The best and worst performing shares this week

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This week, a lot has been said about Australia adopting a target of net zero emissions by 2050 with part of the discussion centered on coal-fired power stations. The challenge Australia and the world has is whether renewable energy sources can meet the full requirement to achieve net-zero emissions.

Regardless of what you think about coal as a resource, it has certainly performed very well in the last year with pricing rising from around US$60 a ton to over US$200 a ton although it has eased off slightly in the last month. That said, I believe this pullback is only temporary, as stockpiles around the world are low and given that winter is not too far away for Europe, the US and China, demand will increase.

It may surprise some that Japan is our largest customer of coal while China comes in second although China is now getting its coal from Russia rather than Australia, which is likely to continue. Other Asian countries like India, Korea and Taiwan among others buy coal from Australia, so any decrease in exports to China may be offset.

asx top shares this week

Australian companies are well placed to benefit from the increased demand for coal with Whitehaven Coal up earlier this month by almost 300% since September 2020. New Hope Coal and Yancoal Australia have also benefited as both were up more than 100% since September 2020 prior to the recent dip in price.

That said, all three stocks have pulled back at present, which is exciting news for investors, as I believe they will all do well into the first half of 2022. Given this, I recommend investors sit back and wait for a month or so and then look at these stocks with a view to entering once the price stops falling.

The best and worst performing sectors this week

The best performing sectors include Communication Services up more than 2% followed by Healthcare and Consumer Discretionary, which are both up more than 1%. The worst performing sectors include Consumer Staples down more than 2% followed by Utilities and Materials, as they are both down more than 1%.

The best performers in the S&P/ASX top 100 stocks include Reliance Worldwide up more than 10% followed by Lynas Rare Earths and Computershare, which are both up more than 6%. The worst-performing stocks include the a2 Milk Company down more than 11% followed by AGL Energy and Aurizon, which are both down more than 6%.

What's next for the Australian share market

The Australian stock market has traded up again this week and may close higher than it opened for a fourth consecutive week, which is very positive. That said, the indecision in the market over the last few weeks has continued given that four of the last eight trading days have closed within a few points of where they opened for the day. While the All Ordinaries index is up so far this week, it is only just in the green.

Looking at the top 20 stocks, 13 are in the red this week, as of writing, however, six of the largest 10 stocks are in the green, which is why the market is holding up. As I mentioned last week, given the sustained indecision, I believe we may now experience a down week next week, so don't be surprised to see the market fall away.

As I continue to say, right now it will pay to be patient, as there will be some great purchasing opportunities in the market once it turns to trend up.

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Dale Gillham is chief analyst for Wealth Within (AFSL 226347). He has an Advanced Diploma and Diploma of Share Trading and Investment and more than 25 years' experience in the financial services industry.