ASX pauses for breath as new fiscal year kicks off

Happy new year, markets fall as gold shines, retailers under pressure, PEXA lists

The ASX 200 (ASX: XJO) finished the first day of trading in the new financial year on a weaker footing, losing 0.7% with every sector apart from materials finishing lower.

The consumer staples and discretionary sectors were the hardest hit, falling 1.3% and 1.2% as lockdowns continue.

On the positive side, materials were positively driven solely by a rallying gold price and weaker AUD with gold miners Regis Resources Limited (ASX: RRL) and St Barbara Ltd (ASX: SBM) jumping 8.1% and 5.6%, respectively.

Westpac Banking Corp (ASX: WBC) also confirmed the sale of its general insurance business to Allianz for $725 million as the clean-up continues, shares fell 0.6%.

The PEXA (ASX: PXA) property settlement platform finished flat despite a weak start to trading for the group that is 42% owned by Link Administration Holdings (ASX: LNK).

PEXA management confirmed that transaction volumes were 4% ahead of those forecast in the prospectus released just a few short weeks ago.

Shares in REA Group Limited (ASX: REA) fell 0.6% despite finalising its acquisition of the Mortgage Choice platform, taking the company off the ASX, with the price of $244 million.

Another Lendlease downgrade, Charter Hall’s latest acquisition, Magellan simplifies

Property developer and engineering firm Lendlease Group (ASX: LLC) delivered another profit downgrade with shares falling 2.8% on the news.

Management reduced profit expectations for the financial year to between $200 and $320 million, a wide range, blaming the pandemic which has seemingly hit rents, development activity, and sales quite hard.

Lendlease’s engineering division remains a drag, with the group writing down another $90 to $175 million for disputed claims over project costs that are currently the subject of legal proceedings.

Charter Hall Long WALE REIT (ASX: CLW) upgraded its earnings guidance and is now expecting a 3% growth in earnings for FY21 and no less than 4.5% in 2022.

Charter Hall’s management also announced the acquisition of a 33% stake in Myer’s Bourke Street Mall property in Melbourne for $135.2 million, an opportunistic purchase in the conditions; the trust finished 0.6% higher.

Magellan Financial Group Ltd (ASX: MFG) continued its streamlining mission, announcing that the Magellan High Conviction Trust (ASX: MHH) would be converted to an Active ETF thereby allowing both redemptions and ASX trading for investors and ultimately reducing costs for the group.

More records, GM car sales jump, economic recovery continues, Krispy Kreme lists again

US markets finished at new records with the Dow Jones and S&P 500 powering ahead, up 0.4% and 0.5% respectively, and the Nasdaq weaker at 0.1%.

The momentum once again came from the cyclical sectors including energy and financials after OPEC+ announced a further 500k barrel increase in supply which was taken as a sign of the strength of the global recovery.

This was confirmed by the PMI estimates along with another fall in first-time unemployment claims to 364k from 411k. New orders hit 66 points whilst production remains strong at 60.8.

Donut maker Krispy Kreme Inc (NYSE: DNUT) has pounced on an e-commerce boom to list on the market once again, jumping 23% on its debut.

General Motors Company (NYSE: GM) is moving beyond the global chip shortage, announcing a 40% increase in car sales as pent-up demand comes through in 2021. This should weaken the run in used car prices that was a key contributor to inflation.

Alibaba Group (NYSE: BABA) restarted its acquisition program, agreeing to buy a 20% stake in electronics retailer Suning.com Co. in partnership with the Jiangsu Provincial Government. The deal sees BABA moving further into JD.com’s turf.

The Inside Investor