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ASX 200 (XJO) morning report – 6 stocks to watch

The S&P/ASX 200 (INDEXASX: XJO) is set to rebound when the market opens this morning. Here’s what you need to know.

More promising vaccine trials

The ASX 200 continued its recent weakness, falling 0.5% on Monday, as concerns of a secondary outbreak in NSW and escalating deaths in the US hit investor confidence. The ASX banking sector dragged the market down as another weekend of falling clearances bodes poorly for property prices. National Australia Bank Ltd (ASX: NAB) and ANZ Banking Group Ltd (ASX: ANZ) were among the hardest hit. Both are likely to recover today after the Federal Government announced the JobKeeper program would continue, with some slight improvements.

Weekend EU meetings remain caught in a stalemate over the ultimate structure of the EUR$750 billion Recovery Plan, with the ‘Frugal Four’ (Denmark, Austria, Sweden and the Netherlands) preferring to lump Greece and Italy with more debt, rather than grants. Nonetheless, the market rallied 0.9% on news that the AstraZeneca (LON: AZN) vaccine had similar success to Moderna’s (NASDAQ: MRNA).

The US tech rally ramped up again, with Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) adding 7.9% and 4.3% respectively, sending the Nasdaq up 2.5%. As California appears to be moving towards another stay at home order, investors are once again turning to these recession-proof businesses. The S&P 500 was up 0.9%, while the Dow Jones edged ever so slightly higher by 0.03%.

Terminal values

Sydney Airport Holdings Ltd (ASX: SYD) delivered the least surprising traffic update in recent history, announcing June traffic volumes were down 95% on 2019. Just 172,000 people visited the airport in June compared to 3.4 million in June 2019. The Sydney Airport share price fell 1.3% for the day and is now down some 25% from its June high. Despite the discounted price, it seems abundantly clear that air travel as we know it will change for the foreseeable future, placing real pressure on SYD’s balance sheet; in my view, enough reason to avoid the company altogether.

FlexiGroup Ltd (ASX: FXL) reported a 447% increase in quarterly transactions through its buy now, pay later platform humm. The platform differentiates itself to rivals by offering unsecured loans of up to $30,000 and actually charging fees to consumers. The FlexiGroup share price finished up 2.1% for the day. With global institutions now bidding Afterpay Ltd (ASX: APT) up to exceptional multiples, local investors are seeking to gain exposure through the smaller players.

World’s largest fintech company set to go public

Ant Financial Services Group, the world’s largest fintech company valued at some $150 billion, announced its intention to undertake a dual listing in Shanghai and Hong Kong. The company, which is 33% owned by Alibaba Inc. (NYSE: BABA), boasts 900 million active users and recorded a profit of $2 billion in the June quarter. It also has technology so superior that Chinese banks are now among its biggest customers.

In other news, International Business Machines Corp. (NYSE: IBM) couldn’t quite hit the loft technology expectations, with services revenue slipping 5.4% to $18.1 billion for the quarter. Business and Technology Support services, which represent over 50% of sales, were the hardest hit down 7.3% and 7.6% respectively.

Closer to home, independent investment platform Hub 24 Ltd (ASX: HUB) reported it had increased market share to 1.94% in June after seeing $4.3 billion in net inflows. This was a record for the company and sees assets under advice at $27.2 billion. There was no mention of financial performance in the update.

This report was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.

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