OBP Capital

Australian shares suffered their most bruising session since February on Friday because of concerns that aggressive tightening by central banks could stall economic growth. The ASX 200 index plunged 2.2 per cent or 159.1 points to 7205.6 on Friday. This made for a weekly loss of 3.1 per cent over the 5 days.

Macquarie bank dived 7.8 per cent to $186.90 after the group expressed caution on the economic outlook and declined to issue guidance, despite a 56 per cent increase in net profit in its financial year ended March 31. The other four major banks also closed the session lower. Westpac fell 0.8 per cent to $22.83, Commonwealth Bank dropped 1.3 per cent to $102.40, National Australia Bank tumbled 2 per cent to $31.62 and ANZ declined 0.6 per cent to $26.76.

REA Group, another tech market darling which is owned by News Corp tumbled 8.1 per cent to $112.15 after reporting revenue growth of 23 per cent year-on-year for the March quarter. News Corp dropped 7.8 per cent to $26.60 despite delivering a 7 per cent increase in its third quarter revenue to a record $US2.49 billion compared with the previous year.

The major miners also posted losses despite the price of the bulk commodity advancing 2 per cent to $US145.80 a tonne. BHP dropped 1.4 per cent to $46.80, Rio Tinto tumbled 2.1 per cent to $109.26, and Fortescue closed flat at $20.83.

OBP Capital Weekly Market Watch

Australian shares posted a small loss for the week as investors grappled with the prospect of aggressive interest rate rises by central banks around the world. The small loss in the ASX 200 was 15 points or 0.2 per cent, taking the index back to 7478. The index in a period where there is global unrest, talk of interest rate rises, and inflation fears, has performed incredibly well since January when the index traded at 6,800 points.

The drivers of this have clearly been the fact that ASX 200 index is so heavily weighted to the top 10 companies (45% of the weighting is the top 10 stocks) which does not include any technology stocks or heavily sensitive stocks to inflation.

One sector that has been very hot is companies associated battery manufacture, and specifically lithium and nickel. On the same thematic, Uranium stocks rocketed after the price of the commodity surged to $61.60 a pound.