Our market is likely to drop this morning but there’s one group of ASX stocks that are poised to buck the downtrend.

The futures market is predicting a 0.4% fall in the S&P/ASX 200 Index (Index:^AXJO) as unbridled  violence in the US, geopolitical tensions with China and the ongoing COVID-19 pandemic takes the wind out of our sails.

The thin silver lining to the global coronavirus outbreak is that it’s pushed the iron ore price to over US$100 a tonne on the weekend.

Can bulls fly?

This might be enough to see the BHP Group Ltd (ASX: BHP) share price, Rio Tinto Limited (ASX: RIO) share price and Fortescue Metals Group Limited (ASX: FMG) share price jumping higher when the market opens.

I say “might” because there are doubts that the commodity bull run may be very short lived and that prices could start correcting as soon as next month. I wonder what is the reverse analogy of a “dead cat bounce”? Maybe “bulls growing wings”?

But the uncertain outlook hasn’t stopped the iron ore benchmark from jumping to US$101.05, according to Bloomberg.

Why iron ore miners may outperform still

Our biggest iron ore rival, Brazil, is quickly becoming the epicentre of the COVID-19 crisis as it recorded another surge in new infections.

This is anticipated to cause major disruption to ore exports from that country with Vale SA downgrading its full year shipment forecast for the commodity in April.

At the same time, China’s industries are reopening as the country overcomes the pandemic. This is driving up demand for the steel-making ingredient.

Chinese stimulus

Chinese leaders have also announced a 3.6 trillion yuan ($760 billion) stimulus package to help pull its economy out of the coronavirus rut.

While the package was smaller than what the market was hoping for, it will still bolster infrastructure construction – a key driver for iron ore demand.

The Chinese government said expenditure on investment projects will rise by 22.4 billion yuan this calendar year to 600 billion yuan.

Is a market correction looming?

However, this isn’t enough to stop some experts from predicting a downturn in the iron ore price in the second half of 2020 after it hit its highest level since August last year.

Bloomberg Intelligence expects a 34-million-ton surplus in the second half on higher supply and stagnating demand, compared to a 25-million-ton deficit in the first half.

Other experts like Credit Suisse have also warned that we are currently in “peak tightness” and that rising output from Brazil and Australia will ease the shortage in July or August.

Foolish takeaway

On the other hand, it’s hard to predict what impact the COVID-19 fallout will have on Brazil over the coming weeks or months.

There’s also the belief that China will inject another round (or three) of stimulus if its economy starts to sputter – whether from the pandemic, the trade war with the US, or both.

More reading

• ASX 200 Weekly Wrap: Surging bank shares push ASX toward 6,000
• 5 things to watch on the ASX 200 on Monday
• ASX investors brace to ride the next wave of “irrational exuberance”
• These were the best performing ASX 200 shares in May
• Buy these quality ASX dividend shares next week

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Rio Tinto Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why ASX iron ore miners may outperform this morning appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has banked yet another week of gains, pushing 4.7% higher last week to end at 5,755.7 points.

I say ‘banked’ partly because it was the ASX big 4 banks that were the stars of the week (and who doesn’t love a bad pun!). All 4 banks experienced massive buying pressure throughout the week, which helped push the ASX 200 to its highest levels since early March and tantalisingly close to the psychologically-important 6,000 point level.

Further easing of coronavirus restrictions, as well as positive comments from the Reserve Bank of Australia (RBA) governor Philip Lowe during the week, bolstered investors’ confidence in the health of the Australian economy. This, in turn, flowed through to ASX 200 shares.

Banks star in the ASX 200 show

But perhaps no sector benefitted more than the ASX 200 banks. Generally speaking, the banks are viewed as proxies for the general health of the economy. That’s probably the reason all 4 of the majors saw such a brutal sell-off in March when the extent of the coronavirus pandemic was becoming clear.

And it’s also likely behind the dramatic shift in sentiment we saw last week.

The ‘big one’ Commonwealth Bank of Australia (ASX: CBA) saw the most muted gains last week, starting off Monday at $58.70 per share before finishing up on Friday at $63.75 – an 8.6% swing.

