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ASX 200 morning report – QAN, CWY & URW shares in focus

The ASX 200 (ASX: XJO) is set to open lower on Friday according to the latest SPI futures. Here’s what ASX investors need to know.

ASX 200 continues to weaken, unemployment surprises

The S&P/ASX 200 finished another 0.7% lower on Thursday, with every sector but miners and retailers falling. Amongst the biggest detractors were the Commonwealth Bank of Australia (ASX: CBA) and CSL Limited (ASX: CSL), down 1.6% and 1.9%, respectively.

The sell-off came despite what appears to be great news for the economy; the unemployment rate falling to 5.8% from 6.3%. According to the initial release, some 88,700 jobs were gained, with the participation rate remaining steady. The result has caught consensus economists off guard, with most predicting a slight improvement to just 6.3%, highlighting the disconnect with the real economy.

Sticking with economic news, the cost of strict lockdowns appears to have impacted the New Zealand economy, with an unexpected contraction of 1.0% in the December quarter setting the economy up for a second recession in 2021. The Reserve Bank of New Zealand was apparently predicting a 0.2% gain, but closed borders have impacted the country’s export-driven economy, which relies significantly on perishable goods.

Featured video: Peter Phan on The Australian Investors Podcast

URW asset sales continue, Cleanaway faces roadblock

Positive unemployment news sent the Australian bond rate and with it the AUD higher, hitting 78 cents once again, placing pressure on Australia’s export companies.

Investors appear to be concerned about inflation, with the likes of gold miner Silver Lake Resources Limited (ASX: SLR) leading the market, up 8.0% on Thursday.

Cleanaway Waste Management Ltd’s (ASX: CWY) planned acquisition of Suez’s Australian businesses has encountered its first hurdle, with its biggest competitor Veolia launching legal proceedings in France in an effort to stop the purchase. The company is involved in its own takeover bid for Suez; Cleanaway shares fell 3.0%.

Property giant Unibail-Rodamco-Westfield CDI (ASX: URW), which owns the European Westfield assets, continued its €$4 billion asset sales as management seeks to reduce its debt burden, disposing of €213 million in French office properties.

Qantas Airways Limited (ASX: QAN) shares fell 0.7% in the broader sell-off despite the Federal Government announcing a JobKeeper-like payment for airline workers of $500 per week. Whilst badly needed due to border closures, a number of sectors including hospitality are crying out for similar support post 31 March.

US markets fall on inflation threat, stimulus cheques going towards travel

US markets fell once again following the Federal Reserve comments, with the bond rate moving higher as investors prepare for an inflationary outbreak. The Nasdaq felt the brunt of the selling pressure, falling 3.0%, with the S&P 500 down 1.5% and the Dow Jones 0.5%.

One issue regularly forgotten in the value vs. growth debate is the fact that value tends to include more cyclical sector including energy and materials, which are inherently more volatile.

According to analysts in the country, the latest stimulus cheques, totalling some US$500 billion, are now likely to end up being spent on travel, rather than gaming or day-trading as they were during the middle of the lockdown, which bodes well for the likes of Walt Disney Co (NYSE: DIS) and its slowly reopening theme parks.

Elsewhere, the oil price fell 7%, sending energy companies sharply lower on dual concerns about growing rhetoric between the US and Russia along with recent vaccine rollout issues. President Biden was quoted as calling Vladimir Putin a ‘killer’, commencing a tit-for-tat commentary – they may see the Russian place pressure on US shale producers.

Similarly, issues with the vaccine and limited supply mean that travel is unlikely to recover as quickly as expected.

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 owns shares in CSL, Cleanaway and Disney.

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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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