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.
Morning Report Tuesday – 3 Things Investors need to Know
The Australian share market and ASX 200 is tipped to open marginally higher today with SPI futures nudging higher following overnight gains on Wall St.
Peak virus
It was a mixed bag for the ASX to begin the week, opening strongly before giving up gains and finally ending up 1.5% on the outperformance of the information technology and healthcare sectors.
The biggest detractor was an unexpected capital raising and dividend cut from the National Australia Bank Ltd (ASX: NAB). The US has once again provided a strong overnight lead for the Australian market, hitting its highest point since March 10 as more States announced a loosening of restrictions from as early as this Friday. The European Index also rallied over 2.6% as Spain, Italy and France signalled their intention to reopen their economies as COVID-19 deaths slowed. Interestingly, US retail businesses are demanding a uniform reopening policy across the states given the complexity and difficulty that would result.
Capital raisings continue
The National Australia Bank unexpectedly brought forward their earnings report, announcing a 51% fall in cash profit to ‘just’ $1.44bn and stunning the market with a $3.5 billion capital raising.
The bank is seeking to increase CET 1 capital from 10.4% to 11.2% in order to offset expected increases in bad debts. Management noted that some 70,000 homeowners and 34,000 businesses had taken advantage of the repayment deferral options.
NAB also announced a 60% cut to the interim dividend, dropping to just 30 cents per share, as flagged by the falling share price. The offer will be at a 10% discount to trailing prices of around $14.15 per share. NAB was joined by integrated ports and logistics provider Qube Holdings Ltd (ASX: QUB), whih entered a trading halt as they shore up their own balance sheet.
Reporting season kicks off
The Down Jones traded 1.5% higher overnight driven by positive news in debt markets and continuous support from Government fiscal policy. Walt Disney Co (NYSE: DIS) shares added close to 5% after announcing that it would be releasing the latest Star Wars movie early on Disney+ to capitalise on the shutdowns, whilst Coca-Cola Company (NYSE: KO) bounced 3% as the gradual wind back may release what has been a circa 25% fall in global sales.
Germany’s Deutsche Bank was a rare highlight, announcing on Sunday night that its revenue had remained flat for the March quarter at $6.4 billion whilst taking a $500 million credit provision. Wednesday sees the likes of Google/Alphabet, Caterpillar, Starbucks and Mondelez report in the US, in what will be a real insight into the state of the economy.
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The morning update is written by Drew Meredith, Director of Wattle Partners.
