Russia-Ukraine Tension Escalates | Woodside Petroleum Result

21 February 2022

Global markets were lower overnight, with US markets (S&P 500 index -2.1%) slumping as investor concerns grow with NATO accusing Russia of amassing even more troops near Ukraine’s borders in recent days, and Russian media reported mortar shelling from Ukraine against Russian-backed militant groups in the region.

Investors were in risk off mode with most sectors trading lower. Tech shares lead losses, gold futures rose +2% and the US 10-year treasury yield slipped below 2%. 

Wall Mart shares rose +4%, after the big box retailer’s quarterly earnings beat expectations and reaffirmed its guidance. Door Dash (+10.7%) and Cisco (+2.7%) both rose after their earnings beat expectations avoiding the market wide sell-off.

European Markets (Stoxx 600 index -0.7%) fell as most sectors were lower with travel and leisure leading losses, while utilities bucked the trend rising, being viewed as a safe haven. 

Woodside Petroleum (WPL:ASX)

Woodside Petroleum shares rose +4.1% yesterday after reporting a strong full year result for the 2021 financial year, reaching fresh post-pandemic high’s. Rising oil prices saw WPL realise average sales price of US$60.30 per BoE and a +4.5% lift in annual sales volume, which helped drive underlying net profit after tax of US1,620m, up +262% from the previous year. Investors were pleased with the US$1.05 per share final dividend and improved price environment for their products. The BHP merger vote is scheduled for 19 May, and now appears to be a much more attractive proposition given the rally in oil prices.

We remain BUY rated on WPL, as the current high inflation environment will be supportive of high commodity prices over the medium-term, and WPL appear fairly priced to continue to pay attractive dividends of ~6%. However at current levels the stock will be extremely sensitive to any heavy downward movements in oil/gas prices which is why we have a high-risk caveat. 


Australia & New Zealand Market Movers

The Australian market eked out a small gain yesterday  (ASX200 index +0.1%) wiping away strong gains earlier in the session on news of elevating Russia-Ukraine tensions.

Strong earnings continue to buoy the market, with CSL leading gains up +5.1% a day after delivering better than expected guidance and broker upgrades giving it another leg up. Cleanaway Waste Management climbed +4.2% after reporting a jump in total revenue as it won new contracts.

Wesfarmers led the market lower tumbling -7.5% after it was forced to cut its interim dividend following a fall in profit driven by supply chain disruptions and risings costs – the company is facing store closures because of covid-19 lockdowns

Telstra fell -4.2% despite reiterating its full year guidance and maintaining its dividend as costs savings contributed to slightly higher earnings, unfortunately the market was disappointed by average revenue per user growth.

It’s rumoured Macquarie has made an initial non-binding offer for a controlling stake in National Grid Plc’s gas transmission business that could value the asset at more than US$10 billion.

The New Zealand market (NZX 50 index +1.1%) extended gains from Thursday with strong company earnings boosting investor confidence, with gains across most of the board.

Fletcher Building (+3%) and EBOS (+4.3%) both rose strongly again a day after posting solid earnings results. Skellerup rose (+1.4%) after reporting record half year earnings. 

Gains were broad-based across the market, with Fisher and Paykel up +4.4%. Hallenstein’s Glasson’s Holdings dropped -4.3% after it warned total sales for the six months ending February were down -6.2%.


3 Things Markets will be Watching this Week

  1. The Latest US Fed meeting minutes,  US housing and retail sales data.
  2. GDP data from Eurozone.
  3. Locally earnings season heads into full steam, with names reporting including Contact Energy, Sky City,  Boral, Jb Hi Fi, Telstra, Ansell, BHP Billiton, EBOS Limited,  Fletcher Buildings, Skellerup, Vicinity Centres, CSL Limited, Goodman Group (Australia), Fortescue Metals, Wesfarmers, Woodside Petroleum, Crown Resorts, QBE Insurance and Cochlear.
Global markets were lower overnight, with US markets (S&P 500 index -2.1%) slumping as investor concerns grow with NATO accusing Russia of amassing even more troops near Ukraine’s borders in recent days, and Russian media reported mortar shelling from Ukr

Do You Want Daily Market Insights?

If you’re interested in staying up-to-date with the latest news and analysis on stocks, be sure to sign up to BlackBull Research.

1 Month Free Trial

Access our expert stock market research Free of charge with no obligation

Free 1 Month Free Trial

Unlock this article & access our expert stock market research

ASX, NZX & USD Stock Buy, Hold, Sell recommendations. Model Portfolios. Daily news and more