ASX 200 (XJO) morning report – QUB, SCG & GNC shares in focus

The S&P/ASX 200 (ASX: XJO) is tipped to open higher this morning according to ASX futures. Here’s what ASX investors need to know.

ASX share market recap

As the saying goes, sharemarkets take the stairs up and the elevator down. The ASX 200 followed the global lead on Wednesday finishing 2.2% lower, with all but 13 stocks in the index finishing lower. Energy companies including Woodside Petroleum Limited (ASX: WPL) and Santos Ltd (ASX: STO) fell by 4.4% and 5.4%, respectively, as oil prices took another hit from signs of another round of global lockdowns.

Predictably, consumer staples and materials outperformed, albeit delivering less negative results for the day. The sell-down was initially triggered by the Nasdaq 100 entering a correction falling 11% in three days, however, given the market is up 41% over the last 12 months, recent volatility should be kept in context.

Graincorp Ltd (ASX: GNC) was among the worst-hit yesterday, falling 8.9% after it was forced to make a $70 million insurance payment following a better than expected 2020 crop.

Featured video: The Australian Finance Podcast – September Q&A

Qube secures extension, Scentre weighing up options

Australian Retailers Association CEO Paul Zahra confronted the Victorian Government’s lockdown measures head-on, suggesting “around 50% of small [retail] businesses in Victoria will permanently close” and reiterating the importance of the retail sector in an eventual economic recovery.

Qube Holdings Ltd (ASX: QUB) announced that its Patrick Terminals business secured an extension to the Port of Melbourne lease until 2066, solidifying its already strong position. The company is committed to improving supply chain efficiency across Australia and stands out as a key beneficiary of the re-shoring of capacity post this pandemic.

According to Morgan Stanley, Scentre Group (ASX: SCG) may be forced to suspend dividends, undertake a dilutive capital raising or consider divesting a portion of its portfolio to get its gearing levels back under control; shares fell 4.0%.

Technology leads turnaround

The ASX will open higher on Thursday after US markets stemmed the bleeding, the S&P 500 up 2.0% and the Nasdaq 100 3.0%.

Telsa Inc (NASDAQ: TSLA) was among the leaders recovering 11% after yesterday missing out on a position in the S&P 500. Investors were expecting Tesla’s addition, which would force ETF providers around the world to increase their stakes, but were left disappointed.

The rally was broad-based but with cyclical airline and consumer sectors feeling the rotation back into technology. Tiffany & Co. (NYSE:TIF) fell 6.4% after announcing it would be suing LVMH (EPA: MC) for pulling out of their $16 billion deal; a sound decision in my view given the changing nature of the economy post COVID.

Athleisure wear provider Lululemon Athletica Inc (NASDAQ: LULU), popular among stay at home workers, fell 7.5% despite growing revenue 3% to US$903 million following a 160% increase in online sales.

In other news, the European Central Bank will meet again overnight.

This article 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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