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

Financial Planner’s morning report – Wednesday

CNBC reportedly coined the phrase ‘Kangaroo’ market today with commentators giving on predicting its direction. The term best describes the daily experience of investors as the market ‘bounces’ around.
In Practice

Bears, bulls and kangaroos?

CNBC reportedly coined the phrase ‘Kangaroo’ market today with commentators giving on predicting its direction. The term best describes the daily experience of investors as the market ‘bounces’ around. The ASX 200 (ASX:XJO) experienced its strongest day in 10 weeks, adding 3.9%, pushed higher by energy (5.8%) consumer discretionary, where Webjet Ltd (ASX:WEB) improved another 11%.
The S&P 500 (IND:SPX) and NASDAQ (NASDAQ:NDAQ) rallied 1.9% and 1.8% respectively supported by a stronger than expected US retail sales result, growing a record 17.7% in May. It seems those who remain employed are now cashed up and seeking to renovate, build pools or travel more domestically. Caterpillar Inc (NYSE:CAT) was a primary beneficiary, up 5%, as was London’s Ashtead Group plc (LON:AHT) +9%, both of which lease machinery and materials to the construction industry.

Picking the trend

As reports of retail investors outperforming professional hedge fund managers spread around the global, it’s becoming increasing difficult to predict how this rally ends. Markets are seemingly as predictable as ever, but more volatile than at any time in decades. It is times like this where investors, experienced and new, need to focus on the importance of asset allocation and diversification; in fact, it has never been more important.
Questions like, how much are you willing to lose? Or do you know where your greatest risks are tends to go unanswered. According to FN Area, some 50% of all companies covered now have Buy ratings by the broking fraternity, this hasn’t happened since the depths of the GFC. Onto more positive news, despite most experts predicting Australian leader Seek Ltd (ASX:SEK) would struggle to recovery from the spike in unemployment, the share price is now up nearly 100% since march lows, rallying 7% alone on Tuesday; it is still 20% below its high.

Diversification is key

Tuesday saw updates from two very different companies, Adobe Inc. (NASDAQ:ADBE) and Orora Ltd (ASX:ORA); the former providing a ubiquitous document software service and the latter a leader in aluminium dans, glass and wine bottle product in Australia and New Zealand. ADBE reported a 78% increase in sales over the 12 months to May, with management noting April and May spending exceeding traditional Christmas levels.
ORA on the other hand reported it had return $600 million from the sale of its Fibre Packaging business to shareholders, using the remainder to effectively become debt free; the share price rallying 5% as a result. Despite being different businesses, both offer unique growth opportunities for investors. Finally, Viva Energy Ltd (ASX:VEA), owner of Geelong’s refining plant rallied 15% after reinstated its on-market buy back as they seek to return profits from the property sales to shareholders; a rare capital return amid a sea of cancelled dividends.
 
The daily report is written by Drew Meredith, Financial Adviser and Director of Wattle Partners.




  • Print Article

    Related
    Higher inflation, recession more likely: Franklin Templeton

    Late July news of the Federal Reserve (Fed) increasing interest rates another 0.75% and a second negative quarter of economic growth (GDP) has created an uncertain environment for investors going forward. Adding to these concerns is China’s economic slowdown and Europe’s energy shock.  Stephen Dover, Chief Market Strategist, at the Franklin Templeton Investment Institute presents…

    Stephen Dover | 15th Aug 2022 | More
    Jones looks to shorten exam, improve ethics code

    Once the advice review is completed, the minister has asked Treasury to look at updating the ethics code and assessing the viability of a shortened adviser exam.

    Tahn Sharpe | 15th Aug 2022 | More
    AZ NGA dives into supply chain with Virtual Business Partners tie-up

    The Italian-backed group has teamed up with one of AMP’s largest advice businesses to take a major stake in the back-office services provider. It’s the first time AZ NGA has ventured beyond advice and accounting investment.

    Tahn Sharpe | 15th Aug 2022 | More
    Popular
    1
    Advisers urged to tread carefully with ‘wholesale investor’ status
    Staff Writer | 28th Jul 2022 | More
    2
    Top hedge fund award goes to L1 Capital
    Greg Bright | 13th Dec 2021 | More
    3
    MAX Award winners and the new world outside
    Greg Bright | 13th Jun 2022 | More
    4
    INDepth with Andrew Lockhart from Metrics Credit Partners
    The Inside Adviser | 30th Jun 2022 | More