Fed’s Cautious Tone | CSL Jumps on Result

21 August 2020

Global markets were mixed overnight as the US market (S&P 500 -0.4%) closed lower after a number of days in the green. The Federal Reserve, despite its efforts to support the economy, raised concerns that the US economic recovery from the devastating effects of the pandemic continues to face a highly uncertain path – denting investor sentiment. 

In other news, Apple became the first publicly listed US company to cross $2 trillion in market capitalisation, boosted by expectations of long-term success from the country’s biggest tech names in a post-covid-19 world. Strong profit results from retailers Target and Lowe’s also lifted sentiment earlier in the session.

CSL Limited (CSL:ASX)

Healthcare giant CSL jumped +6.4% yesterday, after reporting a net profit after tax of  $US2.1 billion which was up +17% from last year as its immunoglobulin portfolio continued to excel.

Challenges with plasma collection did not impact the recent result but CSL guided profits for 2021 would be in the range of US$2.1 billion to US$2.265 – which was better than what the market had anticipated.
CSL are also providing plasma treatment therapy for covid-19 patients, as well as being involved as a local producer for a possible vaccine.

We are encouraged by the move and remain BUY rated as we believe CSL will able to continue to achieve strong growth rates over the medium-term despite some the possibility of some shorter term disruption.

 

   
Australia & New Zealand Market Movers

The Australian market rose yesterday (ASX 200 Index +0.7%) closing in on a 5-month high amidst a few surprises in earning seasons dominated by CSL (The biggest stock on the market).

WiseTech Global shares recorded a massive 33.9% jump after reported revenue growth of 23% per cent and earnings of $126.7 million, at the top of its previous guidance, guiding for strong growth to continue in 2021.
Crown Resort shares rose +3.3%, after reporting a sharp fall (-80.2%) in profit down to $79.5m due to covid-19 restrictions, performing better than feared as it revealed strong bounce in trade for its Perth 
ANZ shares were also higher and helped sentiment towards the banks as the big bank announced an update and that it would resume its dividend. 

New Zealand shares fell yesterday  (NZX 50 Index -0.8%) on a back of mixed earnings results, and declines from its two largest companies FPH and A2 Milk. 

A2 Milk led the market lower, as despite producing a solid result  the market had higher expectations 2020 financial year which saw revenue ($1.7b billion) and net profit after tax ($388.2m) both  rise +33% and +32% respectively from last year. A2 is guiding strong revenue earnings growth for 2021 without giving formal numbers.   

Fisher & Paykel Healthcare dropped -2.2% as investors took profit after its strong run the last couple of days. Fletcher Building continued to fall after confirming last weeks net loss announcement, while also cutting their dividend due to the uncertain outlook. 
 

3 Things Markets Will be Watching this Week

  1. ​​​​​​​​​​​​​​​COVID-19 related news-flow remains key, with second wave and lockdown headlines, while US Congress debate what an extension of stimulus will look like.
  2. Across Australasia we are well underway in terms of companies announcing profit results.
  3. Locally, newsflow around lockdowns in Auckland and Melbourne/Victoria will also drive investor sentiment.

Team

The Federal Reserve, despite its efforts to support the economy, raised concerns that the US economic recovery from the devastating effects of the pandemic continues to face a highly uncertain path - denting investor sentiment. 

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