BHP, both through the end of its dual listing in London and the company’s image as a global mining leader, especially when it comes to climate change, emissions reduction and renewables, played a key role in the local sharemarket’s strength in the first quarter of 2022.
The ASX ended the month of March and the quarter outperforming other many other major markets as the commodities boom restarted by the Russian invasion of Ukraine continues. And for that, investors can mainly thank BHP.
No doubt it was BHP’s quarter, as the world’s biggest miner added tens of billions of dollars to its market value in value as the company united its listing on the ASX and rode out a series of negatives in Vlad’s war in Ukraine and its impact on inflation and commodity prices, continuing Covid infections, record rains and floods in parts of southern Queensland, northern NSW and around Sydney and the looming federal election and the usual jolt to confidence that goes with that event.
BHP’s share price jumped – with the assistance of the ending of the dual listing in London as of January 31 – by 24.6% in the quarter, rising from $41.50 at the end of December to $US51.75 at March 31.
The combination of events, especially the ending of the dual listing makes BHP’s huge gain and boost to the ASX a one-off, but regardless of that, it does tell us there’s a lot more life in resources for this market, despite all those stories about Buy Now Pay later, real estate and technology as drivers of the ASX.
The strong quarter saw BHP’s market value (helped by the consolidation of the shares in Australia) leap to $261 billion, leaving it still the largest Australian company by market value and the world’s biggest miner.
The uniting of the listing on the ASX saw BHP’s weighing on the index rise to just over 10% and remain there at March 31, a rare position in global finance for a major sharemarket to be so dominated by just one company.
Helping BHP (and Rio Tinto) were iron ore prices which bounced to around $US150 a tonne late in the quarter from less than $US100 a tonne in late November. The debacle in the LME nickel contract failed to hurt the share prices or BHP’s position as a growing nickel producer and especially of the key battery product, nickel sulphate in crystal form.
The ASX 200 index had a might have ended the day down 0.2% on Thursday (because of a fall in the final minutes) but BHP shares rose 2.3% as a final illustration of its immense strength in the quarter.
The S&P/ASX 200 fell 14.9 points on March 31, to 7,499.6 to be just 1.8% below the all-time high of 7632.8 reached last August
The S&P/ASX 200 Index climbed 0.7% during the March quarter, beating the S&P 500, which was down 4.7%.
The ASX 200 index jumped 6.4% in the month of March (The S&P 500 was up 4%) as commodity prices took off – especially oil, gas and coal in the wake of Vladimir Putin’s invasion of Ukraine.
Energy was up 25%, financials, 3.7% as the big banks contributed to the gains.
Rio Tinto shares rose 19% in the quarter, but rival iron ore miner. Fortescue Metals (and renewables fav) could only manage a 7.5% rise in the quarter and while copper was mostly solid (and hit an all-time record of $US5.03 a pound after the Russian invasion) OZ Minerals, a major local copper miner, saw its shares lose 5.5%.
Three of the big four banks did very well – Westpac up 13.4% (but from a low base compared to its peers at the end of December), CBA up 4.7%, NAB, 12.7% (and the star so far as good publicity in the quarter) but ANZ saw its shares rise just 0.33% as it continues to pay a price for dropping market share in the hot housing market.
Woodside petrol stood out though, its share price up 46%, Santos shares were up 22% and beach shares gained 23.4% – all thanks to not only the rise in oil prices in late 2021, but also Vlad’s invasion of Ukraine and western sanctions on Russia and many of its commodities, such as some oil shipments and gas.
Outside financials, major industrials were mixed – CSL, the Covid vaccine star saw its shares down more than 7% while Woolies shares eased 2% and Wesfarmers shares lost 15%.
Among the renewables, Pilbara Minerals, which produced a very solid half year report (and profit) went nowhere – the shares static over the 3 months, closing March 31 at $2.89.
That was a better performance than that of Albemarle, the global lithium major which saw its Wall Street-listed shares slide more than 5% in the quarter.
Major markets in Asia all drifted lower – Tokyo fell 3.35 in the quarter, Shanghai more than 10.6% and the Hang Seng slipped 6%.
