Australian Investment Blog

WHAT MATTERED TODAY

Bang, another quick +100pts for the local market today as banks re-entered the fray, a few must have been following the MM Income Note out at lunchtime!! The market opened higher this morning however really found its groove after lunch with the strong move towards the banking stocks providing most of the support at the index level.

GDP data was out at 11.30am and it was better than feared, the economy contracting by 0.3% in the March QTR which confirms Australia will have its first recession since 1991 given the contraction we’ll see in the June quarter, however these are all known knowns for the market - March hit by bushfires and the start of COVID-19 while June will bear the brunt of the shutdowns. That said, the economic outcomes we’re achieving are clearly better than first thought, clearly better than Government modelling suggested and clearly better than the assumptions used to underpin the raft of stimulus that was rolled out which is why the market is rallying so hard.

Economic Data Today

Source: Bloomberg

Overall, the ASX 200 added +106pts / +1.83% today to close at 5941 - Dow Futures are trading up +157pts/+0.61%.

ASX 200 Chart

ASX 200 Chart

CATCHING MY EYE:

Money stocks: We talked about Z1P yesterday and they’ve put on another 20%+ today as the news of their expansion in the US worked through the market, however a lesser known name – Openpay (OPY), another BNPL company has outpaced the move rallying +51% today. Clearly we’re see some decent money flow into the cheapest exposure listed locally with OPY’s market cap still sitting around $200m. Astonishingly, its rallied from near 30c to close today at $3.02 - a huge move in anyone’s language but it’s still cheap.

Openpay (OPY) Chart

While not a BNPL stock, Wisr (WZR) is an interesting finance business (neo bank) that’s copped some buying today as money flows into the space. It closed up +18% today at 19.5c. We like it as a speccy.

Wisr (WZR) Chart

Boral (BLD) +1.7%: as we flagged yesterday, Seven Group (SVW) submitted a substantial holder notice last night on their holding in Boral, taking up 10% of the shares on issue and it seems they have been in the market since March, holding just shy of the 5% substantial limit before the last push on Friday. The move is a positive one for Boral with plenty of cross over between the businesses, it could mean they have a substantial ally in the construction market. The government stimulus is pretty focussed on this area. Boral has now more than doubled from the lows, and while we like the exposure to a recovery in construction, we have concerns over BLD’s balance sheet.

Boral (BLD) Chart

BROKER MOVES:

· Arena REIT Raised to Overweight at Morgan Stanley; PT A$2.68

· JB Hi-Fi Raised to Outperform at Macquarie; PT A$41

· SkyCity Entertainment Cut to Hold at Morningstar

· Orora Cut to Hold at Morningstar

· Aurizon Cut to Sell at Morningstar

· Bingo Industries Cut to Hold at Morningstar

· Newcrest Raised to Buy at UBS

· Evolution Cut to Sell at UBS

· Northern Star Cut to Sell at UBS

· Westpac Cut to Hold at Bell Potter; PT A$18.30

· Aurelia Raised to Buy at Hartleys Ltd; PT 60 Australian cents

· QBE Insurance Cut to Hold at Bell Potter; PT A$9.70

OUR CALLS

International Equities Portfolio

We are buying Iron Ore miner Vale into current weakness as they grabble with COVID-19 + face continueing issues with dams. This has the stocks trading at a steep discount to other global Iron Ore markets.

Vale US (Chart)

Major Movers Today

Have a great night

James, Harry & the Market Matters Team

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