The S&P/ASX 200 (INDEXASX: XJO) is expected to drop when the market opens this morning according to the latest SPI futures. Here’s your daily ASX morning report.
Recession is over, ASX 200 tumbles 1.7%
The ASX 200 finished off the day’s lows falling 1.7% on Tuesday after a weak global lead. The good news in Victoria is being offset by a raft of new lockdown measures across Europe and signs the pandemic is unlikely to slow soon.
On a positive note, the RBA indicated in a speech that they believe the Australian recession is over! Once again, we look to be saved by a combination of mining exports, with the iron ore price still booming thanks to China, and huge government stimulus. According to UBS, this stimulus is making it hard to understand the true strength of the banks as they are operating in a ‘false economy’.
ANZ Banking Group (ASX: ANZ) was the latest to announce a write-down, $528 million taking the total for 2020 to over $1.5 billion, this time centred on more customer remediation and the ‘accelerated write-down of software’. ANZ shares finished 0.9% lower, taking the sector down 1.3%. The latter is becoming increasingly common as the ASX banking sector is challenged by more tech-driven competitors.
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Boral sells Asia business, Evans Dixon under offer
Boral Limited (ASX: BLD) offered the news of the day, announcing the sale of its Asia-focused USG Boral business to joint venture partner Knauf for just over US$1.0 billion. The company specialises in plasterboard and other building products across the region and has been facing a slowdown in volumes of 6% as the pandemic hit.
The price represents a profit of $540 million to Boral shareholders and a multiple of 15 times 2020 earnings, so a solid result in a difficult market. Management confirmed its intention to retain the majority of the US businesses, particularly Fly Ash, but to focus more closely on extracting all growth and value possible, including through smaller asset sales. The sale increases the likelihood of a reinstatement of the dividend. Boral shares were among just eight of the ASX 200 companies finishing higher, up 0.8% on Tuesday.
Long-suffering shareholders and clients of Evans Dixon Ltd (ASX: ED1) may have a knight in shining armour with aggressive acquirer 360 Capital Group Ltd (ASX: TGP) offering what amounts to a $0.61 cent per share offer, which was immediately knocked back. It’s been a difficult few years, the Evans Dixon share price down 79% since its IPO in 2018 and the announcement of an ASIC investigation into the appropriateness of its financial advice remains in the background. ED1 shares finished 7.8% higher.
Tech bounces again, US markets mixed
US markets were mixed overnight as more corporate activity and the likelihood of another round of lockdowns in the US bites on confidence.
The key beneficiary is obviously the technology sector, with the Nasdaq outperforming by adding 0.8% whilst the broader S&P 500 closed down around 0.3% primarily on the back of weaker oil prices.
The news of the day was the agreement for US chipmaker Advanced Micro Devices (NASDAQ: AMD) to buy competitor Xilinx (NASDAQ: XLNX), sending shares in the latter over 8% higher.
The rest of the week will see the likes of Alphabet (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT) and Facebook(NASDAQ: FB) report, which may contribute to a final pre-US election rally if the work from home theme is continuing to pay off for these groups. Watch this space.