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S&P/ASX 200 (XJO) today – APT, PPS & TWE shares in focus

The S&P/ASX 200 (INDEXASX: XJO) is expected to take a backwards step at the open this morning according to data from the Sydney Futures Exchange. Here’s what you need to know.

Afterpay: the NASDAQ effect

It was another volatile day for the ASX 200, with the market finishing 0.6% higher, as a weak lead from the US impacted on confidence. The only two detractors were the ASX property and staples sector, with materials and mining once again a highlight, driven by BHP Group Ltd (ASX: BHP), +2.2%, and Rio Tinto Limited (ASX: RIO), +3.3%.

Afterpay Ltd (ASX: APT) continues to break records, increasing another 11.4% to $73; it seems the company has become the Australian version of the Nasdaq 100, attracting every investor seeking growth despite its sky-high valuation. I’m calling it the NASDAQ effect, as whilst I believe the company has some value, it’s simply moved beyond any realm of understanding.

Speaking of the NASDAQ effect, it finished another 0.5% higher whilst the S&P 500 and FTSE 100 both fell 0.6% and 1.7% respectively. Wells Fargo (NYSE: WFC) was a major detractor, down 2.2% after announcing wide-ranging staff cuts to deal with the aftermath of COVID-19.

Independent platform wars

The superannuation platform space, which offers outsourced administration for financial advisers, remains one of the hottest sectors in the market after Praemium Ltd (ASX: PPS) announced it was acquiring Powerwrap Ltd (ASX: PWL) for around $55.4 million. Powerwrap increased 65.7% and Praemium 23%, in a clear sign that investors expect to see real synergies extracted from this deal. The combined company will have around $28 billion in assets under administration, but a market capitalisation of just $230 million.

As a comparison, the leader in the independent platform space, Netwealth Ltd (ASX: NWL) has around $32 billion of funds under administration but is valued at over $2 billion. In my view, there is serious value in the smaller players for those with an appetite for risk.

On a more sombre note, Australian home loan applications disappointed, falling 10.2% from April with investment lending down a further 15.6%. When combined with the extension of loan repayment holidays, the signs are not good for property or bank profits in 2021 and beyond; my preference is to limit exposure to the embattled sector.

Treasury Wine sours

As we move closer to the most anticipated earnings season in over a decade, Treasury Wine Estates Ltd (ASX: TWE) offered a precursor into what investors should be expecting. The company announced weaker sales in all major markets, but particular the US, down 37%, Asia, down 14% and Australia, down 16%, with profits expected to fall 21% to $530 million.

On the other hand, SAP SE (ETR: SAP) which offers enterprise software and systems, announced a stronger than expected recovery in Asia and confirmed its full-year outlook, adding 4.6%, but the Eurostox 50 finished 0.8% lower. German trade appears to be rebounding, with exports improving 9% but imports remaining subdued, growing just 3.5%.

Recce Pharmaceuticals Ltd (ASX: RCE) was one of the biggest domestic winners, the $100 million company spiking 54.4% after the CSIRO selected their compounds for upcoming COVID-19 treatment tests.

In a sign of the froth building in Chinese markets, a new IT security company, QuantumCTek Co, turned into a ten-bagger immediately upon listing on the speculative exchange, up 924% on day one of trading.

Drew is one of the founders of Wattle Partners. He is an experienced financial and investment adviser with expertise in self-managed superannuation funds, superannuation strategies, investment analysis and portfolio construction. Drew is a Partner at Wattle Partners.

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The Golden Rules of Investing

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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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