Roy Keenan from Yarra Capital Management shares insights with James Dunn from The Inside Network on risk management. The Inside Adviser
Lauren Ryan from Thinktank goes in-depth with Laurence Parker-Brown from The Inside Network on the role of asset-backed securities in offering resilient income. The Inside Adviser
Marker (ASX:XJO) gains on debt ceiling, commodity prices, Adairs lower guidance
The local market delivered a strong end to the week with the S&P/ASX200 (ASX:XJO) gaining 0.5 and the All Ordinaries (ASX:XAO) 0.6 per cent on the back of a strong rally in the commodity sector. Champion Iron (ASX:CIA) and BHP (ASX:BHP) were standouts, adding 5.6 and 2.8 per cent each as investors grew more confident about the hopes for infrastructure stimulus in China. The sector more broadly was one of six finishing higher, adding 2.4 per cent with energy also gaining 1.6 per cent on Friday. Shares in Bubs (ASX:BUB) fell 2.7 per cent after the company reported weaker than expected sales, while Coles (ASX:COL) fell 1.7 per cent after flagging another $25 million in potential underpayments to staff. Furniture retailer Adairs (ASX:ADH) fell close to 15 per cent after the company cut earnings guidance from $70 to $62 million, with Bub’s flagging a near 80 per cent cut to sales in China in just 12 months. Across the week the market finished 0.1 per cent lower, with gains in the materials sector, up 1.5 per cent, offset by continued weakness in financials.
Nasdaq banks six straight weeks of gain, Lululemon jumps on China strength
The Nasdaq gained another 1.1 per cent on Friday, with the weekly gain of 2 per cent marking the sixth such weekly gain. The key driver was the eventual passing of the debt ceiling deal by the Senate, allowing the continuation of the government operations for at least the next two years. The S&P500 managed a 1.5 per cent gain, also marking the third straight weekly gained, while the Dow Jones added 2.1 per cent on the back of a stronger week from the commodity sector. Hopes of a soft landing for the economy continue to grow after the US delivered another 339,000 new jobs in May, well ahead of the 190,000 expected. In company specific news, Lululemon (ASX:LULU) gained more than 11 per cent after the company upgraded sales expectations on a ‘meaningful acceleration’ in demand from China and a near 50 per cent increase in profit. On the other hand, Dell (NYS:DELL) gained close to 4 per cent despite the company reported one of the worst falls in computer sales on record.
Moving on from China, stimulus hopes return, inflation rates remain the risk
News that infant formula producer Bubs had seen a near 80 per cent fall in sales to China were no unexpected, but simply growing evidence of the risk of business relying too much on a single market. While the company is showing signs of improvement, the opportunity set likely remains too attractive for many businesses to avoid despite the history of challenges. Similarly, while it appears trading conditions with China are thawing, the economy is clearly not setting up for infrastructure growth that dominated recent decades, with a more consistent, consumer driven economy expected. Despite this, as the incremental buyer of most major commodities all roads will continue to lead to China. Finally, the debt ceiling impasse has quickly come to an end, with headlines dominating the rhetoric by the result the same as in prior years, reiterating the importance of focusing on the long-term when building portfolios.
