The ‘reopening’ trade leads the ASX higher (CSL, MFG)
WHAT MATTERED TODAY
A strong session today keying off a positive lead from Europe (US closed) and as we often say, the composition of the ASX is far more correlated to European markets than it is the ASX. The ‘reopening stocks’ did best today, travel, some of the beaten up steel stocks, even the shopping centre operator Scentre (SCG) which owns Westfields did well adding +4% while its ugly cousin Vicinity (VCX) added more than 3%.
Interestingly, the stock’s funding todays move were those that have done well out of COVID, JB Hi-Fi (JBH) was off -2.83% against the backdrop of a strong market, Super Retail (SUL) fell -1.50%, Mineral Resources (MIN) bucked the strength on the broader materials sector. All in all, a pretty positive session with 75% of stocks making gains today.
In Asia there was green across the board while US Futures were trading up during our time zone, pointing to a ~300pt rally on the Dow when it opens tonight.
By the close, the ASX 200 was up +63pts / +1.06% to 6007.
ASX 200 Chart
ASX 200 Chart
CATCHING MY EYE
AUSBIZ this am: Quick update this morning on Auzbiz – no login required – click here or the image below – talk general markets, nothing too earthshattering really.
Index Contributors:Second session in a row where most love was directed towards Financials in the first instance which accounted for +20pts of the index gain today followed by the Materials. We’re starting to see the re-opening trade find some form, Webjet for instance is about to break out – ditto for QANTAS as the market starts to look 6 months + into the future. The obvious elephant in the ASX room has been the banks, its what’s held our market back, clearly, they’ve got some headwinds however it seems to me banks are finding some support at current levels. It will only take one slight catalyst to see an explosive move in the sector in MM’s view given the negative positioning currently employed by the market.
Index Points Breakdown today
Macquarie’s calls on results: Results wrap ups are clogging our inbox ATM however I think Macquarie’s summed up reporting pretty well writing….By the end of reporting season there were more beats than misses, although most beats arose because we cut estimates too far. There were some strong results, however with nine ASX 100 stocks posting June half EPSg >20%, including gold stocks (NCM, EVN, NST, SAR), OZL (gold + copper), Covid-19 winners (JBH, A2M, RMD) and WOR (Jacobs ECR acquisition). In small caps, the best results were often from retailers (e.g. TPW, NCK) who benefited from a spending boom that is unlikely to continue after wage stimulus is tapered. Small caps were more likely to post EPS beats than ASX 100 names. New economy stocks were also 60% more likely to beat than old economy ones (Source: Macquarie Research)
CSL+2.14%: Lots of press following the PM naming CSL as the manufacturer of any COVID-19 Vaccine, Morgan Stanley out with a note today putting some numbers around the gig, saying that their prospective agreement with AstraZeneca could provide a $60 million to $90 million lift to the CSL’s earnings (EBIT) in FY21 – that’s about a 2% benefit.
CSL Chart
BROKER MOVES
Credit Suisse upgraded Magellan (MFG) this morning talking up the prospects of their consolidation strategy (MFG plan to combine its three global equity funds into a single, open-ended strategy). CS lifted its price target by 8.3% to $65. We added the stock to the MM Growth Portfolio yesterday. Consensus price target for MFG sits at $60.42 however brokers are always chasing their tail on this one.
Magellan (MFG) Chart
Other moves…
· Beach Energy Raised to Outperform at Macquarie; PT A$1.70
· GUD Holdings Raised to Hold at Morningstar
· Spark Infra Raised to Buy at Morningstar
· Magellan Financial Raised to Outperform at Credit Suisse
· Newcrest Raised to Overweight at JPMorgan; PT A$35
· Regis Resources Raised to Neutral at JPMorgan; PT A$4.80
· Saracen Mineral Raised to Neutral at JPMorgan; PT A$4.70
· Pharmaxis Cut to Speculative Hold at Bell Potter
· Fortescue Raised to Overweight at JPMorgan; PT A$20
OUR CALLS
No changes today
Major Movers Today
Have a great night
James & the Market Matters Team
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