The S&P/ASX 200 (ASX: XJO) is expected to open flat on Friday according to the latest SPI futures. Here’s what’s making headlines.
Volatility continues, ASX 200 pares losses
The ASX 200 pared early losses to finish down just 0.3% on Thursday, with oil prices the biggest detractor. The oil sector fell 1.8% as oil prices pushed lower on concerns of weaker demand.
Woodside Petroleum Limited (ASX: WPL) reported quarterly production had fallen 2% on 2019 levels but revenue had fallen a further 42% as sales prices collapsed; shares fell 1.6%. Santos Ltd (ASX: STO) fell a similar amount with production up 12% for the year to date but revenue falling 18% to $797 million for the first three quarters. The outlook for oil remains reliant on a return of normal people and economic movement which may be some time given the worsening European second wave.
AMP Limited (ASX: AMP) fell 5.5% despite reporting generally positive results from its core Australian businesses. The wealth management division saw net outflows of $1.95 billion, but inflows of $6 billion taking assets under management (AUM) to $121.4 billion. Similarly, AMP Capital saw $1.1 billion in redemptions, AUM falling 0.4%. The company remains under the close watch of a number of private equity firms.
Healius pathology division booming, Mydeal.com.au jumps 84% on IPO
Pathology business Healius Ltd (ASX: HLS) jumped 9.3%, leading the market after reporting strong growth in revenue, hitting $492.5 million for the quarter compared to $419 million in 2019. The company has been processing a large share of COVID-19 tests, with management highlighting the growth was unlikely to be sustained. Seemingly this didn’t faze investors on the day. Earnings for the quarter more than doubled to $81.2 million.
Magellan Financial Group Ltd (ASX: MFG) faced the virtual pressure of shareholders, with many questioning the on balance sheet investments in investment banking firm Barrenjoey, $155 million, and settlement system, Finclear, $20 million. I’m struggling to understand the value in this move and whether it is an appropriate use of shareholders’ capital, particularly given Magellan’s world-leading profit margins of close to 55%.
The latest IPO off the blocks was no-frills e-commerce retailer MyDeal.com.au Ltd (ASX: MYD), which jumped 84% on debut. Whilst a positive for shareholders, this tends to suggest the price could have been higher and less dilutive for existing investors.
Tesla beats expectations, stimulus ‘just about there’
The S&P 500 outperformed the tech-heavy Nasdaq, adding 0.5% on Thursday compared to -0.1%. The cyclicals were the biggest beneficiaries, with the banking sector adding 2% across the board on an improving jobs outlook and signs the US$1.9 trillion stimulus package may be passed.
Electric vehicle maker Tesla Inc (NASDAQ: TSLA) was the highlight of the day, reporting its fifth consecutive quarterly profit of US$874 million, well ahead of consensus estimates as Elon Musk continues to defy expectations. Revenue was also 40% higher with management confirming its goal to deliver 500,000 cars this year. The Tesla share price is up 400% in 2020.
It’s becoming clearer where the global recovery is really being driven from, with consumer goods group Unilever (LON: ULVR), the maker of Ben & Jerry’s and a number of cleaning products, reporting a return to sales growth, up 4.4%, driven primarily by emerging markets China and India.