Nervous investors turn to ASX 200 defensives as global energy shock drags on

The ASX 200 consumer staples and utilities led the market sectors last week, rising 2.73% and 1.92%, respectively.

Meanwhile, the benchmark S&P/ASX 200 Index (ASX: XJO) fell 1.79% to finish the week at 8,786.5 points.

ASX investors are feeling increasingly pessimistic that the war in Iran will end anytime soon.

This was likely a factor behind the support for ASX 200 consumer staples and utilities shares last week.

Consumer staples and utilities are among the most defensive of the 11 market sectors during economic upheaval.

This is because staples and utilities companies have reliable income streams, given they sell essential goods and services.

Another sector considered somewhat defensive is real estate investment trusts (REITs), which lifted 0.14% last week.

The glaring exception among defensives last week was healthcare, a sector that continues to face multiple headwinds.

A 42% dive in Cochlear Ltd (ASX: COH) shares pushed the S&P/ASX 200 Health Care Index (ASX: XHJ) to a 6-year low last week.

Technology also finished just inside the green, as the sector continues its rebound from a prolonged downturn.

Iran war drags on

Oil and gas prices spiked 15% to 18% and ASX 200 shares spent four consecutive days in the red last week.

The world is anxiously awaiting news of when a second round of US-Iran peace talks will begin.

Lucinda Jerogin, Associate Economist at CBA, said:

… fundamentally the situation has not changed; no talks, no fighting and no ships passing through the Strait of Hormuz.

Iran has stated it will neither reopen the Strait nor engage in negotiations until the US lifts its naval blockade.

The longer the Strait remains closed, the greater the costs to the world economy through higher energy prices and supply chain disruptions.

The International Monetary Fund (IMF) has warned of a global recession given the long-tail impact of energy shocks.

In Australia, expectations of higher inflation and more interest rate rises do not bode well for the economy.

The market is factoring in a 69% chance of a rate rise next month. Meanwhile, consumer confidence has tanked.

The Westpac-Melbourne Institute Consumer Sentiment Index recorded its biggest fall in five years this month.

All of these broader macroeconomic concerns likely contributed to support for ASX 200 defensive sectors last week.

Consumer staple shares led the ASX sectors last week

The sector’s largest stock, Woolworths Group Ltd (ASX: WOW), gained 2.99% to finish at $37.89 per share on Friday.

The Coles Group Ltd (ASX: COL) share price rose 2.31% to $23.06.

IGA network owner Metcash Ltd (ASX: MTS) fell 2.76% to $2.82 per share.

Endeavour Group Ltd (ASX: EDV) shares rose 7.36% to $3.50.

The A2 Milk Company Ltd (ASX: A2M) share price edged 0.94% lower to $7.40.

ASX 200 wine share Treasury Wine Estates Ltd (ASX: TWE) lifted 12.22% to $4.50 on news of a revised operating model.

Inghams Group Ltd (ASX: ING) shares fell 0.5% to close at $1.98 on Friday.

Bega Cheese Ltd (ASX: BGA) shares eased 0.51% to $5.87.

Almond food producer Select Harvests Ltd (ASX: SHV) rose 0.54% to $3.75 per share.

Cobram Estate Olives Ltd (ASX: CBO) shares lifted 1.69% to $3.61.

ASX 200 agricultural share Graincorp Ltd (ASX: GNC) increased 0.79% to $6.40.

The Elders Ltd (ASX: ELD) share price fell 2.13% to $7.35.

Stock feed producer Ridley Corporation Ltd (ASX: RIC) lifted 4.46% to $2.81.

The Australian Agricultural Company Ltd (ASX: AAC) lost 2.24% to finish the week at $1.31.

ASX 200 market sector snapshot

Here’s how the 11 market sectors stacked up last week, according to CommSec data.

Over the five trading days:

S&P/ASX 200 market sector	Change last week
Consumer Staples (ASX: XSJ)	2.73%
Utilities (ASX: XUJ)	1.92%
A-REIT (ASX: XPJ)	0.14%
Consumer Discretionary (ASX: XDJ)	0.11%
Information Technology (ASX: XIJ)	0.02%
Industrials (ASX: XNJ)	(0.07%)
Communication (ASX: XTJ)	(0.10%)
Energy (ASX: XEJ)	(0.19%)
Materials (ASX: XMJ)	(2.08%)
Financials (ASX: XFJ)	(2.92%)
Healthcare (ASX: XHJ)	(6.54%)

The post Nervous investors turn to ASX 200 defensives as global energy shock drags on appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates and Woolworths Group. The Motley Fool Australia has recommended Elders. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.