Market drops for second week with ASX down 0.8%
The Australian stock market limped to the finish line on Friday as stocks were weighed down by expectations of another drop in the price of iron ore.
The S & P / ASX200 ended down 0.76% at 7403.7 for the day, pushing the index down 2.9 points for the week as a whole.
A brief surge in the price of oil mid-week propelled energy stocks higher on Thursday, but miners sank the market at Friday’s open after the price of iron ore extended its recent decline to s’ set at US $ 107.21 per tonne.
Fortescue led the declines on Friday, losing 11.5% for the session to $ 15.27 and securing a downgrade from UBS, while Rio Tinto ended the day down 4.7 for 39.16 cents at 98, $ 8 and BHP lost 3.4% to $ 39.06.
Gold stocks also suffered from the drop in the price of gold, with Newcrest down 3.1% to $ 23.78.
Analysts warned investors this week that there was more pain ahead for iron ore, with expectations that weaker steel production in China would lead to a market surplus sooner than expected.
The UBS team cut its price forecast for 2021 to 2023 by 10% on Friday, with expectations that China’s steel production will level off by 2023.
“We expect the price to drop below $ 100 / t by the end of 2021 and average to $ 89 per tonne in 2022 (against a consensus of around $ 132 per tonne),” wrote Myles Allsop in a note to customers.
Exiting lockdowns was also on the minds of investors this week, with Victoria and New South Wales both moving towards higher vaccination rates and a modest easing of restrictions.
Kalkine stock research firm chief executive Kunal Sawhney said it seemed like the market was still digesting the impacts of lockdowns on the job market.
“The closures forced several companies to cut hours and lay off workers in August, keeping employment levels muted. While the unemployment rate fell to its lowest level in almost 13 years, this was mainly due to a sharp drop in the number of people looking for work, ”he said.
Amid these broader economic worries, stocks with positive news to share have performed the best this week. Pharmaceutical wholesaler API ended the week up 10.5%, reaching $ 1.47 after announcing to investors that it would open its books to its buyout contender, Wesfarmers.
Ailing department store Myer posted gains of 12.6% to 58 cents after revealing its 2021 figures, which saw the company rebound to profit but refuse to reinstate its dividend.
Telecommunications giant Telstra also finished with a 1.3% lead to $ 3.92 in a week when boss Andy Penn revealed the company’s business strategy for the next four years.