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S&P/ASX 200 to open lower – PMV & WES shares in focus

Today, the S&P/ASX 200 (INDEXASX: XJO) is expected to open lower despite mixed results overnight.

The US market ended its winning streak overnight, with the Dow Jones retreating 0.6%, the S&P 500 down 0.4%, and the tech-focused NASDAQ once again immune from any weakness, adding 0.1%. The catalyst was another spike in COVID-19 cases in nine US states, with several hitting daily records, at the same time Beijing is dealing with an outbreak of its own. On a positive note, US housing starts rose unexpectedly, up 4.3%, boosting the hopes of a ‘V-shaped’ economic recovery.

The picture wasn’t much prettier in Asia, however, with the Nikkei 225 off another 0.6% after the Japanese economy saw exports slide 28% in May, but those specific to the US fell over 50%.

Locally, the ASX200 finished in positive territory on Wednesday, adding 0.8%, but it will take a negative lead into today’s trading. On Wednesday, the strength came later in the session as investors moved into traditionally defensive assets including the property and consumer staples sectors, with Woolworths (ASX: WOW) up 1.8% and Wesfarmers (ASX: WES) up 1.5%. The supermarkets were the market’s key beneficiaries and should remain stalwarts within all portfolios.

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Talkin’ Tech Stocks

Once again, it was all about the technology stocks this week with Carsales Ltd (ASX: CAR), up 6%, and Oracle Corporation, down 3%, updating markets on Wednesday. CAR offered some positive news with revenue growth for the financial year expected to be up 1% on 2019, on an adjusted basis, but down some 5-6% on reported numbers. Net profit was similarly expected to fall 6-9% to between $134 million and $138 million. The inclusion of Adjusted vs. Reported figures will be as important as ever as markets enter the most difficult reporting season in a decade in July.

US-listed Oracle, which offers cloud-based technology and enterprise planning software, fell just short of guidance, with revenue down 6% to $10.4 billion as management blamed stalling investment from its core hospitality, retail and transport customer for the weakness. The standout was 32% year-on-year growth in sales of its Fusion Enterprise Resource Planning system.

Australia’s leading respiratory care technology manufacturer, Fisher and Paykel Healthcare (ASX: FPH) rebounded from recent weakness, up 5%, buoyed by the spike in cases.

All three of these companies remain global leaders in their fields and are solid investment opportunities post COVID-19.

Cash is King

Overnight, Bloomberg reported that assets held in Money Market Funds, a high-yielding cash alternative for US investors, had reached an all-time high in May, hitting $4.6 trillion. The previous high was $3.8 trillion during the GFC.

This flood of cash goes some way to explaining why the market remains in a Kangaroo pattern with capital flowing back into markets on any weakness. It’s clear to me that investors should be taking heed of the Reserve Bank of Australia’s recent comments regarding the speed of the market recovery post-COVID-19, but particularly those nearing or in retirement, with the importance of hedges — consider things like ETF Securities’ GOLD ETF (ASX: GOLD). These alternative assets growing by the day.

The economic outlook remains difficult at best, with reports that one-in-six Brisbane and Sydney apartments are now vacant following years of excessive construction, the issue being that it only takes a single landlord to sell at a cut price to see the market collapse quickly. These are difficult times for Lend Lease (ASX: LLC) and other builders.

On the other hand, the ‘Great Reset’ appears to be in full swing as retailers, restauranteurs and consumer-facing businesses around the world are seeking a new deal with landlords who have benefitted from ever-increasing rent levels; many are simply refusing to reopen without discounts, Myer Holdings Ltd (ASX: MYR), City Chic (ASX: CCX) and Premier Investments Ltd (ASX: PMV) are among the biggest culprits.

This report was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.

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The Golden Rules of Investing

We might be experts in retirement, but with combined financial advice experience of 35+ years, we’ve nearly seen it all. 

In mid-2023, our senior team at Wattle Partners Financial Planning put the finishing touches on a brand-new report “The Golden Rules of Investing“.

In this free report, we outline the key principles that determine all of the portfolio construction and investment decisions of Wattle Partners. Collated over decades, this paper should be seen as a work-in-progress, constantly under review in light of the ever-evolving nature of markets. 

You’ll find the free report on my Author page. Simply click the button below to view the Golden Rules.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.


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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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