ASX 200 (XJO) morning report – NAB, BBN & PPS shares in focus

The S&P/ASX 200 (ASX: XJO) is set to open lower this morning according to data from the Sydney Futures Exchange. Here’s what investors need to know as we head into what will be a big week for the ASX.

ASX 200 recap

The ASX 200 finished an important week 2.0% higher after adding 0.6% on Friday. The dispersion of returns continued as reporting season gathered steam, with more company-specific than sector moves.

The IT sector was by far the strongest, adding 4.2% after share registry provider Computershare Limited (ASX: CPU) rallied 7.8% as investors digested a strong finish to the financial year.

All eyes were on the RBA Governor’s speech, during which it was made clear that interest rates will remain around 0.25% until at least 2022.

Mesoblast Limited (ASX: MSB) was the standout on Friday, finishing 38% higher after its stem cell treatment got one step further in gaining FDA approval for treating a rare blood disorder in children.

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NAB delivers Q3 update

National Australia Bank Ltd (ASX: NAB) climbed more than 1% on Friday after releasing its third-quarter update. Management’s decision to raise capital in March is looking prescient after the company reported 10% revenue growth and a 16% reduction in deferred home loans. The bank benefited from a recovery in its Markets and Treasury unit which ensured profit fell just 11.6% to $1.55 billion for the third quarter.

Summary: Great result in the circumstances, supporting a second-half dividend.

Baby Bunting share price jumps 10%

Baby Bunting Ltd (ASX: BBN) finished the week with a bang, reporting 11.8% growth in sales and confirming it was not a recipient of any JobKeeper payments. The strong result was driven by 39% growth in online sales, 66% in the second half as lockdowns tightened. The result was a 34% increase in net profit to $19.3 million and a 25% increase in its dividend; a record payout. Baby Bunting shares surged 10.4% on Friday.

Summary: Earnings season standout, little wonder the company is now sitting at all-time highs.

Praemium showing the future for advice

Investment platform provider Praemium Ltd (ASX: PPS) announced 91% profit growth to $49 million despite volatile sharemarkets. Assets under management (AUM) increased 14% to $20.3 billion and should be further bolstered by the acquisition of Powerwrap Ltd (ASX: PWL), which has $8 billion (AUM) of its own. The highlight was a 73% increase in managed account assets of $4.8 billion as financial advisers flock to the platform.

Summary: Excellent year in challenging conditions, adviser tailwind to continue.

What I’m watching this week

Sharemarkets will face a weak lead after the S&P 500 finished flat, adding just 0.6% for the week. With a lack of economic data ahead and US earnings season all but over, investors will likely focus on heightened geopolitical risk.

The three things I’m watching for to start the week are earnings results from JB Hi-Fi Limited (ASX: JBH) and Lendlease Group (ASX: LLC) on Monday, and the outlook for what has become the most popular investment of 2020, gold bullion (and gold stocks).

I’m wary of the impacts of Victoria’s lockdown on JB Hi-Fi’s earnings result, with risk to the downside, and will be interested to see if Lendlease decides to devalue its massive portfolio of property assets.

Despite being quoted regularly on his avoidance of an investment in gold, Warren Buffet’s Berkshire Hathaway Inc.(NYSE: BRK.A) announced it had purchased $565 million of gold miner Barrick Gold Corp. (NYSE: GOLD).

This article was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. He may maintain positions in the companies mentioned. To get in contact with Drew, click here to visit the Wattle Partners website.

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Disclosure: Drew Meredith is the author of this post. He may maintain positions in the securities mentioned.

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