Home / In Practice / Financial Planner’s morning report – Friday

Financial Planner’s morning report – Friday

It was another bumpy day for investors on Thursday, with the ASX 200 (ASX:XJO) following global markets lower and falling by -2.5% as global infection rates and the threat of the re-imposition of restrictions increased.
In Practice


It was another bumpy day for investors on Thursday, with the ASX 200 (ASX:XJO) following global markets lower and falling by -2.5% as global infection rates and the threat of the re-imposition of restrictions increased.
Banks (-3.1%) and energy (-4.4%) were hardest hit with the latter once again seeing storage sites near capacity at a time when demand may reduce once again. Yet as mentioned previously, the huge amount of cash on the sidelines, means any dips will be following by strong buying, with the S&P 500 recovering 1.1% overnight.
The banking sector benefited from a further loosening of legislation expected to support more lending, Wells Fargo & Co (NYSE:WFC) rallied 4.8%, with Macquarie Group Ltd (ASX:MQG) also likely to benefit.
Healthcare bucked the market trend with CSL Ltd (ASX:CSL) adding 0.6% after announcing the $450 million acquisition of a late stage gene therapy business and ResMed (ASX:RMD) hitting an all-time high as its pivot into the production of ventilators continues to pay dividends.

Still flying?

Qantas Ltd (ASX:QAN) announced a capital raising and successfully collected $1.6 billion from institutional investors. The issue price of $3.65 was just a 12% discount on the last traded price, which can only been seen as a coup for management, despite noting just 4 weeks ago that they would not need any capital.
As part of the announcement the company confirmed that international flights would not return to normal until July 2021 and that a further 6,000 jobs would be lost as they seek to cut $1 billion in costs. Opportunistic is the best word for this raising. In my view the discount was insufficient for the heightened risk of the business model post COVID.
The retail world once again remains strong with online marketplace Redbubble Ltd (ASX:RBL) bouncing 25% after confirmed that quarter to date revenue had increased 109% and earnings just over 100% to $11.9 million.
Similarly, Athlete’s Foot owner Accent Group Ltd (ASX:AX1) rallied 9.5% after confirming its earnings would be 10% higher following an 150% hike in digital sales in June. Whilst great news, walking around the Melbourne CBD I can’t escape the feeling that less people will be buying shoes when the Job Keeper program ends, and we understand the real implications of this pandemic.

Australia looking rosy…..

The IMF has upgraded their global growth forecasts for the rest of 2020, predicting the Australian economy will contract by 4.5%, less than the 6.7% tipped earlier. Whilst far better than the -8% in the US and -10% in the UK, it’s yet to be seen what impact China’s renegotiation will have on our economy.
The global job markets remain under pressure with Australia confirming a 43% reduction in job vacancies. Unfortunately not because the jobs were being taken, but due to them simply not existing anymore. Similarly, the first-time jobless claims in the US remained elevated at 1.5 million for the week ended June 20.
Neither bodes well for the domestic property market and companies like Lend Lease (ASX:LLC) or Mirvac (ASX:MVC) particularly after apartments listed for sale increased close to 40%, which in my view, will put pressure on prices. It only takes one forced seller to drop the value of an entire building.
The daily report is written by Drew Meredith, Financial Adviser and Director of Wattle Partners.

  • Print Article

    A great way to play the booming natural gas market

    Longreach taps into the LNG market supported by projects in Texas & Oklahoma.

    Ishan Dan | 11th Aug 2022 | More
    ASIC levy review targets adviser ‘time-lag’ issue

    The review will consider “the consequences of time lags between regulatory action and cost allocation”, the terms of reference states.

    Tahn Sharpe | 11th Aug 2022 | More
    AMP Advice to ‘break even’ by 2024 as losses soften

    The institutional provider’s AUM and profit lines stayed red in 1H22, but positive signs emerged.

    Tahn Sharpe | 11th Aug 2022 | More
    Advisers urged to tread carefully with ‘wholesale investor’ status
    Staff Writer | 28th Jul 2022 | More
    Top hedge fund award goes to L1 Capital
    Greg Bright | 13th Dec 2021 | More
    MAX Award winners and the new world outside
    Greg Bright | 13th Jun 2022 | More
    INDepth with Andrew Lockhart from Metrics Credit Partners
    The Inside Adviser | 30th Jun 2022 | More
    Quality of advice review focused on advisers, not consumers
    Drew Meredith | 11th Jul 2022 | More