB’s business conditions index moving back above the long-term average, with employment a key driver.
Nickel’s surge has garnered most of the attention due to Russia’s role in supplying the mineral, but the price of wheat has been similarly strong, touching record highs in recent weeks. The spike, which is unlikely to be sustainable, has seen shares in GrainCorp Ltd (ASX: GNC) double over the last 12 months but fall 3% on Tuesday.
International Women’s Day & rate hikes
International Women’s Day has dominated headlines, with the financial services sector among the worst in terms of gender equality and opportunity. At Wattle, we remain committed to closing this gap at any opportunity.
Speaking at the AFR’s Business Summit on Tuesday, Paul Keating placed further pressure on the Reserve Bank to raise interest rates, suggesting they ‘get on the curve’ rather than stuck behind it. This is clearly a challenging period with the spike in fuel prices a significant brake on growth. The currency also stands out as a potential issue should the RBA allow the Federal Reserve to get too far ahead.
ASX 200 today
Looking ahead, the ASX 200 is set to edge higher when the market opens this morning despite a modest negative lead from US stock markets overnight.