The ASX 200 (ASX: XJO) is heading for a negative open on Tuesday according to the latest SPI futures. Here’s what ASX investors need to know.
ASX finishes higher, Crown share price surges on takeover offer
The S&P/ASX 200 overcame a weak global lead to break a three-day losing streak, adding 0.7% on Monday. Every sector was higher barring materials, with Fortescue Metals Group Limited (ASX: FMG) dragging the sector lower, falling 4.3% on a further weakening of the iron ore price.
Energy was by far the highlight, jumping 2.8% on the back of a stronger oil price and a 5.7% rally in Ampol Ltd (ASX: ALD).
The news of the day, however, was the release of a takeover proposal of Crown Resorts Ltd (ASX: CWN) by $111 billion global asset manager Blackstone Group (NYSE: BX). According to Crown, the offer is at a price of $11.85, a 19% premium to the previous price, valuing the business at over $8 billion. Naturally, the Crown share price jumped 21.4% on the news.
The casino operator remains under extreme pressure just two days out from a Victorian Government Commission into its suitability to retain its casino license following the outcomes of a similar assessment in NSW. Blackstone already owns 9.9% of the company and this appears a solid ‘out’ for the beleaguered group.
Telstra plots a course for the future, Freedom Foods trades again
The other major news came from Telstra Corporation Ltd (ASX: TLS), with management releasing more details on the long-awaited ‘structural separation’.
As previously flagged, the infrastructure assets will be split into three separate subsidiary companies being InfraCo Fixed, owning the physical infrastructure and data centres, InfraCo Towers, owning the telecommunications towers and ServeCo, delivering innovative products and services.
According to the announcement, these will now be joined by an International subsidiary, owning the company’s global operations including its subsea cables, all of which will be owned by the Telstra Group. Shareholders will receive a share in each company according to their current allocation.
Telstra’s management highlighted the benefits of this structure, focusing on the ability to then consider the sale or monetisation of each business separately, hopefully realising value due to the greater transparency; shares finished 1.3% higher.
Insurance Australia Group Ltd (ASX: IAG) remains under pressure, falling 2.3%, after announcing it could not yet quantify the costs of the NSW floods, whilst Freedom Foods Group Ltd (ASX: FNP) finally recommenced trading and tumbled 82.4% ahead of a massive capital raising.
More stimulus on the way, US markets move higher
US markets moved higher overnight, offering a positive lead for the ASX, with the Nasdaq up 1.2% and the S&P 500 0.8% following more insights from the Federal Reserve. Yet once again it was all about bond rates, with a falling bond rate sending equity markets higher.
The Biden Administration is now expected to deliver another US$3 trillion in stimulus, but with a particular focus on infrastructure and decarbonisation, most likely to be funded from tax hikes on the wealthy and corporations that have become stronger during the pandemic.
Tesla (NASDAQ: TSLA) is leading the market again after ETF provider ARK Invest upgraded their price target.
Meanwhile, Federal Reserve Chair Powell was quoted as comparing Bitcoin as more akin to a hedge like gold, with its significant volatility making it near impossible to be considered an alternative to the US dollar. So-called stable coins offered the best alternative, despite being linked to physical currencies anyway.
