Miners push market to poor week, financials bounce on Friday, AMP loses contract

The local market capped off the worst week in several months, falling another 0.3 per cent and taking the weekly loss to 3.9 per cent.

On Friday it was the financial sector leading the way on hopes that the economy may remain strong, bounced 0.7 per cent, with the more defensive healthcare and real estate sectors also posted reasonable gains.

The commodities sector capped off a challenging week, falling 1.9 per cent on Friday, but down more than 10 per cent over the five days.

The key driver was BHP (ASX: BHP) and a number of other iron ore miners going ex-dividend at the same time that iron ore prices suffered from a weaker Chinese economy.

It was a similar story for the energy sector, which fell 5.2 per cent for the week with the likes of Ampol (ASX: ALD) and Viva (ASX: VEA) down more than 1.5 per cent.

All eyes were on AMP (ASX: AMP) which fell another 1.7 per cent after the company announced they had lost the management rights for the AMP Capital Retail Trust, which owns $2.7 billion in property.

The result was a reduced offer price from acquirer Dexus (ASX: DXS) by $25 million.

Over the week, every sector was lower barring consumer staples, up 0.3 per cent, as investors once again flocked to safety.
 
Market reverses gains on strong employment data, Lulu Lemon soars on growth plan
 
The Dow Jones marked an 800 point swing, ultimately finishing with a 1.1 per cent loss on Friday despite ‘goldilocks’ employment data being released.

It was a similar story for the Nasdaq and S&P500 which fell 1.3 and 1.1 per cent as treasury yields increased once again.

Employment data was in line with expectations, with a further 315,000 jobs added in August, however, unemployment surprised to the downside.

The rate increased from 3.7 to 3.5 per cent as the participation rate, which has been central to the record low levels of joblessness increased, as more people re-enter the workforce.

The energy sector was among the strongest gaining on reports that Russia’s Gazgrom would slow the reopening of a key gas pipeline.

In company-specific news, Lulu Lemon (NYSE: LULU) athleisure wear retailer, rallied close to 7 per cent after reporting a 10 per cent increase in profit and guiding for more strong growth.

Sales were up 29 per cent, with same store sales growing 23 per cent.

The group outlined plans to double their sales by 2026 by increase their global footprint and selling more products to men.

Over the week, the Dow fell 3 per cent, the S&P500 3.3 and the Nasdaq 4.2.
 
Changes to advice, the ultimate challenge facing central banks, beware the past
 
While not directly related to the investment markets, the release of the Quality of Advice Review may well have long-lasting impacts.

The likes of AMP, Insignia and many other advice and investment firms will likely welcome the simplification of the financial advice regulations that are being proposed.

After nearly quadrupling the amount of paperwork required of financial advisers and doubling registration fees, the review proposed a significant simplification.

Central bankers seemingly couldn’t deal with being out of the headlines during reporting season, with comments from the Federal Reserve once again spurring a selloff in equity markets.

The chairman flagged the continuation of aggressive interest rate hikes, the question is whether this is purely a message or will be put into action.

More importantly, the population may well be considering whether seeing unemployment increase significantly is worth the fight against inflation.

Finally, this week offered a reminder of the fact that dividend yield measures are always backward-looking.

Woodside and Fortescue both delivered significant, near-record, dividends, on the back of a strong FY22, yet share prices continue to retreat as the present day economic slowdown bites.

Drew Meredith

Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.