Share market’s March quarter best and worst stocks

A rollercoaster ride on the stock market ended with a pre-Easter flourish. See the March quarter’s biggest winners and losers.

Aussie shares marked the end of the March quarter with a bang, and there is cautious optimism about the rest of this year.

Investors enjoyed a solid 4 per cent gain for the first three months of 2024 despite weakness in some mining and energy giants, and a fresh record high above 7900 points was set by the S&P/ASX 200 index on the last day before the four-day Easter shutdown.

On Thursday the market closed 77.3 points or 1 per cent higher at 7896.9, after reaching 7901.2 during trading.

The quarter’s best performer was family tracking tech company Life360, up 73.2 per cent, followed by data centre company Megaport, which rose 62.9 per cent.

On the downside, lithium stocks were sold off heavily, led by Arcadian Lithium’s 39.5 per cent fall, while Domino’s Pizza Enterprises dropped 26.4 per cent and BHP Group and Fortescue both fell more than 11 per cent.

Bell Direct market analyst Grady Wulff said the quarter was a solid result that reflected an earnings season where about one-third of ASX200 companies beat expectations.

“With interest rates having peaked and cuts on the horizon, investor appetite for high-growth sectors has regained momentum,” Ms Wulff said.

“Rate-sensitive stocks and any equity associated with the AI-movement are the strongest performers in 2024,” she said.

“Technology stocks have outperformed the market year-to-date with the sector up over 24 per cent since January 1, while real estate stocks are the second-best performing sector this year so far, up 12.5 per cent.

“Megaport is the top performer on the ASX200 over the last 12-months, with the tech stock rocketing 266 per cent amid strong growth in the data centre space.”

Australian Shareholders’ Association director Lel Smits said the ASX200’s gain suggested a cautious return of investor confidence.

“After an extended period of rising interest rates, investors have embraced optimism, in hope of central bank rate hikes pausing, and the next move possibly being down,” Ms Smits said.

“Mining and energy stocks underperformed over the March quarter as investor concerns over the direction of the global economy and lower commodity prices took centre stage,” she said.

“Looking ahead, the outlook for ASX-listed stocks is cautiously optimistic, with potential for further growth in major Australian benchmark indexes if inflation eases, interest rates stabilise and global growth prospects brighten.”

Aussie stocks lagged US markets in the March quarter, with the S&P500 index rising 10 per cent since January 1. Ms Smits said this reflected the Australian market’s higher exposure to resources stocks what were hit by softer global commodity prices.

“This trend may shift if inflation expectations and current geopolitical concerns ease,” she said.

Shaw and Partners senior investment adviser Jed Richards said BHP’s share price fell from above $50 on January 1 to less than $42 during March, but had since bounced back above $44.

“We are heavily reliant on China … “I believe China is going to grow and steel demand will be high,” he said.

“The market is now confident that we are moving to rate cuts, that we have avoided recession and inflation is looking like it’s all under control.”

Mr Richards said historically the two years following central bank interest rate cuts were very positive for stocks, but current share price valuations appeared to already reflect that enthusiasm.

“The PE ratios and multiples we are paying at the moment are extremely high, and value is not as obvious as in the past,” he said.

Grady Wulff, market analyst at Bell Direct

Australian Shareholders' Association director Lel Smits

“I feel we have already received the share price increases that will come from the current economic environment.”

Companies would have to increase profits significantly to justify current high prices, Mr Richards said.

“Don’t forget we were 6751 points only six months ago back in October,” he said.

“To have that sort of rally so quickly, we were very wrong then or are very wrong now.”

His outlook for shares for the months ahead was “flat”.

“I think we are going to run out of steam a bit.”

Bell Direct’s Ms Wulff said “overvaluation is of course an ongoing concern”.

“We may see some profit taking from investors in stocks that have enjoyed a long run over the last 12 months, but the outlook economically as inflation eases, combined with strong earnings growth runways for many sectors, provides the perfect foundation for the rally to continue.

Originally published as Share market’s March quarter best and worst stocks