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S&P/ASX 200 morning report – TCL, NWL & BXB shares in focus

The S&P/ASX 200 (ASX: XJO) is tipped to rise again at the open on Friday as US markets continued to creep higher overnight.

ASX 200 records longest winning streak since July

The ASX 200 has delivered its longest winning streak since July, finishing 1.1% higher on Thursday as the budget stimulus continues to reverberate through markets. The announcements have been well received by the corporate sector, despite several shortcomings.

But a reminder of the long road ahead came from the Transurban Group Ltd (ASX: TCL) AGM, during which management provided a third-quarter update. Average daily toll road traffic was down 25.2% in the September quarter, with Sydney the only improver, growing 1.5%. Melbourne’s lockdowns continued to bite, pushing traffic down 58.6%, Brisbane a more muted 9.1% and North America falling 28.2%.

Rather than a dilutive capital raising, the company flagged the partial sale of the Washington toll road, in an effort to assuage lender concerns. The Transurban share price fell 1.0% on the news and is 40% off its March lows despite the weakness. To me, this suggests limited upside even in the event of a vaccine.

Source: Rask Media TCL 1-year share price chart

Elsewhere, iSelect Ltd (ASX: ISU) settled a case with the ACCC for $8.5 million, arising from queries around the competitiveness of its comparisons. The iSelect share price rallied 13.3% on the news.

Brambles confirms guidance, Netwealth booming

The Reserve Bank of Australia remains under pressure to do more, the latest comments from bond manager, Charlie Jamieson cutting to the core. Speaking at a conference, Charlie suggested that “the RBA are a tremendously reactionary central bank” and highlighted that “they couldn’t have done a worse job at predicting what might occur”. The same could be said for the majority of Australian economists in recent years.

Global pallet distributor Brambles Limited (ASX: BXB) reiterated guidance for 2021, with sales to grow by up to 4% and underlying profit closer to 5% – all going well. Brambles shares finished 0.9% higher.

Meanwhile, superannuation platform provider Netwealth Group Ltd (ASX: NWL) rallied 8.3% after announcing an 8% increase in funds under administration to $34 billion in September. The growth is being driven by managed accounts, allowing advisers to outsource investment implementation, which is now $6.5 billion compared to just $3.4 billion in 2019. The group also announced the launch of its own suite of funds with Magellan Financial Group Ltd (ASX: MFG), adding another string to its bow.

US markets at five-week highs

The daily volatility continues, with signs the Democrats will relent on a new stimulus package boosting markets to five-week highs. The S&P 500 finished 0.8% higher and the Nasdaq 0.4%.

It appears markets are becoming more optimistic about a Biden victory with the additional stimulus spending it provides to boost the domestic economy; only time will tell.

Signs of progress on both COVID-19 treatments and vaccines shot the energy sector higher, oil jumping over 3% on the news. The combination of oil, cruise and travel companies will be the key beneficiaries from a real vaccine, but remain well below 2019 highs.

Merger activity has spiked in recent months with Morgan Stanley (NYSE: MS) announcing the acquisition of fund manager Eaton Vance (NYSE: EV), which jumped 48% on the news.

Finally, McDonald’s Corp (NYSE: MCD) announced that sales continued to recover in September, 4.6% higher which should be good news for Australia’s Collins Food Ltd (ASX: CKF).

This article 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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Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

Not only are we offering these 11 investment ideas completely FREE, we've also released an in-depth podcast to go with the report!

So, whether you have $2,000 or $50,000, our brand new analyst report could help transform your watchlist. Right now, you can get the full analyst report emailed to you for FREE by CLICKING HERE NOW.

Disclosure: At the time of publishing, Drew does not have a financial or commercial interest in any of the companies mentioned.

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