ASX rallies on the back of QE pump priming

ASX rallies on the back of QE pump priming, healthcare falls, Tabcorp (ASX:TAH) confirms bid

The ASX200 (ASX:XJO) continued its strong start to the week, finishing 1.5% higher after news that the Reserve Bank of Australia would be keeping rates on hold.

Every sector barring healthcare finished higher, with IT once again leading the way with low rates used to justify ‘perceived’ inflated valuations due to the lack of alternatives.

In an apparent ‘surprise’ to experts in the industry, the RBA announced it would be doubling its quantitative easing policy, ramping up bond buying in the hopes of supporting a continued recovery in the economy.

Comments from the RBA meeting suggest the real concern is around the strengthening AUD, with Australia’s world-leading 10-year government bond yield of over 1.0% causing a flood of demand for the currency and pushing shares with overseas earnings like CSL (ASX:CSL) lower as a result; the AUD fell to $0.76 on the news.

The Governor also confirmed that the cash rate is unlikely to be increased until such time as inflation is well above 2% flagging 2024 as the planned timing.

Tabcorp Holdings (ASX:TAH) jumped another 8.8% after management confirmed the existence of confidential and unsolicited bids or proposals for the group’s wagering and media arm.

Debt collection paying dividends, hot-stock Vulcan (ASX:VUL) raising cash, Temple & Webster (ASX:TPW) jumps 556%

Global debt collection agency Credit Corp Group (ASX:CCP) moved 8.8% higher after announcing they would reinstate dividends following a strong finish to 2020.

Despite widespread concerns around the world, the pandemic has had less impact than expected on debt servicing, thus far at least, with CCP reporting a 10% increase in first half profit to $42.3 million.

US collections increased 36%, doubling profit to $8.0 million and the company now expects full year profit to fall between $85-$90 million compared to the $70-85 million forecast in December.

The acquisition of struggling competitor Collection House’s (ASX:CLH) debt ledger, the largest investment in CCP’s history, appears well timed and will contribute in the second half.

Vulcan Energy Resources (ASX:VUL) may be the hottest stock on the ASX at the moment, increasing 41 times from a low of $0.16 in March to $7.84 today.

The company hits the two most popular themes, decarbonisation and battery storage, as they are building what is reported to be the first Zero Carbon Lithium mine in Europe. 

The group entered a trading halt as they sought to raise $100 million to fund construction at a price of $6.50 per share.

The volatility of these smaller companies makes them difficult to invest in directly, with more diversified exposure generally warranted.

Day trading ‘Reddit’ frenzy collapses, US markets higher, growth continues at Alibaba (NYSE:BABA)

Both the key US markets finished higher, 1.6% for the Nasdaq and 1.4% for the S&P500 offering another strong lead for the ASX today.

Not unexpectedly the short selling driven by chat room Reddit users slowed with both GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) falling 60% and 40% respectively proving that what goes up must come down and the market may not be ‘broken’ just yet.

Chinese e-commerce and payments giant Alibaba (NYSE:BABA) showed its continued resilience, reporting a 37% increase in quarterly sales and a 52% increase in profit.

BABA’s continued focus on cloud computing and its core e-commerce business is paying dividends, with revenue increasing 50% and 38% amid the distraction of regulatory pressure from the Chinese government around the separation of their ANT Financial business; shares fell 3.8%.

Ahead of Amazon’s (NASDAQ:AMZN) after market results, United Parcel Service (NYSE:UPS) reported revenue from the giant jumped 31% in the quarter, accounting for 13.3% of total sales, which jumped 21% in total after processing some 2 million daily packages.

The Inside Investor