ASX 200 (XJO) morning report: What ASX investors need to know

The Australian share market, including the S&P/ASX 200 (INDEXASX: XJO) and All Ordinaries (INDEXASX: XAO), is tipped to open higher this morning according to the Sydney Futures Exchange.

ASX share market recap

The ASX 200 finished Wednesday 2.3% lower, taking the loss to 4.0% for the month; the first negative result since March and down 1.4% for the quarter.

The energy sector led the losses, down 4.2%, as a combination of increasing supply and second wave lockdown measures in Europe and the US drive investor concerns. Santos Ltd (ASX: STO) fell 4.0% despite receiving approval for its much-maligned Narrabri gas project. Similarly, the Woodside Petroleum Limited (ASX: WPL) share price finished 4.9% lower.

Just nine companies in the ASX 200 managed to finish higher, led by Corporate Travel Management Ltd (ASX: CTD) after its trading halt was released post the acquisition announcement.

Markets fell heavily in the afternoon, coinciding with the first US presidential election debate, but not solely because of it. The Australian Energy Regulator announced its decision on the allowed rate of return for Victorian electricity transmission providers, including Spark Infrastructure Group (ASX: SKI), cutting the rate from 5.36% to 4.59%. Spark shares fell 3.3% on the news.

Featured video: ASX small-cap chat with Andrew Page

Credit ratings cuts for Australian states

The Chinese economy continues to surprise, with the manufacturing PMI increasing to 51.5 from 51.0 in August, spurred on by infrastructure stimulus. Both bode well for the likes of BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO). Importantly, the non-manufacturing measure, which includes services and trade, also rose to 55.9, solidifying China’s position as the fastest-growing economy in the world.

The cleanout at AMP Limited (ASX: AMP) continues as the group attempts to streamline its business model, announcing a 20% cut to the workforce through a series of redundancies.

Credit rating agency Standard & Poor’s released an update of their views on the debt position of each Australian state. Titled “Shock and Ore”, they placed NSW and the ACT onto a negative outlook along with Victoria due to concerns around expanding debt levels. These credit ratings aren’t particularly relevant these days, with Australia still among the most highly-rated government in the world and our banks far less reliant on global investors to fund their loan books.

Strong quarterly result, stimulus overpowers debate

The S&P 500 finished the month on a positive note, 0.8% higher, capping the monthly loss to 3.9%, the first since March. The quarterly result was much stronger, up 8.5% for the three months which included a better than expected reporting season.

Oil and gas producer Duke Energy (NYSE: DUK) rallied 7.5% after receiving a takeover offer from Next Era Energy(NYSE: NEE) as a slowdown in the sector triggers consolidation.

The latest tech IPOs were strong, big data analytics company Palantir (NYSE: PLTR) finishing 30% above its reference price of US$7.25, whilst workplace process app Asana (NYSE: ASAN) added 37% on its open.

The Nasdaq finished 0.7% higher, not enough to offset the 4.9% fall for the month. Discussions on a stimulus package continue to offer hope for markets despite the debacle that was the first presidential election debate.

Finally, US inflation dropped 0.8% in the quarter as energy prices continued their falls.

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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