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.

  • Drew Meredith

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

    Print Article

    ‘Make it cool’: Hunt for grads heats up as professional service firms scramble for talent

    Making up the adviser shortfall is going to be a challenge, with the big professional services firms just as desperate for top-level talent as advice groups. To get young people interested, Striver founder Alisdair Barr says, we need to make the industry interesting.

    Staff Writer | 26th Feb 2024 | More
    What paraplanners want: How advisers can work better, ditch the double-ups and make staff smile

    It’s not a corner office or a fatter pay packet at the top of paraplanners’ collective wish list, but something that is much more beneficial to financial advice practices and the clients they serve.

    Tahn Sharpe | 30th Nov 2023 | More
    Number of wealthy investors not seeking advice ‘persistently’ high

    Even though there are thousands more HNW investors in the country this year, they are a lot less willing to pay the going rate for financial advice according to Praemium and Investment Trends.

    Tahn Sharpe | 27th Oct 2023 | More
  • Popular posts: