The S&P/ASX 200 (ASX: XJO) is set to take a backwards step when the market opens on Friday. Here’s what ASX investors need to know.
ASX breaks seven-day winning streak
The ASX 200 couldn’t take its winning run beyond seven days once again, falling 0.7% on Thursday on the back of weakness in the technology sector, down 2.1%.
The weakness was twofold, with Facebook (NASDAQ: FB) facing US legal action as regulators seek to have the company’s Instagram and WhatsApp businesses broken up. Closer to home, tech darling Appen Limited (ASX: APX), which leverages artificial intelligence to deliver process and business improvements, fell 12.4% after delivering a weaker than expected trading update. Management flagged a ~30% fall in earnings from $125-130 million to $106-109 million as Californian lockdowns crimped a fourth-quarter recovery.
The property sector remains one of the hottest on the ASX at the moment, with the likes of APN Property (ASX: APD), 360 Capital Group Ltd (ASX: TGP) and Charter Hall Group (ASX: CHC) all raising additional funds for opportunistic acquisitions this week. SCA Property Group (ASX: SCP), which owns suburban shopping centres, was the first to increase the valuation of its properties, adding $125 million despite cutting its distribution by 24%; shares finished 1.2% higher.
Iron ore price over US$150, Link rebuffs takeover offer
The incredible iron ore rally continued overnight, hitting a seven and a half year high above US$150 as Chinese stockpiles continue to reduce. Whilst positive for the likes of BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG), it may be distorting the Australian economy. The huge demand for iron ore, combined with the stronger Chinese currency, has seen the AUD near $0.75 cents this week, placing a lot of pressure on our other key exports.
Management of Link Administration Holdings Ltd (ASX: LNK) rebuffed the latest takeover offer after flagging a weaker than expected second-half performance yesterday, noting that the offer is unfunded, non-binding and unsolicited. That said, management has agreed to allow due diligence, commencing what may be a long process ahead. In my view, it’s looking fully valued.
Personal care and hygiene company Asaleo Care Ltd (ASX: AHY) was the latest small cap to receive an unsolicited offer, spiking close to 22% after major shareholder Essity bid $1.26 for the company.
Airbnb doubles, Facebook under pressure
US markets staged a late rally, offering a positive lead for the ASX with the Nasdaq finishing 0.5% higher and the S&P 500 just 0.1%. It was news of a stopgap stimulus measure targeting state-based support that spurred the market higher, overcoming the highest unemployment claims in three months. Traders are now worried that without stimulus before Christmas, JobKeeper-like payments will cease as of the 1st of January.
Airbnb (NASDAQ: ABNB) finally listed, despite being hard hit by the pandemic, soaring 113% on its first day of trading.
The European Central Bank increased its bond-buying program or quantitative easing as it seeks to overcome the second wave but Facebook is now under incredible pressure to break up its business. The US Federal Trade Commission along with several states have filed an antitrust lawsuit against the company, suggesting it has abused its monopoly powers in the pursuit and purchase of Instagram and WhatsApp among other platforms. This has been a long time coming, but always a concern given Facebook’s growing importance for online advertising spend.