Westpac Banking Corp (ASX: WBC) faired far better. Westpac shares were languishing at $15.01 on Monday morning but finished up on Friday at $17.22 – banking a 14.72% pop.

National Australia Bank Ltd. (ASX: NAB) did one better again. It started Monday at $15.34 per share and ended Friday at $17.81 – a 16.1% surge.

But it was Australia and New Zealand Banking Group Limited (ASX: ANZ) which claimed the banking crown and saw a 17.47% rise after starting off Monday at $15.23 per share and finishing on Friday at $17.89.

The big 4 banks are major constituents of the ASX 200, which means their moves have a heavy impact on the direction of the index as a whole. As such, we can mostly thank the banks for last week’s gains – although they weren’t the only ones popping the champagne.

How did the markets end the week?

As discussed, the ASX 200 was a very happy camper last week. It started Monday on 5,497 points and ended up at 5,755.7 points – putting the week’s gains at 4.7% overall.

Monday saw a healthy 2.2% gain, which was raised by Tuesday’s 2.9% surge. Wednesday saw some consolidation with a 0.1% loss, but then it was back on Thursday with another 1.3% gain.

By Friday, it was clear investors might have gotten a little too excited, and the ASX 200 fell back 1.6% for the day. But it wasn’t enough to overcome the rampaging bullish sentiment earlier in the week and left the ASX 200 with its hefty 4.7% gain for the week.

Meanwhile, the All Ordinaries (INDEXASX: XAO) was also on fire, rising from 5,608.8 points to 5,872.2 points to bring home a 4.7% gain for the week.

Which ASX 200 shares were the biggest winners and losers?

It’s ‘gossip pages’ time, Foolish style – so let’s see which ASX 200 shares were the week’s biggest winners and losers. As always, let’s start with the losers!

Worst ASX 200 losers	% loss for the week
Technology One Ltd (ASX: TNE)	7.77%
Worley Ltd (ASX: WOR)	7.18%
Saracen Mineral Holdings Limited (ASX: SAR)	5.37%
CSL Limited (ASX: CSL)	5.06%

Taking out the wooden spoon last week was Technology One, a software company that has been trending steadily lower ever since releasing its half-year results a fortnight ago. It was unfortunate to also see a bearish broker’s recommendation last week, which seemed to add to investors’ concerns.

Saracen Minerals was another loser. Most ASX 200 gold miners were sold off last week as the price of the yellow metal lost some steam after rallying hard earlier in May. Saracen took the cake with its 5.37% loss though.

A shoutout has to go to CSL as well, a rare participant in the ASX 200 losers column. CSL shares have been losing steam ever since topping $330 per share back in mid-April. It seems investors have finally realised this company may have been overbought and sent the shares back down closer to earth this week. This is coincidentally getting pretty close to the lows we saw in mid-March.

Now the losers are out sight and mind, let’s take a look at the ASX 200 stars of the week:

Best ASX 200 gainers	% gain for the week
Southern Cross Media Group Ltd (ASX: SXL)	71.43%
Virgin Money UK (ASX: VUK)	22.45%
Boral Limited (ASX: BLD)	21.01%
Austal Limited (ASX: ASB)	20.14%

You would think at least one of the major banks would have made the list this week, but alas!

Instead, we have Southern Cross Media taking out the top spot. Southern Cross has been in the ASX 200 winners or losers column more times than not over the past 2 months. It seems to be in a love-hate relationship with its investors.

Southern Cross shares were up an eye-popping 71.43% this week, even though there was no real news out of the company. It seems punters just flicked the ‘risk-on’ switch with this one in a big way.

Although it’s not one of the big 4, NAB’s old flame Virgin Money UK (formerly Clydesdale Bank) came in second with a 22.45% gain (and that’s after a 10.45% loss on Friday). This stock was one of the most beaten-down banking shares on the ASX during the March trough, so it’s a surprise to see sentiment restored so powerfully.

The ‘risk-on’ trend can also be seen in the highly cyclical Boral and Austal as well.

What is this week looking like for the ASX 200?

It will be very interesting to see if the ASX 200 continues either the negativity we saw on Friday or the positivity we saw earlier last week as we start another 5 days of trading.

