Stocks rally, NAB raises equity
WHAT MATTERED TODAY
A good session to start the week particularly when we consider NAB went into a trading halt to raise $3.5bn in new equity. When such an index influential stock does this, we generally see selling in other banks + the market more generally and that certainly played out early however a strong fight back saw the index close up +80pts near the session highs. Resources were also fairly week so other parts of the market, IT stocks, Industrials and the like were very strong. We cover the Nab raise below briefly, however I’ll include a more comprehensive video tomorrow morning.
Today the ASX 200 added 78pts /+1.50% to close at 5321 - Dow Futures are trading up +232pts/+0.98%
ASX 200 Chart
ASX 200 Chart
CATCHING MY EYE:
NAB: the first bank to report their half year for the season. The result itself was largely inline – net interest income up 2% despite a small decline in net interest margin. Expenses offset the increase in net interest income by climbing 2%. Softer trading income and higher bad debts and impairment charges that were previously flagged weighed on earnings which fell nearly 25%.
NAB was forced into cutting the dividend to 30c, from 83c last year, and launched a $3.5bn capital raise to sure up their CET1 position ahead of the most severe economic impacts of COVID-19. While investors couldn’t sell NAB shares today, the other banks felt the weight of money to fill allocations into the NAB capital raise. We still prefer CBA then WBC, although WBC may well follow NAB down the capital raise path when they report this week.
NAB Chart
BROKER MOVES:
- Codan Raised to Buy at Canaccord; PT A$7.25
- Atrum Coal Raised to Speculative Buy at Bell Potter
- DMP AU Raised to Add at Morgans Financial Limited; PT A$55.57
- Hotel Property Raised to Overweight at JPMorgan; PT A$2.70
- ALE Property Cut to Underweight at JPMorgan; PT A$3.80
OUR CALLS
Growth Portfolio:
We bought Reece (REH)
Major Movers Today
Have a great night
James, Harry & the Market Matters Team
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