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S&P/ASX 200 set to bounce, Xero in focus

SPI futures contracts suggest the S&P/ASX 200 (INDEXASX: XJO) is expected to open higher on Monday morning. Here’s what you need to know…

The ASX 200 moved higher last week, adding 0.25% amid rising trade tensions with China and the worst week in the US for two months, falling 2.6%.

Despite being comparatively unscathed by the worst of COVID-19 the Australian sharemarket remains one of the worst-performing markets in the world, still down some 26% from February highs. That compares to the S&P 500 which is down just 11.92%.

With limited overseas leads, comments from the Chinese Foreign Ministry overnight highlighting that both China and Australia have benefitted from the free trade agreement should be enough to the market rally after a week of increasingly aggressive trade accusations.

Is retail dead?

It shouldn’t come as a surprise but many commentators, including UBS, are suggesting COVID-19 will be the death knell for much of traditional retail that was previously in the ‘emergency room’. UBS analysts predict over 100,000 retail stores will close in the next five years, even those of more successful businesses. This call came as US retail spending fell 16.4% in April and department store JC Penney (JCP) filed for bankruptcy.

As reported as last week, US industrial production fell 11.2%, the lowest recording in 100 years. Meanwhile, unemployment surged to 14.7% with women the worst hit, increasing to 16.2%. With lockdowns easing the threat of a second wave begins to increase, which would be devastating for any sign of recovery.

Maiden profit from Xero

Small business accounting platform Xero Limited (ASX: XRO) reported a maiden full-year profit, albeit just $3.3 million after-tax on revenue of $718 million.

Importantly, Xero’s free cash flow improved over 30% to $27.1 million, ensuring the company has the cash to pay its bills.

Shaver Shop (ASX: SSG) shares rose nearly 30% last week as it announced online sales had quadrupled compared to previous years with same-store sales to April up a further 17.8%.

Another US tech giant managed to rally despite reporting weaker results, with Cisco’s (CSCO) revenue falling 8% and another 10% drop forecast in the June quarter. The company, which provides traditional communication infrastructure equipment including routers to very large businesses, happened to purchase Webex a video conferencing platform, for $3.2 billion just a few years ago. After poor performances, the company announced Webex had hosted 25 billion minutes of meetings in April, triple that of February and six times more than Microsoft’s Team’s platform.

This report was written by Drew Meredith, Financial Adviser and Director of Wattle Partners.

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The Golden Rules of Investing

We might be experts in retirement, but with combined financial advice experience of 35+ years, we’ve nearly seen it all. 

In mid-2023, our senior team at Wattle Partners Financial Planning put the finishing touches on a brand-new report “The Golden Rules of Investing“.

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You’ll find the free report on my Author page. Simply click the button below to view the Golden Rules.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.


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Wattle Partners is a financial advice firm, servicing clients around Australia, specialising in retirement planning (pre and post retirement). 

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