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

The S&P/ASX 200 (INDEXASX: XJO) is expected to follow a weak lead from overseas markets and open lower this morning. Here’s what ASX investors need to know.

ASX 200 recap

The ASX 200 ultimately finished flat on Tuesday, after trading as much as 0.8% higher during the session. Industrials and tech companies offered support, adding 0.7% and 2.4% behind Sydney Airport Holdings Pty Ltd (ASX: SYD) and Afterpay Ltd (ASX: APT). Sydney Airport shares reacted positively to news that the Western Australian Government is considering loosening quarantine measures.

The financials sector was the biggest drag, falling 0.4%, after Bank of Queensland Ltd (ASX: BOQ) reported a further $177 million in write-downs on its home loan book and flagged further underpayment of staff that will cost $10 million. Bank of Queensland shares finished 7.2% lower.

The Telstra Corporation Ltd (ASX: TLS) share price was flat despite the telco announcing its 5G broadband modem, as it moves to compete directly with the NBN business that has been eating away at its monopoly. With both NBN Co and Telstra now investing in the sector, consumers should stand to benefit from more freedom of choice and ultimately better speeds.

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Corporate Travel makes US$200m acquisition

After surviving a highly publicised short selling attack in 2019, Corporate Travel Management Ltd (ASX: CTD) has responded with another major acquisition, purchasing the Nebraska-based Travel and Transport booking group for US$200 million. The purchase will be funded via an AUD$375 million capital raising with focus once again turned to management’s ability to integrate and extract efficiencies from the business.

A2 Milk Company Ltd (ASX: A2M) shares continued to retreat, down 4.0%, as confidence in the company’s Chinese growth opportunity continues to wane.

Recently listed business lender Plenti Group (ASX: PLT) has received the all-clear from the Department of Industry, Science, Energy and Resources, after reports that it had received preferential treatment on loans secured by solar panel installations.

Meanwhile, economists remain split on hopes for an October rate cut, with fiscal policy and the upcoming budget likely to offer greater benefit than a move from 0.25% to 0.10% as predicted.

US markets weaker, retail bankruptcies hit record

Both the S&P 500 and Nasdaq finished lower overnight, down 0.4% and 0.3% respectively. Around two-thirds of companies fell, driven by a combination of factors.

Investment Bank JPMorgan Chase & Co (NYSE: JPM) was fined US$920 million in the US over questionable trading practices on commodity and futures exchanges, some way off Westpac Banking Corp’s (ASX: WBC) money laundering fine despite JPM’s size and scale.

Energy prices continue to retreat as reported global COVID-19 deaths surpassed 1 million, traders concerned that a worsening outbreak in the northern hemisphere may further slow any economic recovery.

In a sign of the future, the first half of 2020 saw record US bankruptcies, liquidations and store closures, with retail among the hardest hit. Eleven major retailers including Sears and Toys ‘R’ Us declared bankruptcy in the first half, that number doubling July and August alone.

Chipmakers rose after Micron (NASDAQ: MU) reiterated guidance for quarterly revenue of US$5.2 billion, supporting the likes of NVIDIA Corporation (NASDAQ: NVDA) and ASML (NASDAQ: ASML).

Stimulus negotiations remain at an impasse, with hope for tomorrow following today’s US presidential election at around 11am AEDST.

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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