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S&P/ASX 200 to rise – A2M & PLL shares in focus

The S&P/ASX 200 (ASX: XJO) is tipped to rise at the open on Tuesday according to ASX futures. Here’s what’s making headlines.

ASX 200 recap

The ASX 200 finished 0.2% lower to open the week, increasing the likelihood of the first negative month since March. The A-REIT sector was among the few positives, with Scentre Group (ASX: SCG) and GPT Group (ASX: GPT) finishing over 2% higher as Victorian coronavirus cases continued to decline and hopes for an economic reopening increased.

Webjet Ltd (ASX: WEB) and Qantas Airways Limited (ASX: QAN) were the other beneficiaries, adding 6.6% and 6.4% respectively, after discussions with New Zealand on a trans-Tasman bubble were announced.

The financial sector lost ground, falling 0.6%, after the strong gains on Friday as investors’ attention once again returned to the economy.

Small-cap lithium miner Piedmont Lithium Ltd (ASX: PLL) rallied 83% after announcing it had signed a five-year supply agreement with global electric car leader Tesla Inc (NASDAQ: TSLA). The company’s mine is based in North Carolina with the deal to represent at least one-third of sales over its term.

Daigou drought hitting a2 Milk

Specialist ‘feel good’ milk producer A2 Milk Company Ltd (ASX: A2M) unexpectedly downgraded its expectations for the financial year, flagging a fall in first-half revenue to between NZ$725 million and NZ$775 million. The midpoint of this range represents a 7% drop from revenue recorded in the first half of FY20. a2 Milk’s full-year result is expected to land in the range of NZ$1.8 billion to NZ$1.9 billion, with an important caveat that future COVID-19 impacts are limited.

Management flagged a slowdown in the Daigou channel, which represents a large but difficult to measure portion of Australian sales and involves foreigners buying and on-selling product in their home countries, typically China. That said, a2 Milk’s direct Chinese sales are expected to remain strong, suggesting a change in approach may be warranted. The a2 Milk share price fell 11.5% on the news and dragged the Consumer Staples sector down 2.2%.

Elsewhere, potential COVID-19 treatment producer, Mesoblast Ltd (ASX: MSB) stood out once again, increasing 12%, whilst Ardent Leisure Group Ltd (ASX: ALG), the owner of Dreamworld, received a fine of $3.6 million relating to deaths in 2016.

Markets higher across the board, Tik Tok ban on hold

Global markets staged a strong recovery overnight. The S&P 500 finished 1.6% higher and the Nasdaq rose 1.9%, but European markets led the way adding 2.8%. The major contribution came from British bank, HSBC Inc (LON: HSBA) which rallied 8.9% after its largest shareholder Ping An Insurance increased its holding. This came following a fourth straight month of growth in Chinese industrials profits, the first step in the ‘wall of worry’ facing investors.

The rally was broad-based, with just 32 constituents of the S&P 500 finishing lower, travel and energy companies delivering the largest gains on the growing hope of stimulus.

The recent banning of Tik Tok app downloads by the White House has been questioned by the Federal Court, blocking the decision by suggesting it exceeded their authority. This should support Chinese tech companies in the months to come.

The week ahead sees Chinese industrial production results, British and US GDP along with the long-awaited debate between President Trump and Joe Biden on Wednesday.

This article 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.

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.


Disclosure: At the time of publishing, Drew does not have a financial or commercial interest in any of the companies mentioned.

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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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