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S&P/ASX 200 to open higher — ASX shares to watch Wednesday

The S&P/ASX 200 (INDEXASX: XJO) is tipped to open slightly higher on Wednesday morning, following strong results overnight. Here’s what you missed…

A Kangaroo market

US news channel CNBC reportedly coined the phrase ‘Kangaroo’ market with commentators giving on predicting its direction. The term best describes the daily experience of investors as the market ‘bounces’ around.

The ASX 200 experienced its strongest day in10 weeks, adding 3.9%, pushed higher by energy (5.8%) consumer discretionary, where Webjet Ltd (ASX: WEB) improved another 11%.

The S&P500 and NASDAQ rallied 1.9% and 1.8%, respectively, supported by a stronger-than-expected US retail sales result, hitting a record of 17.7% in May. It seems those investors who remain employed are now cashed up and seeking to renovate, build pools or travel more domestically.

Caterpillar Inc (NYSE: CAT) was a primary beneficiary of the news, up 5%, as was London’s Ashtead Group plc (LON: AHT) +9%, both of which lease machinery and materials to the construction industry.

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What’s the trend?

As reports of retail investors outperforming professional hedge fund managers spread around the globe, it’s becoming increasingly difficult to predict how this rally ends. Markets are seemingly as predictable as ever, but more volatile than at any time in decades. It is times like these when investors, experienced and new, need to focus on the importance of asset allocation and diversification. In fact, it has never been more important.

Questions like how much are you willing to lose? Or do you know where your greatest risks are? These questions tend to go unanswered.

According to FN Area, some 50% of all companies covered now have Buy ratings by the broking fraternity. This hasn’t happened since the depths of the GFC.

On a more positive note, despite most experts predicting Australian leader Seek Ltd (ASX: SEK) would struggle to recover from the spike in unemployment, the share price is now up nearly 100% since march lows, rallying 7% alone on Tuesday. It is still 20% below its high.

Diversify

Tuesday saw noteworthy updates from two very different companies, Adobe Inc. (NASDAQ: ADBE) and Orora Ltd (ASX: ORA). Adobe provides a ubiquitous document software service and the latter a leader is an aluminium cans, glass and wine bottle product in Australia and New Zealand.

ADBE reported a 78% increase in sales over the 12 months to May, with management noting that spending in April and May exceeded traditional Christmas levels. Orora, on the other hand, reported it had returned $600 million to shareholders from the sale of its Fibre Packaging business, using the remainder to effectively become debt-free. The Orora share price rallied 5% as a result. Despite being different businesses, both offer unique growth opportunities for investors.

Finally, Viva Energy Ltd (ASX: VEA), owner of Geelong’s refining plant, rallied 15% after reinstating its on-market buyback as they seek to return profits from the property sales to shareholders; a rare capital return amid a sea of cancelled dividends.

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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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“.

In this free report, we outline the key principles that determine all of the portfolio construction and investment decisions of Wattle Partners. Collated over decades, this paper should be seen as a work-in-progress, constantly under review in light of the ever-evolving nature of markets. 

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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