Australian shares (XJO) set to open lower – 6 ASX shares to watch

The S&P/ASX 200 (INDEXASX: XJO) is set to rise when the market opens this morning according to data from the Sydney Futures Exchange. Here’s your daily ASX morning report.

ASX share market recap

The ASX 200 experienced another positive, albeit somewhat mixed, day on Wednesday with the banking sector (+1.7%) forcing the market higher by 0.5%. The ASX travel sector was the key detractor as an outbreak in South Australia combined with profit-taking hit confidence.

Investors continue to return to the banks as a normalise in interest rates supports profits whilst the doomsday scenario of 30% property price falls appears to be off the cards for the time being. Commonwealth Bank of Australia (ASX: CBA) was the big winner yesterday, adding 2.9%.

Casino operator Crown Resorts Ltd (ASX: CWN) entered a trading halt late in the session after the NSW State Government announced the Barangaroo casino opening would be halted until 2021 on the back of potential money laundering revelations.

Market darling a2 Milk Company Ltd (ASX: A2M) was among the worst performers, falling 4.8% despite the outgoing chairman reiterating revenue expectations at the company’s AGM. Investors appear to be concerned about the lack of transparency into Chinese Daigou sales, a lucrative part of a2 Milk’s business.

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United Malt reports, Aristocrat cuts dividend

United Malt Group Ltd (ASX: UMG), which was demerged from Graincorp Ltd (ASX: GNC) earlier this year, highlighted the growing impact on global barley producers from China’s more aggressive stance against Australia. That said, processing volumes are back to 90% of pre-COVID levels with full-year profit falling just 3% to $57.4 million. Processing revenue fell just 1% with warehouse and distribution work falling 6% and the dividend cut to 3.9 cents. The United Malt share price finished 3.0% higher on the news.

Poker machine designer and operator Aristocrat Leisure Limited (ASX: ALL) released its FY20 results, slashing its dividend by 70% from 34 cents to 10 cents per share despite being a major recipient of the government’s Job Keeper regime. Revenue fell 5.9% to $4.1 billion with falling margins resulting in a 46.7% fall in profit to $476.6 million. The Australian business was the hardest hit, with revenue falling 72% compared to 53% in the Americas as stringent lockdowns and social distancing capped customer limits. The company has recovered quickly from March lows but there remains significant uncertainty ahead.

US markets weaken on spiking COVID cases

US markets were broadly weaker overnight as investors tire of spiking COVID cases across the country. The S&P 500fell 1.2% and the Nasdaq 0.7%. Tesla Inc. (NASDAQ: TSLA) was once again the leader, adding 10.2% along with a number of lower-cost retail-focused stocks, including Target (NYSE: TGT).

Management of Target reported a 20.7% increase on 2019 sales for the third quarter, double the consensus estimate on the back of incredibly strong e-commerce sales figures where Target has a sector-leading platform.

In further positive signs for the US economy, housing starts for single-family homes reached their highest rate since 2007, hitting 1.53 million in October, a 14.2% increase on 2019.

Meanwhile, Europe has once again begun to outperform the US, having entered lockdowns more quickly, with this week’s progress on a Brexit deal offering hope for a smoother than expected exit.

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Disclosure: At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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