Key takeaways:

• China COVID-zero policy shift provides a positive backdrop for iron ore and copper stocks

• Oil prices set fresh 2022 lows, wiping out all gains following the onset of the war in Ukraine

Weaker sentiment out of the US has weighed on the local share market this week, despite more signs that China is pivoting from its COVID-zero approach. 

Which shares excelled?

Iron ore stocks are tearing away for the second straight week. The price of iron ore was trading at just over US$110 per tonne on Friday morning. The catalyst for the rally was China decision to implement its most widespread changes to its COVID-zero policy thus far. 

Policy makers unveiled a series of changes, including but not limited to allowing home quarantine, scrapping QR check-ins, and looser testing requirements. The changes are being viewed as a positive for iron ore miners since it raises expectations that economic activity will pick up. Winners this week include Grange Resources (ASX: GRR), Fortescue Metals Group (ASX: FMG), and Champion Iron (ASX: CIA).Fresh off an upbeat drilling discovery just a couple weeks ago, Chalice Mining (ASX: CHN) has followed up its recent success with another encouraging drilling update. This time around, the company has reported significant mineralisation at its Hooley prospect at the Julimar NiCu-PGE Project. 

The explorer reported sulphide mineralisation was intersected in all five holes it drilled across approximately 1.8km of strike. Currently, on-site staff have moved onto downhole electromagnetics work, with assay results pending for an additional nine drill holes.

Strike Energy (ASX: STX) is a headline story, and started the week in strong fashion before a Friday pull-back. The integrated, low-carbon energy and fertiliser business is a central player in the takeover frenzy surrounding its partner Warrego Energy (ASX: WGO). Bidding between Beach Energy and Hancock Energy to acquire Warrego heated, with each party outbidding one another in an effort to land a decisive blow, before Beach finally waved the white flag this morning. 

However, Strike Energy remains a pivotal stakeholder after this week increasing its stake in Warrego to 19.9%. Originally launching its own bid for Warrego, Strike was the first party to bow out of the takeover race. However, now that it is Warrego largest shareholder, investors are wondering what will happen next. In the meantime, Strike Share Purchase Agreement with Warrego shareholders allows it to increase its ownership of Warrego key asset, the West Erregulla gas field, to 60%.

Nufarm (ASX: NUF) is slowly inching back towards the highs it made earlier this year in the wake of the Ukraine war, which provided a tailwind for agricultural chemicals and the like. The stock is up roughly 30% since early September.Alumina (ASX: AWC) is also faring well this week. The company, which is engaged in bauxite mining, alumina refining and selected aluminium smelting, appears to have gained strength on China reopening move. That is also the catalyst for copper producer Sandfire Resources (ASX: SFR).Some of the other stocks trending higher this week include Clinuvel Pharmaceuticals (ASX: CUV), Vulcan Steel (ASX: VSL), and Orica (ASX: ORI).

Which shares dragged on the market?

Shareholders in Downer EDI (ASX: DOW) were spooked by news of accounting irregularities' at the integrated services firm. The news relates to historical misreporting of revenue and work in progress for one of its maintenance contracts. 

While the company is still looking into the matter, early findings suggest revisions will be made across a period of three years. That has led management to indicate pre-tax earnings could have been overstated by as much as $40 million up to the end of last month. 

While the company is still trying to determine whether there will be an ongoing impact on earnings, it took the opportunity to disclose headwinds during the first quarter of FY23. Between inclement weather, staff shortages, and supply chain issues, management issued an earnings downgrade. Downer now expects to deliver underlying net profit between $210-230 million, before the impact of the aforementioned accounting irregularities.

Battery metals stocks have gone backwards this week, with heavy selling on Thursday. That followed a decision by Goldman Sachs to initiate coverage of the ASX lithium sector. Some months ago, the broker forecast lithium prices may fall in the second half of 2023 and into the following year.

However, Goldman Sachs has revised its numbers, providing a grim outlook, tipping lithium carbonate prices to fall to US$53,000 per tonne by the end of 2023, and then just US$11,000 per tonne in 2024. The broker expects production to catch up with demand over that period, despite tightness in the market in the near-term. Core Lithium (ASX: CXO) found itself in the firing line, hit with a sell recommendation, but the impact was felt across the sector, including stocks such as Novonix (ASX: NVX) and Liontown Resources (ASX: LTR).It may be a potential takeover target, but Tyro Payments (ASX: TYR) is nursing a hangover after its latest update. The payments business issued a transaction update earlier in the week, but the figures appear to have disappointed shareholders. A key concern is the decrease in transaction value growth, which was just 16% across the course of November. Year-to-date, the company transaction value growth is 43%, which suggests a potential slowdown heading into one of the busiest periods of the year for shopping.Tech stocks were also on the back foot for the majority of the week. Rather than any specific local news affecting the sector, it was the performance of the Nasdaq that dragged ASX tech lower. The Nasdaq posted three consecutive declines between Monday and Wednesday, which was enough to dent sentiment in stocks like Brainchip (ASX: BRN), Megaport (ASX: MP1), and WiseTech Global (ASX: WTC).

Energy stocks have been out of favour over recent trading sessions. Concerns about an economic downturn are lingering, with observers speculating crude oil demand could decrease. The prospect of the Keystone pipeline reopening has further weighed on prices, as have surging gasoline inventories. Both Brent and WTI crude oil hit their lowest levels in 2022 this week. 

Declining oil prices weighed on Karoon Energy (ASX: KAR) and Beach Energy (ASX: BPT). The latter is also dealing with uncertainty regarding the development of its Waitsia gas facility, with the project primary contractor, Clough, falling into voluntary administration.Last but not least, uranium duo Paladin Energy (ASX: PDN) and Boss Energy (ASX: BOE), as well APM Human Services Management (ASX: APM) round out the underperformers.

We'll be back next week with another Weekly ASX Trading Wrap Up - until then, have a great week!