Financial Planner’s market update – ASX to open strongly

Vaccine hopes send markets higher, ASX to open strongly, banks keep running

The ASX 200 (ASX:XJO) finished 0.5% higher behind a strong rally in financials, up 2.5%, following positive comments on a potential COVID-19 treatment.

National Australia Bank Ltd (ASX:NAB) lead the sustained rally, adding 4.2%, whilst Qantas Ltd (ASX:QAN) jumped 3.0% after announcing another 2,500 job cuts.

The administrators of Virgin Airlines Holdings Ltd (ASX:VAH) confirmed that unsecured bondholders including many direct investors would stand to receive between 8 and 13 cents in the dollar return; shareholders on the other hand receive nothing.

Despite the continuing rally in the ASX 200 it remains 17% below its all-time and well behind the likes of the US.

Another busy day of reporting season, with our updates as follows:

• Qube Holdings Ltd (ASX:QUB), -2.4%, 9% increase in revenue. Profits fell 15.4% to $104 million.
  • Weakness was felt across the business as global trade was forced to slow, but particularly in container volumes and automotive shipments.
  • Despite the disruption’s management were able to deliver earnings growth over the prior period.
  • The dividend was cut from 2.9 cents to 2.3 cents per share which was in line with expectations.
  • Comment: Tough conditions, but market dominance supports the dividend and a growing demand for supply chain solutions, BUY.
• Ansell Ltd (ASX:ANN), -1.9%, was perfectly positioned for the onset of COVID-19 delivering strong growth across the board.
  • Revenue increased 7.7% to $1.6 billion pushing earnings 37.9% higher to $219 million and profit along with it adding 42.1% to $158.7 million.
  • The result was a substantially higher than expected dividend of 50 cents per share, 7% higher.
  • Comment: Strong (but expected) result, dividend a highlight, HOLD.
• Hub 24 Ltd (ASX:HUB), -1.5%, delivered record annual inflows of $4.9 billion Revenue increased 37% to $74.3 million as group assets under management reached $17.2 billion, a 34% uptick.
  • The result was a 60% increase in profit, to $24.7 million and importantly margin expansion from 33.3% to 38.6% due to the benefits of scale.
  • Management are now targeting total funds under management of $28 – $32 billion.
  • Comment: Solid result, albeit with AUM growth behind expectations, HOLD.
• Seven West Media Ltd (ASX:SWM) reported a 14% fall in revenue to $1.2 billion and a $200 million loss.
  • The result was due to an already weakening advertising market, with a 40% fall in the June quarter alone.
  • On the positive side, management have used the pandemic to renegotiate their expensive sports rights, saving $87 million on the AFL alone.
  • The digital division was a highlight, reporting a 40% increase in revenue and 53% in consumption growth.
  • Comment: Reflects a sector in decline, future hangs on the ability to go digital, AVOID.

Mixed overseas lead, but US markets higher, Europe weak, ANT goes marching on

Both the S&P 500 and Nasdaq reached new all-time highs for the second straight day, adding 0.4% and 0.8% respectively.

It was the ‘socially distanced’ companies like Gap Inc. (NYSE:GPS) and Starbucks Corp (NYSE:SBUX) leading the market higher as vaccine hopes grew and ahead of a speech by the Federal Reserve that is expected to make no changes to current accommodative monetary policy.

Facebook Inc. (NASDAQ:FB) announced a series of platform changes that pivot into e-commerce, it finished 3.5% higher.

As flagged in this column previously, Alibaba’s (NYSE:BABA) financial services group, ANT Financial, filed for what could be one of the world’s biggest IPO in both Hong Kong and Shanghai.

The company has over 1 billion users, processed $17 trillion in transactions and is expected to attract a $225 billion valuation.

Drew Meredith

Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.