Financial Planner’s morning report – Friday
Sharemarkets around the world capitulated on Thursday as concerns of a second wave of the Coronavirus hit the US, the S&P 500 shedding (SPX:IND) 5.9% with only one constituent, grocery retailer Kroger’s Inc. (NYSE:KR) posting a positive return.
The Dow Jones Industrial Average (DOW:IND) fell over 1,800 points or 7.1%, driven down by the likes of Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) off 10% and 9% respectively. The story was much the same in Europe with the Stoxx 600 down 4.1%.
Expect the Australian banking sector, including the Commonwealth Bank of Australia Ltd (ASX:CBA) along with consumer facing businesses like Webjet (ASX:WEB) to be hit heavily at the open.
On the positive side, gold continued to rally as US COVID-19 deaths exceeded 111,000, hitting USD$1,740, whilst the slide in the AUD back down to $0.68 should offer some protection for the ASX 200 (ASX:XJO).
All streaks must come to an end
The ASX 200 felt the immediate brunt of US weakness, leading global markets down 3.1%, with the financial sector experiencing the strongest falls, National Australia Bank Ltd (ASX:NAB) off 6% alone.
Global gold miner Newcrest (ASX:NCM) was one of the few bright spots on an otherwise difficult day adding nearly 6%. Kogan Ltd (ASX:KGN) and JB Hi-Fi Ltd (ASX:JBH) remain the bright spots of the Australian consumer sector, with the latter reporting 20% growth in Australia like for like store sales and 23% growth at The Good Guys whitegoods retailer for the five months to 31 May, predicting profit will increase 20-22% for the financial year.
Just as the AFL season got off and running with the lowest scoring game in recent history, Seven West Media (SWM) announced they have renegotiated their agreement with the association, extending for a further two years but saving some $87 million in 2020 and 2021. With signs of a second wave, here’s hoping the manage to keep the season afloat.
Everyone needs to eat
After highlighting Uber Technologies Inc. (NYSE:UBER) aggressive approach to profitable home delivery app Grub Hub (NASDAQ:GRUB), their European counterpart Just Eat Takeaway appears to have beaten them to the bunch, acquiring the business in an all-scrip deal valued at $7.3 billion; the stock was up 4%.
Tesla (NASDAQ:TSLA) quickly became the most valuable car manufacturer in the world, passing Toyota with a capitalisation of $190 billion, yet to us it is abundantly clear the company is anything but car manufacturer at this stage of its life.
Redflow (ASX:RFW) a unique Australian company producing a series of portable batteries to aid the world’s transition to a lower carbon economy announced sales were up 166% but announced a capital raising amid the Coronavirus shutdown; an interesting one for the real risk takers.
Finally, despite increasing volatility in sharemarkets, a flood of unrented apartments and huge rental discounts is likely to reduce the attractiveness of property for many years to come, with shares to benefit.
The daily report is written by Drew Meredith, Financial Adviser and Director of Wattle Partners.