Coronavirus restrictions continue to be lifted across the country, which should provide a base of positive sentiment. We also have an RBA meeting on Tuesday that will determine whether the cash rate stays at 0.25% or is cut to zero. Expect some share market volatility on Tuesday either way!

On the other hand, we have seen international political tensions continue to rise over the past week, which could put a dampener on ASX 200 bulls. In particular, we have seen rising violence in the United States in recent days as well as continuing tensions between the US, Hong Kong and China.

Before we go, here’s how the ASX 200 blue chips are looking as we start a new week.

•     S&P/ASX 200 (XJO) at 5,755.7 points
•     ALL ORDINARIES (XAO) at 5,872.2 points
•     Dow Jones Industrial Average at 25,383.11 points
•     Gold (Spot) swapping hands for US$1,740.25 per troy ounce
•     Iron ore asking US$99.73 per tonne
•     Crude oil (Brent) trading at US$37.84 per barrel
•     Crude oil (WTI) going for US$35.49 per barrel
•     Australian dollar buying 66.67 US cents
•    10-year Australian Government bonds yielding 0.90% per annum

Foolish takeaway

Last week delivered some startling share price movements, none more so than the big ASX banks. Whether this sentiment holds this week will be a crucial test for the ASX 200, especially considering that elusive 6,000-point threshold is now within sight.

Keep an eye both on Australia and the rest of the world this week Fools, both spheres have make or break potential over the ASX’s momentum.

Otherwise, as always, stay safe, stay rational and stay Foolish!

More reading

• Why ASX iron ore miners may outperform this morning
• Here’s how ANZ, CBA, NAB, & Westpac performed in May
• Why I would buy CBA and these ASX dividend shares right now
• 5 things to watch on the ASX 200 on Monday
• Top ASX Stock Picks for June 2020

Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited and CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, Wesfarmers Limited, and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX 200 Weekly Wrap: Surging bank shares push ASX toward 6,000 appeared first on Motley Fool Australia.

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The big four banks were on form in May and played a key role in driving the S&P/ASX 200 Index (ASX: XJO) higher over the period.

Here’s a snapshot of how the big four banks performed last month:

Australia and New Zealand Banking Group (ASX: ANZ)

The ANZ share price recorded a gain of 5.85% last month. All of this gain came in the final week of May after investors started to pile into the banks again. With the economy opening up quicker than many expected and government stimulus appearing to be working very well, investors may believe the banks have been oversold. This could also mean that ANZ has overestimated its COVID-19 impacts of $1.031 billion.

Commonwealth Bank of Australia (ASX: CBA)

The CBA share price was a comparatively poor performer in May with a gain of just 1.7%. During the month Australia’s largest bank released its third quarter update. For the three months, CBA’s cash net profit from continuing operations came in at approximately $1.3 billion. This was a 41% reduction on the average quarterly cash net profit it achieved in the first half. This was driven largely by remediation charges and COVID-19 provisions. The bank made an additional credit provision of $1.5 billion for the potential longer term impacts of COVID-19.

National Australia Bank Ltd (ASX: NAB)

The NAB share price pushed a sizeable 5% higher last month. Once again, it appears as though investors believe that its shares were oversold during the pandemic. This was good news for shareholders who took part in the bank’s share purchase plan (SPP). The bank increased the SPP materially to $1,250 million and raised the funds at an issue price of $14.15 per new share. NAB’s shares finished the month almost 26% higher than the SPP price.

Westpac Banking Corp (ASX: WBC) 

The Westpac share price was on form in May and pushed 5.8% higher. This also appears to have been driven by bargain hunters swooping in at the end of the month on the belief that things will not be as bad as first feared. Earlier this year Westpac announced approximately $1.6 billion of additional impairment charges predominantly related to COVID-19 impacts. If things turn out better than expected, some of these provisions could be reversed. Which would be a positive for future dividend payments.

More reading

• ASX 200 Weekly Wrap: Surging bank shares push ASX toward 6,000
• Why I would buy CBA and these ASX dividend shares right now
• 2 quality ASX shares to buy for long-term growth
• What to watch on the ASX 200 next week
• Beat low interest rates with these ASX dividend shares

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here’s how ANZ, CBA, NAB, & Westpac performed in May appeared first on Motley Fool Australia.

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