Stocks In Red Zone On ASX; Global Sell-Off Follows Crucial Developments

Stocks In Red Zone On ASX; Global Sell-Off Follows Crucial Developments

The shares across global stock markets tumbled during Monday’s session as well as at the commencement of trading on Tuesday following a series of events worldwide. It all started with the US President Trump’s announcement of imposing an additional tariff of 10%, effective 1 September 2019, on China’s remaining imports worth $ 300 billion. The announcement comes in retaliation as Beijing retracted from fulfilling its promise of buying large quantities of US farm goods, startling the entire world that was anticipating the growing possibility of a trade deal resolution.

As a counterstroke, China devalued its currency yuan (CNY) past the 7-per-dollar psychological barrier for the first time on Monday (5 August 2019) since the global financial crisis of 2008, and was deemed as a currency manipulator by the United States.

The sudden resumption of the US-China trade dispute follows the announcement of interest rate cuts by a quarter point, for the first time in a decade, by the US Federal Reserve. Overall, the impact of these consecutive events was observed on the value of shares across various indices globally as the investors’ confidence weakened amidst an ambiguous political and economic global landscape.

With the close of trading on 5 August 2019, the Dow Jones Industrial Average Index in the United States slid 2.90% to 25,717.74, while the S&P 500 Index also closed lower at 2,844.74, down 2.98%.

 Overseas in Europe, the Belgium BEL 20 Index also touched a low of 3525.990, down 2.41% (up 0.45% as on 6 August 2019 07:45 PM AEST) and UK’s FTSE 100 Index also fell 2.47% to 7,223.85 (up 0.14% as on 6 August 2019 07:49 PM AEST).

The Australian S&P/ASX 200 Index settled the trading lower at 6,640.300, down 1.90% on 5 August and at 6,478.1, down 2.5% as on 6 August 2019.

On the ASX, the S&P/ASX 200 Information Technology (Sector) Index recorded the maximum decline of 4.07% to the current value of 1,249.6 followed by the S&P/ASX 200 Health Care (Sector) Index ending the session at 33,715.3, down 3.8% on 6 August 2019.

Some of the declines for the day included IT player, Wisetech Global Limited (ASX: WTC) which lost 8.02 while the shares of Appen Limited (ASX: APX) also slid 3.61%.

Amongst the healthcare stocks, Pro Medicus Limited (ASX: PME) fell by a major 14.86% while Service Stream Limited (ASX: SSM) was also down 2.49%.

Discussed below are the ASX-listed stocks with maximum declines for the day.

Wisetech Global Limited

WiseTech Global Limited (ASX: WTC), based in Australia, is engaged in the development and provision of software solutions to the logistics execution industry worldwide. The company’s clients include around 12,000 of the world’s logistics companies across 130 countries. WiseTech Global’s flagship product is CargoWise One, which is a powerful high-growth engine and forms an integral link in the global supply chain, executing over 54 billion data transactions every year. Some of the key features of the solution include reduction in costs, productivity gains, risk mitigation, scalability and expansion into new geographies and services as well as sustainability and maintainability.

Source: WTC Investor conference and briefing materials

With a market capitalisation of around AUD 9.32 billion and around 318.18 million shares outstanding, the WTC stock settled the day’s trading at AUD 26.950, down 8.02% by AUD 2.350 with approximately 5.29 million shares traded. In addition, WTC has delivered positive returns of 72.05% on YTD basis and 43.28 % in the last six months.

NRW Holdings Limited

NRW Holdings Limited (ASX: NRW), based in Western Australia, offers civil contracting services including rail formation, bulk earthworks, mine development, road and tunnel construction and a range of contract mining services. With a market capitalisation of ~ AUD 826.96 million and around 375.89 million shares outstanding, the NRW stock settled the day’s trading at AUD 2.050, down 6.82% by AUD 0.150 with ~ 2.25 million shares traded. In addition, NRW has generated positive returns of 37.50% on YTD basis and 10.83% in the last six months.

Recently on 3 July 2019, NRW Holdings informed the stakeholders that its 100% owned subsidiary Golding Contractors Pty Ltd, based in Queensland, had reached an agreement with Brisbane-based coal explorer, Stanmore Coal (ASX:SMR) to improve the overburden removal capacity through addition of a third truck and excavator fleet.

During the financial year 2019, the mine consistently enhanced its production and the new contract mine plan is particularly aimed at maintaining the present coal production volumes of ~ 3 million ROM tonnes pa. The third fleet is scheduled to be deployed in August 2019 while Golding Contractors would also supply an additional Hitachi EX3600 excavator, 5 EH3500 Hitachi trucks and the remaining ancillary fleet, of which the majority would be mobilised from NRW Holdings’ Middlemount Project.

As per the company, five of the EH3500 trucks are intended to be substituted by the five of the EH4000 Hitachi trucks. Besides, Stanmore Coal would also be providing a new Caterpillar 6060 excavator, that is expected to be commissioned in the later part of the calendar year 2019 (CY19), with operations and maintenance to be overlooked by Golding Contractors.

Pilbara Minerals Limited

Western Australia-based Pilbara Minerals Limited (ASX: PLS) is a metals and mining sector company engaged in the exploration and development of lithium and tantalum projects. With a market capitalisation of around AUD 842.4 million and around 1.85 billion shares outstanding, the PLS stock settled the day’s trading at AUD 0.425, down 6.6% by AUD 0.030 with ~ 16.58 million shares traded.

Recently, on 25 July 2019, the company released its June 2019 quarterly results posting the quarter production at 63,782 dry metric tonnes (dmt) of spodumene concentrate, which was higher than the March 2019 Quarter production of 52,196 dmt. Besides, Pilbara Minerals shipped around 43,214 dmt of spodumene concentrate as compared to 38,562 dmt in the prior quarter.

In addition, the tantalite concentrate sales stood at 38,538 lbs (March 2019 quarter: 30,356 lbs). The company also mentioned that production at the Pilgangoora Project would be moderated during the September 2019 Quarter to incorporate customers’ revised production requirements.

Source: June 2019 Quarter Results- Presentation

Besides, the company also reached an offtake agreement with China-based Great Wall Motor Company, and the first shipment is expected to be delivered in the month of August 2019. Deliveries would be undertaken at the rate of 20,000 dmt per annum and the term of the contract is around six years. The company had around AUD 63.57 million in cash and cash equivalents as of 30 June 2019.


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