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ASX 200 morning report – APT, Z1P & OSH shares in focus

The S&P/ASX 200 (ASX: XJO) powered to another record close on Monday, jumping 1.3% on what has been dubbed ‘the biggest day in Australian sharemarket history’; the IT sector added 6.5%.

Whilst every sector finished the day higher, it wasn’t smooth sailing for materials, which added just 0.1% after the iron price tumbled 7.4% overnight to US$181 per tonne, with Fortescue Metals Group Limited (ASX: FMG) falling 2% on the news.

Afterpay takeover steals the show

Before the market opened, Afterpay Ltd (ASX: APT) disclosed that it had entered into a scheme of arrangement to merge, or be taken over, by global payments giant Square Payments (NYSE: SQ).

This was massive news, with management agreeing to the deal that values Afterpay at $39 billion or $126.61 per share and will hand them 18% of the combined company.

The Afterpay share price finished 18.8% higher on the same day that management reported another year of stunning growth, as underlying sales doubled and revenue jumped 88% to $925 million.

Afterpay will go down as one of the biggest success stories in modern history and perhaps the greatest creator of shareholder value in history, after being founded just six years ago.

Naturally, shares in highly-shorted competitor Zip Co Ltd (ASX: Z1P) jumped 9.0% with the company clearly now in play to another global giant like PayPal (NASDAQ: PYPL), Klarna or another major bank.

Santos and Oil Search merger

It didn’t end at Afterpay, with oil junior Oil Search Ltd (ASX: OSH) announcing that management would recommend a revised merger deal with competitor Santos Ltd (ASX: STO) as both seek to maintain relevance in a renewable-focused economy.

Under the improved deal, Oil Search shareholders will take a 38.5% stake in the combined entity, up from 36.9%.

Both shares jumped on the news, with Oil Search up 4.7% and Santos 0.6%, albeit both well below the heady days of the mid-2010s.

Queensland lockdown extended, property prices buoyant

Queensland’s extension of its lockdown did little to dent confidence, with Qantas Airways Limited (ASX: QAN) down just 0.7% as investors tire of the constant change in restrictions.

Australian property prices rose 1.6% in July, making the 12 months gain 16.1%, the strongest in over 17 years.

The banking sector was buoyed by the news, adding 1.9% behind a 2% jump in each of National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).

Ramsay to see surgery recovery

Private hospital operator Ramsay Health Care Limited (ASX: RHC) added 1% after management was quoted in a recent interview suggesting that extended lockdowns in NSW, along with Victoria and Queensland for that matter, will likely see the government forced to subcontract work to the private sector to have any hope of shortening waiting lists.

ASX 200 today

Looking ahead, the ASX 200 is set to open lower on Tuesday, following a mixed lead from US markets overnight.

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Disclosure: At the time of publishing, Drew owns shares in Zip.

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Wattle Partners is a financial advice firm, servicing clients around Australia, specialising in retirement planning (pre and post retirement). 

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