The China stimulus surge lifted the ASX on Friday, and many investors are hoping for the rally to continue this week, even though China enters a week-long holiday starting tomorrow, with no major news expected during that period.
However, the news from China and the U.S. economic data overshadowed the return to normalcy at the top of the ASX, with BHP reclaiming its spot as the most valuable company, overtaking the Commonwealth Bank.
The ASX 200 index closed Friday up 8.5 points, or 0.1%, at an all-time high of 8212.2, while the broader All Ordinaries gained 14 points, or 0.17%, to close at 8476.8. The ASX 200 added just 0.035% by Friday’s close, driven by the surge in iron ore mining stocks, especially BHP.
Overnight futures trading ended early Saturday with a rise of 22 cents, ahead of the reopening of trading this morning.
The mining sector rose 2.8% on Friday and 9.4% for the week, marking its best weekly performance since a 10.3% gain in October 2015. In contrast, the ASX financial index lost 0.6% on Friday and 4.4% for the week.
The China stimulus story saw BHP shares jump 3.2% on Friday and 13.5% for the week, as it surged past CBA, which slid 0.1% on Friday and recorded a 6.5% loss in what was a significant sell-off for the country’s largest bank.
BHP’s market value rebounded to $227 billion, while CBA’s dropped to $224 billion by Friday’s close.
NAB shares fell 1.8% on Friday and 6.3% for the week. Westpac dropped 1.7% on Friday and 5% for the week, while ANZ lost 1% on the day and 4% for the week.
In addition to BHP’s rise, Rio Tinto shares increased by 3.43% on Friday and 15% for the week. Fortescue shares rose 3.6% on Friday and more than 16% for the week, while struggling Mineral Resources saw its shares surge 14% on Friday and 38% for the week, as investors believed it had emerged from the debt danger zone, potentially saved by higher iron ore prices.
Much of last week’s gains in resources, particularly in iron ore stocks, were due to ‘clever’ fund managers, investors, and other market participants being caught off guard by news from China and lacking exposure, especially so close to the month-end and quarter-end.
Today is the last day of the month and quarter, leaving no time to rebuild exposure to China, which will serve as an unpleasant reminder for many fund managers. The decline in bank stocks last week also dulled what had been the best play for many Australian investors during the quarter.
Investors should also keep an eye on Star Entertainment this week. Will its shares rebound after Friday’s near 44% collapse?
A2Milk is expected to announce an acquisition today or tomorrow—unless it doesn’t, and its shares could relist and drop following the unexpected 8.7% surge on Friday morning.
The ASX 200 appears set to finish the month up 1.7% and the September quarter up 5.7%—its best result since the December quarter of last year.