Financial Planner’s market update – AMP cleans house, ASX 200 to open higher, Trump relents
AMP cleans house (finally), ASX 200 to open higher, Trump relents
The ASX 200 (ASX:XJO) overcame a weak lead from overseas markets to finish 0.3% higher, behind another rally in Wesfarmers Ltd (ASX:WES), up 1.5%.
Elsewhere, dividend payments are placing downward pressure on the market with ANZ Banking Group Ltd (ASX:ANZ), -0.9%, and Aurizon Holdings Ltd (ASX:AZJ) the major payers today.
The materials sector continued to push higher as Fortescue Metals Group Ltd (ASX:FMG) announced a record profit and dividend, whilst highlighting that Chinese ore stockpiles remain well below previous levels and likely to support current prices for the foreseeable future.
Zip Co Ltd (ASX:Z1P) added 13% after achieving record monthly transaction volumes of $70 million, a 600% year on year increase as the company added 133k new customers.
My take on the other key reports follows:
- Finally, some positive action at AMP Ltd (ASX:AMP) Management at AMP finally bowed to public pressure with Chairman David Murray, Director John Fraser and recently appointed CEO of AMP Capital Boe Pahari all stepping down over the weekend.
- I’m expecting a new appointment to AMP Capital will be made in the coming months, with the CEO holding a caretaking role until that time, with the potential for a rebrand and eventual spin off to improve shareholder value. The shares finished higher.
- Comment: Finally the shackles of the past have been released.
- All is not well in America for Boral Ltd (ASX:BLD): Boral Ltd (ASX:BLD) unexpectedly announced a $1.3 billion write-down of their North American operations, pricing in lower housing starts and reducing good will on their major Headwaters purchase and related Joint Ventures.
- The result of both changes was earnings to fall between $820 – $825 million and profit before the $1.3 billion significant, non-cash impact of the above, at $175 to $180 million.
- Unfortunately, the second half dividend has been cancelled ahead of their full earnings report on Friday.
- Comment: Disappointing but not unexpected decisions amid a global slowdown.
- Fortescue Metals Group Ltd (ASX:FMG) pumping out records Fortescue Metals Group Ltd (ASX:FMG) delivered recover revenue of $12.8 billion on the back of a 6% increase in iron ore shipments for the financial year.
- Net profit was $4.7 billion, ahead of the $4.6 billion expected which will send shares higher today.
- The low cost of production at $12.94 per tonne is allowing return on equity of 40%.
- Importantly, the dividend looks to be a major beat at $1.0 compared to $0.72 expected.
- Comment: Great result from a booming sector.
- Isolation beards boosting Shaver Shop Ltd (ASX:SSG): It seems the boom in isolation beards among Victorian’s locked at home is resulting in a massive improvement in sales at Shaver Shop Ltd (ASX:SSG).
- Management reported sales growth of 15.3% on a like for like basis.
- Online sales were up to 103% for the year representing more than 22% of sales.
- The result was stronger net profit, up 44% to $10.6 million and an increased dividend on 2019; bucking the trend of the sector.
- The company did not receive Job Keeper payments and appears to be one built for the future.
- Comment: Solid result, but boosted by reducing stock levels, which may become an issued.
Double records, COVID-19 treatment fast tracked, value winning
Both the S&P 500 and Nasdaq finished at all-time highs, up 1.4% and 0.6% respectively on a flurry of positive news.
The US Government reported over the weekend that it was fast tracking a blood plasma treatment for COVID-19, whilst President Trump appeared to be lightening his approach on US businesses using We Chat, amid a recent uproar.
Shares in Tencent (HKG:0700) finished 5.8% higher.
As expected, signs of a vaccine sent the ‘value’ sectors of the market higher, American Airlines Group Inc. (NYSE:AAL) and Carnival Corp. (NYSE:CCL) both over 10% higher.
This bodes well for another strong open in Australia.