The S&P/ASX 200 (ASX: XJO) is set to push higher when the market opens on Tuesday. Here’s what’s making headlines across local and global sharemarkets.
ASX starts the week on positive footing, CBA hit with ASIC investigation
The ASX 200 finished 1.7% higher to start the week, rebounding quickly from Friday’s so-called ‘bloodbath’. Once again, market volatility was met with reassuring language from central banks and positive news around the vaccine rollout.
The Reserve Bank of Australia confirmed that it would be doubling its bond-buying to $4 billion per day, sending the 10-year government bond down close to 30 basis points, hitting 1.6%.
Every sector finished higher, with real estate (+3.2%), IT (+3.0%) and healthcare (+2.7%) the biggest beneficiaries, gaining on the ‘duration’ effect.
The Commonwealth Bank of Australia (ASX: CBA) gained 3.1% after the latest loan data was released, with total loan values up 10.5% in January over the month prior and more than 44% higher than the same time in 2020.
The bank also confirmed that ASIC had initiated proceedings against its Commsec share trading division on the basis that it may have overcharged brokerage and failed to have sufficient systems in place to track some types of forbidden trades.
Austal share price jumps upgrade, Tyro returning to normal
Ship-maker Austal Limited (ASX: ASB) jumped 8.4% after announcing that its US division had signed another US$235 million contract to produce a ‘catamaran’ type vehicle for the US Navy.
Tyro Payments Ltd (ASX: TYR) has continued with its COVID-era weekly market updates, which offer an almost live insight into the rebounding Australian economy. Management reported that year-to-date transactions to 26 February hit $15.94 billion, 10% higher than the same time last year, whilst the February results also improved 16% with consumers clearly venturing out of their homes once again.
In an interesting insight, the final inputs into GDP results, being corporate profits and inventories were released, the former falling 6.6% and the latter gaining 0.1%. As mentioned yesterday, many companies have kept costs low by running down inventory, but this needs to be restocked at some stage, with a surge in demand potentially creating an inflation spike.
Fortescue Metals Group Limited (ASX: FMG) fell 5.3% after going ex-dividend, once again showing the issue of investing solely for income.
Strongest day since June, Berkshire Hathaway reports
All three US benchmarks finished more than 2% higher to open the week, with the Nasdaq the highlight, up 3.0%. The S&P 500 was 2.4% stronger, posting its best one-day gain since June, but it was ultimately the smaller companies sector, represented by the Russell 2000, that contributed most. The sector is inherently more tied to the reopening of the economy and hence is likely to benefit more significantly from recently announced stimulus.
Long-term bond rates continued to fall ahead of further statements from Federal Reserve officials that will likely confirm continued monetary support.
The Warren Buffett-led Berkshire Hathaway reported 14% growth in earnings on the same quarter in 2019, hitting US$5.02 billion. However, full-year 2020 profits fell 48%, primarily due to both a slowdown in its insurance and energy businesses. Berkshire stock finished 3.6% higher as all eyes were on Berkshire’s annual letter.
Berkshire’s holding in Apple Inc (NYSE: AAPL), which is 5.4% of the portfolio, was the biggest highlight with the company continuing to outperform. Management also continued to buy back shares, US$9 billion the quarter, on the basis that they undervalue the underlying assets, not unlike a listed investment company in Australia.
