The S&P/ASX 200 (ASX: XJO) is set to open higher this morning according to the Sydney Futures Exchange. Here’s what’s making headlines.
ASX share market recap recap
The ASX 200 fell 0.7% for the day on Wednesday, pushed lower by dividend payouts from Telstra Corporation Ltd(ASX: TLS) and AGL Energy Limited (ASX: AGL), among others. This was despite new records being reached in the US.
The losses were broad-based with only the healthcare and consumer sectors finishing higher; the ASX banks were among the worst hit, falling 1.2% and contributing to a quarter of the market’s fall.
With reporting season coming to a close, Zip Co Ltd (ASX: Z1P), an emerging competitor to Afterpay Ltd (ASX: APT), jumped by nearly 30% after announcing a partnership with eBay and the launch of its Zip Business product as it continues to pivot.
I’ll be discussing this in more detail in tomorrow’s reporting season update with Owen Raszkiewicz. You can check out last week’s video below:
Wednesday’s major ASX announcements
Cleanaway Waste Management Ltd (ASX: CWY) delivered a solid result, once again proving that both recycling and waste disposal are among the most defensive businesses in the world. The company reported a small increase in revenue by 2.1% to $2.3 billion, with the core Solid Waste division growing 0.8%. The result was an 8.7% increase in profit on an underlying basis, to $153 million and a 10% increase in the final dividend.
My take: Progress being made in integration, recycling tailwind to continue.
Adbri Ltd (ASX: ABC) reported a 7% fall in revenue for the half but managed to deliver a profit of $29.1 million, a 260% increase on 1H19 due to major write-downs in the previous corresponding period. On an underlying basis, profit fell 14% to $47.6 million. Looking more closely at the individual business limes, Cement fell 6% due to the bushfires, Lime sales grew 4% as gold and nickel mining ramped up, whilst Concrete fell 13% due to a slowdown in housing construction.
My take: Difficult half and more to come, Boral Limited (ASX: BLD) preferred for infrastructure exposure.
Australian Ethical Investment Limited (ASX: AEF) bucked the trend of investment managers, adding $660 million for the financial year, doubling the inflow from 2019. The group hit $4 billion in assets, boosting revenue by 22% to $49.9 million, with the benefits of scale adding 46% to profit which came in at $9.5 million. Such was the strength of the result that management increased the full-year dividend by 20% to 6 cents per share.
My take: New growth player in the funds management space.
Platinum Asset Management Ltd (ASX: PTM) continues to feel the brunt of sustained underperformance, with funds under management falling 14% for the financial year following $3 billion in outflows. The group is now just 20% of the size of competitor Magellan Financial Group Ltd (ASX: MFG), with CEO Andrew Clifford blaming the “investment mania” in markets for the underperformance.
My take: Growth continues to outperform value.
The third wheel of groceries
Metcash Ltd (ASX: MTS) added 2.4% on Wednesday after management announced total sales for the first quarter of 2021 were up 14.9% thus far. Wholesale sales have improved 18.4% when recent 7-Eleven and Drakes contract losses are excluded. Liquor remains an outperformer with Australians indulging while trapped at home, growing 11.4%, along with hardware up 19.2% on the prior corresponding period.
My take: Unexpected surprise, but not sustainable post-pandemic.
Trifecta of news boosts global markets
The so-called ‘juggernaut’ of stocks rolled on overnight, the S&P 500 finished 1.0% higher and the Nasdaq 1.7% as a trifecta of news boosted confidence.
China appears to be relenting on the US push for greater transparency into the audit books of listed companies, US durable goods orders grew 11.2%, three times higher than an expected 4.2% rise and the German Government extended their version of the JobKeeper program.
Evidence that companies are committed to upgrading their technology and digital systems came from Salesforce.com Inc. (NYSE: CRM) which saw revenue climb 29% in the three months to July, leading to a jump in profits. Salesforce shares finished 26% higher.
Reporting season continues in Australia on Thursday, with Ramsay Healthcare Ltd (ASX: RHC) and Woolworths Group Ltd (ASX: WOW) among the blue-chips announcing results. Afterpay and Zip will also release their hotly-anticipated results.
This article was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. He owns shares of Zip Co and Cleanaway in his super fund. To get in contact with Drew, click here to visit the Wattle Partners website.