Tuesday’s sell off a world away as equities bounce again (SKC)
WHAT MATTERED TODAY
Financials, healthcare and REITs carried the index today as the resources and tech names gave back some of the outperformance – the same trend seen in the US overnight. Liquidity is still the key driver of markets with equities supported despite the continuing threat of the virus and the looming event risk of the US election. Tech also lagged last night as Trump made a push to have processes ready for a potential vaccine launch on November 1, just 2 days before the election is due. A classic Trump move – if the vaccine makes it before the election, he is heralded a winner for fast tracking the development whereas if it doesn’t arrive in time there are plenty of people to point the finger at in his bid for re-election. Tech names have benefitted from the stay-at-home trend, so the news took some shine off the shares prices.
Xero (XRO) further contributed to the tech weakness as founders sold down large blocks of stock, initially at $99 for 2m shares before the market opened, before a second line at $100 for 1m was stamped at 10.30am. REITs were better with Dexus leading. Murmurs of Blackstone sifting through the accounts of the property group fuelled buying today, lifting the broader sector. Some economic data out today – local PMI numbers improved, though remain contractionary below 50. Trade balance was softer though with imports rising and exports falling to miss expectations.
By the close, the ASX 200 was up 49pts / +0.81% to 6112. Dow Futures are trading down -22pts / -0.08%
ASX 200 Chart
ASX 200 Chart
CATCHING MY EYE
SkyCity Entertainment (SKC) +7.36%: one of the reporting season stragglers, SkyCity operate 3 casinos in NZ as well as one in Adelaide. Profit took a hit given its exposure to NZ where lockdowns were far more stringent than ours, falling nearly 60% in the year to $NZ66.3m, though this was 7.5% better than analysts had pencilled in. Even better was guidance – EBITDA for FY21 is expected to come in higher than FY20 which came in at $200.7m, already ahead of the markets expected FY21 print of $190.6m. Key to the forecast is the Adelaide casino which is running cashflow positive since re-opening in late June as well as an influx of users on the NZ online casino offering.
SkyCity Entertainment (SKC) Chart
BROKER MOVES
· Nufarm Raised to Neutral at Macquarie; PT A$4.26
· Evolution Raised to Neutral at Macquarie; PT A$5.60
· South32 Raised to Buy at HSBC; PT A$2.06
· Reliance Worldwide Cut to Hold at Morningstar
· Costa Cut to Sell at Morningstar
· PointsBet Cut to Hold at Ord Minnett; PT A$13.60
· IOOF Holdings Raised to Overweight at JPMorgan; PT A$4.15
· Nufarm Raised to Hold at Jefferies; PT A$4.50
OUR CALLS
No changes today
Major Movers Today
Have a great night
Harry & the Market Matters Team
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