• Overview

    While Sydney and Melbourne’s lockdowns have only recently lifted, a basket of stocks leveraged to the reopening of Australia’s two most populous states had already rallied well ahead of these dates as Australia caught up on its vaccination coverage. Across a range of stocks exposed to travel, leisure, retail, gaming and education, the median performance since July was around 14% the relatively flat return of the benchmark ASX 200 Index.

    Chart 4: Re-opening stocks rally ahead of lockdowns ending

    Source: Bloomberg


    Despite strength in oil and base metals prices over recent months, the Australian resource index has fallen more than 15% from its August peak and hence resulted in a significant drag on the broader index’s performance. With iron ore experiencing a sharp correction in this time, this highlights the sector’s reliance on this one commodity, which is the primary source of earnings for BHP, Rio Tinto and Fortescue

    Chart 5: Iron ore a drag on the market

    Source: Bloomberg


    Broad-based positive earnings revisions have faded in the last quarter, with the impact of lockdowns and the collapse in the iron ore price leading to softer earnings for the ASX 200. However, not all sectors have been impacted, with around half of all sectors still recording upgrades, led by significant upgrades in energy stocks.

    Chart 6: Iron ore a drag on the market

    Source: Bloomberg

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