The S&P/ASX 200 (INDEXASX: XJO) could extend its winning streak on Friday, with ASX futures pointing to a positive open. Here’s what you need to know.
ASX 200 continues to push higher
The ASX 200 has delivered its longest winning streak since July, finishing 1.1% higher on Thursday as the budget stimulus continues to reverberate through markets. The announcements have been well received by the corporate sector, despite several shortcomings.
But a reminder of the long road ahead came from the Transurban Group Ltd (ASX: TCL) AGM, during which management provided a third-quarter update. Average daily toll road traffic was down 25.2% in the September quarter, with Sydney the only improver, growing 1.5%. Melbourne’s lockdowns continued to bite, pushing traffic down 58.6%, Brisbane a more muted 9.1% and North America falling 28.2%.
Rather than a dilutive capital raising, the company flagged the partial sale of the Washington toll road, in an effort to assuage lender concerns. The Transurban share price fell 1.0% on the news and is 40% off its March lows despite the weakness. To me, this suggests limited upside even in the event of a vaccine.
Elsewhere, iSelect Ltd (ASX: ISU) settled a case with the ACCC for $8.5 million, arising from queries around the competitiveness of its comparisons. The iSelect share price rallied 13.3% on the news.
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Netwealth share price jumps
The Reserve Bank of Australia remains under pressure to do more, the latest comments from bond manager, Charlie Jamieson cutting to the core. Speaking at a conference, Charlie suggested that “the RBA are a tremendously reactionary central bank” and highlighted that “they couldn’t have done a worse job at predicting what might occur”. The same could be said for the majority of Australian economists in recent years.
Global pallet distributor Brambles Limited (ASX: BXB) reiterated guidance for 2021, with sales to grow by up to 4% and underlying profit closer to 5% – all going well. Brambles shares finished 0.9% higher.
Meanwhile, superannuation platform provider Netwealth Group Ltd (ASX: NWL) rallied 8.3% after announcing a September 2020 update. The company revealed an 8% increase in funds under administration to $34 billion in the month. The growth is being driven by managed accounts, allowing advisers to outsource investment implementation, which is now $6.5 billion compared to just $3.4 billion in 2019. The group also announced the launch of its own suite of funds with Magellan Financial Group Ltd (ASX: MFG), adding another string to its bow.
Will she or won’t she, stimulus talks gather steam again
The daily volatility continues, with signs the Democrats will relent on a new stimulus package boosting markets to five-week highs. The S&P 500 finished 0.8% higher and the Nasdaq 0.4%.
It appears markets are becoming more optimistic about a Biden victory with the additional stimulus spending it provides to boost the domestic economy; only time will tell.
Signs of progress on both COVID-19 treatments and vaccines shot the energy sector higher, oil jumping over 3% on the news. The combination of oil, cruise and travel companies will be the key beneficiaries from a real vaccine, but remain well below 2019 highs.
Merger activity has spiked in recent months with Morgan Stanley (NYSE: MS) announcing the acquisition of fund manager Eaton Vance (NYSE: EV), which jumped 48% on the news.
Finally, McDonald’s Corp (NYSE: MCD) announced that sales continued to recover in September, 4.6% higher which should be good news for Australia’s Collins Food Ltd (ASX: CKF).
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.