The S&P/ASX 200 (INDEXASX: XJO) is set to follow US markets higher on Tuesday. Here’s what’s making headlines.
ASX swings, Worley tumbles on downgraded guidance
The ASX fell over 1% at the open on Monday following a weak overseas lead but managed to finish 0.8% higher for the day, bringing back memories of the 2020 daily swings.
Most sectors finished higher, with healthcare the standout after CSL Limited (ASX: CSL) benefitted from a rotation back towards quality amid the Perth lockdowns.
The exuberant day trading which last week focused on shares in GameStop (NYSE: GME) has seemingly moved to the silver market, with so-called ‘influencers’ pushing the price higher and ASX-listed silver miners doing the same. Whilst worthy of comment, these trends simply reiterate the importance of having a disciplined plan in place for both buying and selling stocks, not simply chasing momentum. GameStop stock fell 31% overnight to $225, after reaching an intra-day high of $322 in morning trade.
Engineering service provider Worley Ltd (ASX: WOR), a common proxy for mining stocks, fell 10.9% on Monday after announcing revenue would be around 26% below 2020 levels, with guidance falling to between $4.4 billion and $4.5 billion in the first half of the year. Management expects deferred projects to return to normal and highlighted the company’s focus on cost-cutting to offset the impact in earnings. Contract service providers remain a difficult proposition in a highly uncertainty environment.
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Link to sell PEXA, deals approved
Despite declaring recent private equity offers ‘undervalued’ the company, management of Link Administration Holdings Ltd (ASX: LNK) have clearly put the jewel in their crown, PEXA, on the block announcing it is aggressively pursuing a trade sale of the business.
The digital settlement platform has become somewhat of a cash cow in recent months, benefitting from the inability to settle property transactions in person with Link seeking to capitalise on this interest. The company has also terminated its $266 million offer for European loan servicing business Pepper, citing issues relating to the pandemic; a positive move in light of the outlook for non-performing loans. Link shares finished shares 1.7% higher.
The takeover of Coca-Cola Amatil Ltd (ASX: CCL) was approved by the Foreign Investment Review Board (FIRB), with shares moving 0.3% higher and remaining above the $12.75 bid price. It’s hard to see a better offer being received at this point given continued weak volume growth.
Amaysim Australia Ltd (ASX: AYS) announced the successful sale of its mobile business to Optus for $250 million, clearing the way for WAM Capital Limited (ASX: WAM) to gobble up the franking credits and cash on the balance sheet.
US markets bounce back, Nintendo upgrades guidance
US markets started the week on a positive note, the Nasdaq delivering the strongest result in three months, jumping 2.5% and the S&P 500 rising by 1.6%.
Both Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) jumped ahead of their earnings reports, with analysts expecting Amazon to report a US$100 billion quarter for the first time.
Free-trading house Robinhood remains the centre of attention after banning trading on a number of stocks whilst also raising US$3.4 billion to support its capital requirements amid the incredible surge in trading. Brokerages are required to hold sufficient levels of capital with the regulator to support the trading of their members, with shareholders likely hoping for an IPO to come sooner rather than later.
Video game maker Nintendo (TYO: 7974) continued its strong run in 2020, raising its forecast for financial year profits after reporting a US$2.2 billion profit. The result was driven by the company’s Switch platform, which sold 11.6 million units in the December quarter; 7% higher than 2019.
Nintendo remains a key beneficiary of the stay-at-home orders, with software sales up 43% in the nine months to December, 40.9% of which are online sales. Management is seeking to capitalise via the launch of a new line of games in 2021.