Dip-buyers push ASX higher

Risk on, Altium offer pulled, property rallies, Lendlease selling, and Kogan on track

It was ‘risk on’ once again for the ASX 200 (ASX: XJO) with the market up over 1% during the day but ultimately finishing 0.8% higher.

The strength was broad-based with just two sectors, industrials and IT finishing lower, as both materials and real estate powered the recovery on the hopes of more government stimulus.

Lendlease Group (ASX: LLC) was a key contributor during the session, jumping 2.1% after announcing that NBN installer Service Stream Limited (ASX: SSM) would be acquiring their services division for $310 million.

The offer was struck at a multiple of just five times earnings and will be partially funded by a capital raising.

Circuit board design platform Altium Limited (ASX: ALU) was the biggest detractor, falling 4.8% after US competitor Autodesk announced they would be pulling their offer despite verbally increasing it during negotiations.

The consumer discretionary also performed strongly, adding 1% behind a 2.3% rally in Wesfarmers Ltd (ASX: WES) following Kogan’s positive update.

Kogan overcoming issues, BHP exits coal, oil next, toll road revenue recovers

Management at BHP Group Ltd (ASX: BHP) has confirmed they are considering exiting their oil and gas operations as the business continues to simplify.

The timing couldn’t be better given the incredible rally in the oil price since the depths of the pandemic, with shares finishing 1.3% higher.

With earnings of around US$2 billion, analysts suggest the value could be as high as US$15 billion for their low-cost asset base, sparking hopes of more capital returns.

US and European toll road operator Atlas Arteria Group (ASX: ALX) confirmed traffic conditions were beginning to return to normal in June, reporting average traffic was 69% higher than 2020 levels and just 19% lower than pre-pandemic 2019 levels. ALX shares fell 1.3% despite the positive news.

E-commerce retailer Kogan.com Ltd (ASX: KGN) fell 1.5% after what has been a difficult first half of 2021.

That said, management has confirmed sales picked up in the June quarter but is still discounting stock after ordering too much over the Christmas period, which will impact margins. 

Financial year earnings growth is expected to be 23% with revenue up 56% to $1.2 billion.

US rally continues on strong earnings, COVID-19 cases up 75%, Coca-Cola reports

All three US benchmarks finished higher on Wednesday with both the Dow Jones and S&P 500 up 0.8% as earnings season kicked up another gear.

Similarly, the Nasdaq jumped 0.9% despite the US reporting a 75% increase in COVID-19 cases and a 25% increase in deaths.

The successful vaccine rollout means policymakers have hope of avoiding a second slowdown, a benefit not as prevalent in less developed countries.

Chipotle Mexican Grill (NYSE: CMG) jumped over 4% in a positive sign for the likes of Collins Foods Ltd (ASX: CKF) with the company reporting a 40% increase in revenue in the fourth quarter.

Profit was up close to twentyfold, hitting US$188 million on the back of 56 new restaurant openings and an 11% increase in digital sales that now make up 49% of the total.

Shares in Coca-Cola Co (NYSE: KO) also rallied, with the defensives on show as the company reported a 42% increase in revenue to US$10.1 billion.

Earnings also jumped by 50% as it made further market share gains in the non-alcoholic markets.

The Inside Adviser