The S&P/ASX 200 (INDEXASX: XJO) share market index is expected to get whacked at the open of ASX trading on Friday. Here’s what you need to know…
A second wave?
Sharemarkets around the world capitulated on Thursday as concerns of a second wave of the Coronavirus hit the US, the S&P 500 shredded 5.9% with only one constituent, grocery retailer Kroger’s Inc. (NYSE: KR), posting a positive return.
The Dow Jones Industrial Average fell over 1,800 points or 7.1%, driven down by the likes of Bank of America (NYSE: BAC) and Goldman Sachs (NYSE: GS), which came off 10% and 9%, respectively. The story was much the same in Europe with the Stoxx 600 down 4.1%.
Video: how the Dow Jones works
I expect the Australian banking sector, including the Commonwealth Bank of Australia Ltd (ASX: CBA) along with consumer-facing businesses like Webjet (ASX: WEB) to be hit heavily at the open.
Gold prices continued to rally as US COVID-19 deaths exceeded 111,000, hitting USD$1,740 per ounce, whilst the slide in the AUD back down to $0.68 should offer some protection for the ASX 200.
All good things come to an end?
The ASX200 felt the immediate brunt of US weakness yesterday, leading global markets down 3.1%, with the financial sector experiencing the strongest falls, National Australia Bank Ltd (ASX: NAB) off 6% alone. Meanwhile, global gold miner Newcrest (ASX: NCM) was one of the few bright spots on an otherwise difficult day adding nearly 6%.
Kogan Ltd (ASX: KGN) and JB Hi-Fi Ltd (ASX: JBH) remain the bright spots of the Australian consumer sector, with the latter reporting 20% growth in Australia like for like store sales and 23% growth at the Good Guys whitegoods retailer for the five months to 31 May. JB also predicted its profit will increase 20-22% for the financial year.
Just as the AFL season got off and running with the lowest scoring game in recent history, Seven West Media (ASX: SWM) announced they have renegotiated their agreement with the association, extending for a further two years but saving some $87 million in 2020 and 2021. With signs of a second wave, here’s hoping they manage to keep the season afloat.
Everyone needs to eat
After highlighting Uber Technologies’ (NYSE: UBER) aggressive approach to profitable home delivery app Grub Hub (NASDAQ: GRUB), their European counterpart Just Eat Takeaway appears to have beaten them to the bunch, acquiring the Grub Hub business in an all-scrip deal valued at $7.3 billion. The stock was up 4%.
Tesla (NASDAQ: TSLA) quickly became the most valuable car manufacturer in the world yesterday, passing Toyota with a capitalisation of $190 billion. To us it is abundantly clear the company is anything but car manufacturer at this stage of its life.
Redflow (ASX: RFW), a unique Australian company producing a series of portable batteries to aid the world’s transition to a lower-carbon economy, said its sales were up 166%. However, it also announced a capital raising amid the Coronavirus shutdown — it seems to be an interesting one for the real risk-takers.
Finally, despite increasing volatility in sharemarkets, a flood of unrented apartments and huge rental discounts is likely to reduce the attractiveness of property for many years to come, with shares to benefit.
This report was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.
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