ASX starts the week on the front foot (JBH, ANN)
WHAT MATTERED TODAY
A strong Monday for the ASX which has proven to be a rarity in recent times with the market opening lower, before staging a strong recovery throughout the session, the ASX adding an impressive +348pts from the early session low. A good move by the Government to announce a new, large wage subsidy costing around $130bn over 6 months providing around 70% of the median wage, and 100% of the median wage in heavily hit sectors such as retail and hospitality, with payments flowing from the 1st May.
Buying today was targeted towards the banks which are heavily exposed to unemployment / bad debt increases and the like, and todays move by the Govt is a clear positive in this regard, however the healthcare stocks were also very strong after a poor session on Friday. When CSL rallies ~12% and Commonwealth Bank (CBA) puts on more than ~10% its clear we’re in for a good move on the index, those two companies alone contributing +85pts of the days gains.
In terms of the virus, we’ve seen 213 new cases in Australia today taking the total count to 4193, however the rate of growth nationally is just 5.4%, although growth in NSW is nearer 12%. While this is still troubling, that rate of growth is low and implies that social policies are working.
Today the ASX 200 added +339pts /+7% to close at 5181 - Dow Futures are trading up +172pts/+0.80%
ASX 200 Chart
ASX 200 Chart
CATCHING MY EYE:
Retailers: This is the pointy end of the spectrum at the moment with the sector garnering headlines for all the wrong reasons, however after a tough Friday the sector bounced back hard today buoyed by the governments move on wage subsidies and better domestic news flow around the virus. Nick Scali (NCK) today confirmed they would close stores adding to a long list of retailers who have. That said, the sector has been hit for six and value is emerging, we wrote about being positive on JB Hi-Fi (JBH) and Premier Investments (PMV) in reports last week. JB added more than ~10% today.
JB Hi-Fi (JBH) Chart
Ansell (ANN) +25.08%: one of the more immune companies to the current crisis is protective products manufacturer Ansell, and shares popped today on the company reaffirming their full year guidance. Ansell noted an increase in demand for their examination and surgical gloves, and at this stage hasn’t seen any impacts on production by lockdowns or implementing steps to mitigate risks at the production sites.
This increase in demand though is expected to be offset by softening in the company’s industrial products arm which supplies safety gear for industrial applications. This side of the business has been more impacted by the slowdown in activity while also noting trade restrictions has limited its ability to move product. For now though, the strength in medical supplies being offset by weakness in industrial was enough to please the market. While Ansell stood by guidance, Bank of Queensland (BOQ) and QBE Insurance (QBE) walked away from theirs.
Ansell (ANN) Chart
BROKER MOVES:
- ALS Raised to Add at Morgans Financial Limited; PT A$6.90
- GUD Holdings Raised to Buy at Citi; PT A$10.30
- Alumina Raised to Neutral at UBS; PT A$1.50
- Aristocrat Raised to Buy at Goldman; PT A$29
- Monadelphous Cut to Neutral at Goldman; PT A$12.70
- Orica Raised to Buy at Goldman; PT A$20.10
- Seven Group Raised to Buy at Goldman; PT A$15.90
- Emeco Cut to Neutral at Goldman; PT A$1.20
- Western Areas Raised to Buy at UBS; PT A$2.50
- IGO Raised to Buy at UBS; PT A$6
- AGL Energy Raised to Neutral at Macquarie; PT A$17.38
- Atlas Arteria Raised to Add at Morgans Financial Limited
- Ramsay Health Raised to Neutral at Goldman; PT A$52
- Afterpay Raised to Buy at Goldman; PT A$25.10
- Tassal Group Raised to Outperform at Credit Suisse; PT A$3.90
- Vicinity Centres Raised to Neutral at Evans & Partners Pty Ltd
OUR CALLS
No changes today, we’ll be covering some proposed portfolio amendments in the am report tomorrow
Major Movers Today
Have a great night
James, Harry & the Market Matters Team
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