Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
ASX hits 11-month high
ASX hits 11-month high, BHP (ASX:BHP) delivers record dividend, Ansell (ASX:ANN) riding the COVID wave
The ASX200 (ASX:XJO) reached an 11-month high and is now nearing 7,000 points once again, with the energy and materials sectors powering the recovery.
Zip Co. (ASX:Z1P) continued its stellar 2021 run, adding 10.0% and taking the year-to-date gain to 160%. The company received a ‘speeding ticket’ from the ASX but stated it had no knowledge as to why the share price kept running.
BHP Group Ltd (ASX:BHP) which represents over 6% of the ASX200, smashed expectations to deliver a 55% increase in the interim dividend of US$1.01 per share.
Near record iron ore prices dominated the first-half results, with underlying profit 16% higher to US$6.03 billion, or US$3.87 billion after the previously flagged write-downs on their coal operations were included.
Iron ore prices were 33% higher than in 2019 due to surging Chinese demand and weakening Brazilian supply, and when combined with record shipments of 144.1 million tonnes, it was a perfect storm for shareholders.
Management continues to highlight their diversification into electric vehicle related commodities including nickel and copper but this remains an iron ore play.
The company is clearly travelling well and is unlikely to see current conditions continue in the longer term; shares increased 2.7% to $47.
Fortescue Metals (ASX:FMG) fell 3.0% during the session after announcing a number of high-profile executive departures on the basis of ‘cultural issues’ flagged by their CEO.
Redbubble (ASX:RBL) sold off despite growth, National Australia Bank (ASX:NAB) poised for recovery
Online marketplace Redbubble (ASX:RBL) delivered a 118% increase in gross profit to $144 million for the half on the back of a 96% increase in marketplace revenue to $353 million. Market place revenue represents the difference between the sale price of apparel and similar products and the costs of paying the artists who create them.
Despite the strong report, shares fell 18.1% with traders clearly concerned about the slowing growth rate after management announced that mask sales, a key portion of recent growth, has fallen to just 7% in the quarter.
With cash of $130 million and free cash flow hitting $80 million, the company is well placed to invest for another leg of growth.
Glovemaker and industrial product manufacturer Ansell (ASX:ANN) has been a key beneficiary of the pandemic and the associated demand for better hygiene.
The stalwart of the ASX delivered a 61.9% increase in profit in the half to US$106.5 million, on the back of a 24.5% increase in revenue to US$937.8 million. Of this, 59% was sourced from healthcare products which saw sales increase 37.3% in the first half alone.
Being in the right place at the right time meant investors were rewarded with a 52.6% increase in the dividend to 33.2 cents per share.
With the share price increasing 1.8% on the news, the company appears to be pricing in a continuation of current sales growth for an extended period, which is likely difficult to deliver.
The highlight of the National Australia Bank (ASX:NAB) first quarter report was the fall in deferred residential home loans from a peak of $38 billion to just $1 billion today.
The headline numbers continue to reflect a company in transition, with cash earnings 1% higher to $1.65 billion, but low-interest rates having a clear impact on profit margins.
Management flagged further cost reductions after cutting expenses by 1% as a key driver of long-term growth and differentiation.
Global markets lower, bond yields continue to spike, Twitter (NASDAQ:TWTR), Starbucks (NASDAQ:SBUX) rally
US markets were broadly lower, the S&P500 falling 0.1% and the Nasdaq 0.3% as both bond yields and oil prices continued to spike.
Oil prices have been impacted by a ‘deep freeze’ in Texas where a large number of production wells are located, with blackouts and skyrocketing energy prices spreading across the state.
With little in the way of company specific news, investors remain focused on the outlook and sector-wide opportunities, particularly now that bond rates have hit 12-month highs above 1.30% in the US.
Twitter (NASDAQ:TWTR) is close to an all-time high after last week reporting strong growth in active users and a continued recovery in digital advertising spending.
Similarly, Starbucks (NASDAQ:SBUX), a long-term holding of the Magellan group of funds, has rallied after its Chinese competitor Luckin Coffee filed for bankruptcy.
