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ASX 200 (XJO) morning report – TPW, ANZ & ASX travel shares in focus

The S&P/ASX 200 (INDEXASX: XJO) is expected to climb when the market opens this morning. Here’s what’s making headlines.

ASX 200 share market recap

The ASX 200 overcame a weak lead from the US to deliver its strongest budget bounce since 2002, jumping 1.3% on Wednesday. It will likely take several weeks to digest the true implications of this budget, particularly those sectors that missed out. But on Wednesday, it was all about the consumer, property and banking sectors.

Both the discretionary and staples sectors rallied 2.2%, with furniture retailer Temple & Webster Group Ltd (ASX: TPW) and Woolworths Group Ltd (ASX: WOW) identified as key beneficiaries, adding 9.5% and 2.0% respectively.

Initial estimates suggest that the announced tax cuts will add $6.9 billion to disposable incomes in 2021. It’s yet to be seen whether consumers will have the confidence to spend this or will increase savings in line with the post-GFC experience.

The ASX banking sector benefitted from the jobs-focused budget and hopes that the Victorian economy may be returning to normal, with Australia and New Zealand Banking Group Ltd (ASX: ANZ) leading the way, up 2.4%.

The other clear beneficiary has been trade and construction exposed businesses, or those with substantial capital requirements. Recycling and waste management group Cleanaway Waste Management Ltd (ASX: CWY) rallied 4.8% on hopes of a boost to residential construction and SEEK Limited (ASX: SEK) added 4.2% as job advertisements are expected to rise following the $200 per week trade credit announced.

In my view, the budget was good news for an economy that needs a real injection, but lacked the real innovation and leadership required to push the Australian economy into the future.

Featured video: How to save money on health insurance

The biggest losers from the budget

Whilst there were plenty of winners from the budget, there are a number of clear losers, with the travel and leisure sector offered little in the way of support. As highlighted on Tuesday night’s coverage, there is little value in tax write-offs if you don’t have any revenue.

The Qantas Airways Limited (ASX: QAN) share price fell 0.6% on the news, whilst Flight Centre Travel Group Ltd(ASX: FLT) shares remain under pressure, falling 0.7% despite hopes of intra-Australian travel returning sooner rather than later.

I’m not confident enough is being done to boost those businesses that have been devastated by the lockdowns, particularly smaller retailers, restaurants and tourism providers; nor that the changes will be sufficient to offset the expected reduction in immigration in the years ahead. Only time will tell.

The tweets continue, triggering new highs

President Trump got straight back to work, unleashing a series of tweets around one-off stimulus payments. He flagged support for the beleaguered airline sector and another one-off stimulus cheque, that he would sign off personally.

The result was a risk-on mood, the S&P 500 finishing 1.7% higher and the Nasdaq 1.9%, near one-month highs. Just 51 companies fell on the S&P 500, with the pressure focused on real estate and energy utilities.

The White House has also ramped up pressure on the impending IPO of mega fintech Ant Financial, owned by Alibaba Inc. (NYSE: BABA), indicating it has been seeking options to restrict the sharing of payment information, similar to its restrictions on We Chat, owned by Tencent. The difficulty remains in working out how this is possible and legal, hence both share prices headed higher, by 2.9% and 1.4% respectively.

Meanwhile, Levi Strauss (NYSE: LEVI) delivered an earnings update, highlighting its strong online growth, 50% for the quarter, as consumers seem to be pivoting from activewear to casual wear.

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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Low fees? Check.

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Disclosure: At the time of publishing, Drew owns shares of Cleanaway.

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