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Note from the MD: Markets weighed down by iron’s crushing descent

May 26, 2021

Note from the MD: Markets weighed down by iron’s crushing descent

They say the full moon brings a bit of craziness out – perhaps that’s why, as tonight’s full lunar eclipse and super blood moon looms, we Melburnians are feeling a little nervous.

They say the full moon brings a bit of craziness out – perhaps that’s why, as tonight’s full lunar eclipse and super blood moon looms, we Melburnians are feeling a little nervous.

Or, more likely, it could have to do with the slew of new COVID-19 cases identified in the past two days. 

The news of another possible outbreak was quick to hit travel stocks today, with Qantas (ASX: QAN) and Webjet (ASX: WEB) both hitting COVID-related turbulence early on in trade, before the latter managed to right itself (closing the day up 0.6%).

Qantas fared less favourably despite staging something of a recovery by lunchtime only to lose those gains and finish 0.85% below where it started.  

The airline was in good company in the red, after China unveiled a new, tougher stance on iron ore, sending its price back below $200 per tonne and pushing mining giants BHP (ASX: BHP) and Rio Tinto (ASX: RIO) down with it.

The miners lost 2.38% and 2.23% respectively, weighing on the lead ASX 200 (ASX: XJO) index.

The market opened bullish with the buyers controlling the market in the morning. Sentiment changed after midday and the sellers wrestled control, pushing the market lower.

The market reached a high of 7136.4 during the session, but lost 22.7 points by the end of the day, closing at 7092.5. 

The market is back to trading around it’s post-COVID trend line and we may see short term price action around this indicator until we hit new all-time highs.

Speaking of all-time highs, Australia’s largest bank, Commonwealth Bank (ASX: CBA) broke past the $100 per share mark briefly today, marking a first time for the former central bank turned financial leviathan.

That momentum ran out shortly before 3pm, however, and the bank finished up at $99.58.

Looking to the smaller end of town, the ASX Small Ordinaries index (ASX: XSO) closed in the green, albeit only just – up 0.2%.

Gold miners were among some of the better performing companies that index, with Chalice Mining (ASX: CHN), Capricorn Metals (ASX: CMM), Alkane Resources (ASX: ALK) and Red 5 Limited (ASX: RED) all notching up gains.

Their combined strength may owe to gains in the gold price in recent days, with weakness in the US dollar and low bond yields pushing the price of the yellow metal up above $1,900 per ounce today for the first time since January.

Lucky for Japan then that Olympic medals haven’t been made of real, solid gold since 1912.

Moving from iron ore to iron-clad security, access control company TZ Limited today announced yet another contract win, this time a $1 million deal with global logistics company DSV South Africa.

The contract comes only a week after the business inked a number of deals (including one with tech giant Microsoft) in North America – with a total value of USD $2.2 million.

On Friday at 12pm, I will be talking with TZ Limited’s CEO Scott Beeton about the company’s recent announcements, their A-list client base, the growing e-commerce market and how TZ’s market-leading software is uniquely positioned as a category leader. Click here to take part in this live investor briefing.

 

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