Home / Economics / Financial Planning morning report – Wednesday

Financial Planning morning report – Wednesday

The ASX 200 experienced its best day in over seven weeks on Tuesday, adding 2.9% to 5,780 points, with all sectors increasing. The Australian share market has now regained 31.2% from its March lows.
Economics

A global recovery

The ASX 200 experienced its best day in over seven weeks on Tuesday, adding 2.9% to 5,780 points, with all sectors increasing. The Australian share market has now regained 31.2% from its March lows.
It was a similar story with the S&P 500, up close to 3% mid-session, only to capitulate in the final hour of trade following the threat of Chinese sanctions — the market finished up 1.2%. This likely provides a weaker lead for the Australian market this morning.
The strength in the local market was generally driven by the perceived higher risk of more cyclical companies, including small caps, energy and travel-related businesses. Flight Centre Travel Ltd (ASX: FLT) for instance rallied another 9.5% and Boeing Inc. 5%. European markets provided a similar leading, improving 1.1% as traffic flows and activity begin to recover.

Resilience in the face of adversity

Resilience comes in many forms, adaptability is one of them.
Despite the threat of Amazon (AMZN) entering Australia, followed by bushfires and now a pandemic, online retailer Kogan.com Ltd (ASX: KGN), hit an all-time high, benefitting from insatiable demand for their low cost, fast-delivery consumer and electronic goods. They seem to have outmaneuvered Amazon, for now. However, I’m not confident the market nor margins can be sustained on the other side of the COVID-19 recovery.
Myer Holdings (ASX: MYR) was similarly up a further 12% as further store openings continued, but with a number of well-publicised department store bankruptcies in the US, the big-box format offers little in the way of comfort to me.

Featured video: Apollo Capital’s Hendrik Andersson

  • Job Maker to boost economy

    The Federal Government announced its latest policy with an eye to moving on from the pandemic, dubbed Job Maker, with a key focus on working together with the unions as well as improving the vocational training sector. It is clear the economy is halfway over the cliff, with the now infamous Job Keeper program the only savior at this point.
    After years of cost-cutting, businesses will see costs increase overnight and respond by cutting or ‘right-sizing’ staff levels. The threat of renegotiated leases, mass delinquencies and higher unemployment has not deterred property owners such as Unibail Aramco (URW) or Vicinity Centres, the former rallying 12.7% and the latter 5.6% as restrictions are eased. I remain wary of the concept of ever-increasing rents and suggest most commercial property owners are facing steep valuation ‘resets’ post-COVID 19.
    The daily report is written by Drew Meredith, Financial Adviser and Director of Wattle Partners.




    Print Article

    Related
    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
    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
    5
    Quality of advice review focused on advisers, not consumers
    Drew Meredith | 11th Jul 2022 | More