Materials carry the index (NCK, RMD)
WHAT MATTERED TODAY
The local market tracked the risk on trade seen overnight that took the S&P to within 2% of all time highs. For the bulls, it was positive to see a rally away from the key 6000 level that was breached briefly yesterday with resources in particular leading equities. It was even more positive to see local shares track higher despite weakness in the region – broadly speaking Asian indices were lower today. Materials and energy were boosted by strong moves in commodities overnight. Oil prices has started to regain some momentum as inventories begin to show draw downs as demand creeps back in.
Overall, the ASX 200 added +40pts / +0.68% to close at 6042. Dow Futures are trading up +83pts / +0.31%
A couple of the more watched names reported today – we touch on Nick Scali (NCK) and ResMed (RMD) below. Scentre Group (SCG), owner of a number of Westfield malls, pre-released results due later this month, expected a 10% downgrade to asset values and operating cashflow of more than $250m. The stock was off -2.29% on the back of the news. Centuria Industrial REIT (CIP) was back trading and managed to hold the $3.15 price they raised money at yesterday after their result.
LOCAL REPORTING CALENDAR: CLICK HERE **Please note, data sourced from Bloomberg, not all ASX companies are on this list and dates can vary**
ASX 200 Chart
ASX 200 Chart
CATCHING MY EYE
Nick Scali (NCK) +14.58%: furniture retailer was out with their full year report pre market – James touched on the result in this morning’s Frist Reactions. It was a beat, no doubt about it. They pre-released earnings back in June, just a few weeks out from the end of the Financial year but even that sold the result short. Profit of $42.1m was 5% above the top end of guidance and flat on last year. The market had grave concerns around the discretionary spend, particularly with Nick Scali’s leverage to a healthy housing market – which has been anything but healthy during lockdowns. It looks as though while people couldn’t travel, they used the additional funds to spend on themselves and their home, driving decent demand for Nick Scali’s mid to upper market furniture. The current financial year was also off to a flying start with the company noting that strong momentum in the 2nd half, which saw ~20% growth on the first, had continued into the first half with the company expecting 50-60% growth on the first half of last year despite the temporary closure of a number of Melbourne sites. Shares hit all time highs today. While we aren’t prepared to chase NCK just yet, it does give a positive read through for other retailers heading into reporting - we own Super Retail Group (SUL) in the income portfolio.
Nick Scali (NCK) Chart
ResMed (RMD) -7.41%: took a hit today on their 4th quarter revenue update which saw US sales take a steep dive in the face of falling sleep apnoea detections as hospitals focus their effort on the corona virus battle. The company had started making and selling ventilators to help patients with the disease, but it was their main focus on the apnoea machines that saw sales dive which the market was concerned with. Around 80-90% of sales for RMD come from new diagnosis of the sleeping issue which relies on patients staying overnight at a practice or hospital – something which has clearly been disrupted of late. They have done well to refocus the business on more broader applications of ventilators but not one for us here.
ResMed (RMD) Chart
BROKER MOVES:
· Pinnacle Investment Cut to Market-Weight at Wilsons; PT A$5.70
· Qantas Reinstated Neutral at JPMorgan; PT A$3.50
· Fortescue Cut to Sell at Bell Potter; PT A$12.50
· Galaxy Resources Cut to Hold at Bell Potter; PT A$1.20
OUR CALLS
No changes today
Major Movers Today
Have a great night
Harry & the Market Matters Team
Disclosure
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