The S&P/ASX 200 (ASX: XJO) is set to climb when the market opens on Thursday. Here’s what’s making headlines.
ASX 200 jumps again, BHP breaks more records
The ASX 200 had another strong day on Wednesday, this time a combination of energy (+1.3%) and IT (+2.5%) sending the index higher.
It seems overseas investors may have identified Afterpay Ltd (ASX: APT) as a cheaper alternative to their own Affirm (NASDAQ: AFRM), with the company hitting another all-time high in intra-day yesterday of $142.30.
BHP Group Ltd (ASX: BHP) released its quarterly activities report which made for good reading, the company reporting record iron ore production of 128.4 million tonnes for the half. With iron ore prices now exceeding US$170 per tonne, the company has been able to reduce gross debt by another US$4.1 billion in a half, opening the door for higher dividends and buybacks. Copper production fell 5% but is becoming a key growth driver, with every renewable energy or electric vehicle asset requiring the in-demand commodity. The BHP share price finished 1.4% higher but likely requires a sustained iron ore price to justify the valuation.
Glovemaker Ansell Limited (ASX: ANN) upgraded its earnings guidance, expecting organic growth of 20% in the second half which will take its earnings to a 62-68% improvement for the year. Most importantly, management announced that it expects the current heightened demand to continue for the remainder of the financial year. The Ansell share price jumped 4.1%, with the company looking fully valued.
Australian Foundation profit crashes
Listed investment company Australian Foundation reported a 42% fall in profit in the first half, down from $164.1 million to $95.2 million. The key driver was dividend cuts from investments in CBA (8.1% of the portfolio), Westpac (3.8%), and Transurban (4.1%). Despite the fall management kept the dividend in line with 2020 levels at 10 cents per share.
This is both a drawback and a benefit of the structure, with dividends able to continue despite profit falling and the underlying portfolio performing poorly, but obviously, this can only be sustained for so long. Elsewhere, 360 Capital’s (ASX: TGP) bid for under pressure financial advisory group Evans & Partners (ASX: EP1) is gaining steam. The Takeover Panel accepted undertakings from TGP regarding certain terms in their offer relating to EP1’s ‘ASIC proceedings’ which had raised concern.
They declined to conduct proceedings on the basis of EP1’s application meaning the bid will continue to move forward; shares remain below the $0.66 offer price. Shares in aged care provider Regis Healthcare (ASX: REG) also fell 8.1% after Washington H Soul Pattison (ASX: WSP) abandoned their $1.85 per share takeover offer.
US markets charge higher on new stimulus, Netflix soars
US markets were buoyed by the inauguration of President Joe Biden, along with the confirmation of Janet Yellen as Secretary of the Treasury. Both are clearly committed to the debt-funded stimulus programs and now have the majority in both houses to pass them.
The Nasdaq moved 2.0% higher and the S&P 500 1.4%, with Netflix (NASDAQ: NFLX) and Alibaba (NYSE: BABA) key contributors.
Netflix stock added 16.8% after smashing expectations by reporting a total of 200 million subscribers to its video streaming platform. The group added 37 million subscribers in just 12 months, or around 3 million per month, hitting a total of 200 million. Interestingly, this number could be usurped solely from India, where the company recently launched. Management is now estimating the company will be cash flow breakeven in 2021, earlier than expected. The company is at the centre of one of the most powerful trends of this decade, seeing huge subscriber growth but losing billions of dollars to create content to sustain the growth.
Alibaba, on the other hand, added 8.5% after Jack Ma resurfaced several months after facing regulatory pressure regarding the listing of ANT Financial.