The S&P/ASX 200 (ASX: XJO) is expected to open higher on Monday according to the latest SPI futures. Here’s your daily ASX morning report.
Another negative week for the ASX, Link undervalued
The ASX 200 finished 0.1% lower on Friday, keeping the index in negative territory for the week, down 0.2%. The IT sector was the highlight, adding 1.8%, behind strength in Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and Link Administration Holdings Ltd (ASX: LNK).
The Link share price finished the week 22.8% higher after the company received an unexpected takeover bid. On Friday, management responded to the $5.20 private equity offer, indicating it ‘materially undervalues’ the business. Management cited an expected recovery in market-focused income, 80% recurring revenue and the latent value of the PEXA platform. In response, Link will seek to demerge or IPO the billion-dollar business in a boon for investors; shares finished 0.8% lower on Friday.
BlueScope Steel Limited (ASX: BSL) was the highlight of the day, jumping 10.9% after announcing a 30% increase in earnings in the first half of 2021 to $340 million. Demand and pricing in Asia has been a particular highlight.
Qantas earnings hit, who won the debate?
All eyes were on the US Presidential Debate, with neither combatant seemingly committing any major errors. Markets appear to have priced in a Biden election win but given the history of polling in recent elections, investors should be wary and avoid making significant changes until the outcome is clear.
The Australian National Cabinet, excluding Western Australia, agreed to the reopening of borders by Christmas, with Qantas Airways Limited (ASX: QAN) shares jumping 2.7% on the news despite the Victorian lockdowns costing the group $100 million in the quarter alone.
CleanSpace Holdings Ltd (ASX: CSX), which manufactures respiratory protection material, jumped 54% on its IPO as the second wave sees huge demand for its products.
Negative week for US markets, governance in focus
It was another negative week for global markets, the S&P 500 and Nasdaq falling 0.5% and 1.1%, respectively, despite 0.4% gains on Friday.
Intel Corporation (NASDAQ: INTC) fell over 10% despite beating analyst estimates to report US$4.3 billion in profit in the third quarter. Concern remains about its manufacturing process and fast falling market share to competitors, including NVIDIA Corporation (NASDAQ: NVDA).
It’s just the one takeaway from the week and that is the growing importance of governance from both a public and private market perspective. The week started with the investigation into Crown Resorts Ltd (ASX: CWN) and the Victorian Government inquiry but expanded into extravagant gifts at Australia Post, excessive expense payments at ASIC, the Alphabet Inc (NASDAQ: GOOGL) antitrust case and questions on in-house investments at Magellan Financial Ltd (ASX: MFG).
ESG has been used heavily as a marketing tool in recent years but not strictly applied. Now with a great deal of pain across the Australian and global economy, consumers, investors and super fund members will likely be applying a blowtorch to companies that don’t meet community expectations.