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ASX 200 (XJO) morning report – 8 ASX shares to watch

The S&P/ASX 200 (ASX: XJO) is expected to start the day strongly on Tuesday, with ASX futures pointing to a positive open. Here’s your daily ASX morning report.

ASX 200 recap

The ASX 200 overcame a weak lead from overseas markets to finish 0.3% higher on Monday, behind another rally in Wesfarmers Ltd (ASX: WES), up 1.5%.

Elsewhere, dividend payments are placing downward pressure on the market with ANZ Banking Group Ltd (ASX: ANZ), -0.9%, and Aurizon Holdings Ltd (ASX: AZJ) the major payers today.

The materials sector continued to push higher as Fortescue Metals Group Limited (ASX: FMG) announced a record profit and dividend, whilst highlighting that Chinese ore stockpiles remain well below previous levels and are likely to support current prices for the foreseeable future.

Zip Co Ltd (ASX: Z1P) added 13% after achieving record monthly transaction volumes of $70 million, a 600% year on year increase as the company added 133,000 new customers.

Featured video: ASX results recap – JBH, PME, KGN, EML & more

Finally, some positive action at AMP

Management at AMP Limited (ASX: AMP) finally bowed to public pressure with Chairman David Murray, Director John Fraser and recently appointed CEO of AMP Capital Boe Pahari all stepping down over the weekend. I’m expecting a new appointment to AMP Capital will be made in the coming months, with the CEO holding a caretaking role until that time, with the potential for a rebrand and eventual spin-off to improve shareholder value. The shares finished higher.

Comment: Finally the shackles of the past have been released.

All is not well in America for Boral

Boral Limited (ASX: BLD) unexpectedly announced a $1.2 billion write-down of its North American operations, pricing in lower housing starts and reducing goodwill on its major Headwaters purchase and related Joint Ventures. The result of both changes was earnings to fall between $820 million to $825 million and profit before the $1.3 billion significant, non-cash impact of the above, to come in between $175 and $180 million. Unfortunately, the second half dividend has been cancelled ahead of Boral’s full earnings report on Friday.

Comment: Disappointing but not unexpected decisions amid a global slowdown.

Fortescue pumps out records

Fortescue Metals delivered record revenue of US$12.8 billion on the back of a 6% increase in iron ore shipments for the financial year. Net profit was US$4.7 billion, ahead of the US$4.6 billion expected which sent shares higher yesterday. The low cost of production at US$12.94 per tonne is allowing return on equity of 40% Importantly, the dividend was a major beat at $1.0 compared to $0.72 expected.

Comment: Great result from a booming sector.

Isolation beards boosting Shaver Shop

It seems the boom in isolation beards among Victorian’s locked at home is resulting in a massive improvement in sales at Shaver Shop Group Ltd (ASX: SSG). Management reported sales growth of 15.3% on a like for like basis. Online sales were up to 103% for the year representing more than 22% of sales. The result was stronger net profit, up 44% to $10.6 million and an increased dividend on 2019; bucking the trend of the sector. The company did not receive JobKeeper payments and appears to be one built for the future.

Comment: Solid result, but boosted by reducing stock levels, which may become an issue.

Double records, value winning

Both the S&P 500 and Nasdaq finished at all-time highs overnight, up 1.4% and 0.6% respectively on a flurry of positive news.

The US Government reported over the weekend that it was fast-tracking a blood plasma treatment for COVID-19, whilst President Trump appeared to be lightening his approach on US businesses using We Chat, amid a recent uproar. Shares in Tencent (HKG:0700) finished 5.8% higher.

As expected, signs of a vaccine sent the ‘value’ sectors of the market higher, American Airlines Group Inc.(NYSE:AAL) and Carnival Corp. (NYSE:CCL) both jumping over 10%. This bodes well for another strong open in Australia.

Look out for reports from Ansell Limited (ASX: ANN), Blackmores Limited (ASX: BKL) and Scentre Group (ASX: SCG) today, amongst many others.

This article was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. He may maintain positions in the securities 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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