Global markets were higher overnight (S&P 500 Index +0.4%) as Wall Street fluctuated between relatively small gains & losses as investors weighted up rising coronavirus cases and new restrictions against positive news that Oxford University's COVID-19 vaccine generated good immune responses in older people.
Nearer term economic growth could take a hit, with New York city the latest to announce that it would close schools after the COVID19 infection rate breached a critical threshold. However, near term vaccine news is being priced into markets. In stock moves, Tesla rose to a record ahead of its inclusion in the S&P 500 US market Index.
Aristocrat (ALL:ASX)
As we touched on yesterday, Aristocrat Leisure shares rose after reporting solid full year results. The company slashed its final dividend 70% after its normalised operating revenue and profit slumped during the year but this was widely expected.
In terms of details, the gambling machine and digital gaming business announced its revenue declined by 5.9% to $4.14 billion. Normalised net profit after tax dropped 52.6% to $357.1 million. However, its closing net debt position improved by 29.5% to $1.57 billion.
ALL is a economy re-opening/recovery play, and 25% of revenue comes from North American gaming, while represents 54% of group revenue. We think the digital aspect is a great part of the broader business, and there is further upside as this segment should be seen as more of a software as a service business.
We currently have a BUY rating on ALL and will release a full update in our weekly report.
Australia & New Zealand Market Movers
The Australian market continued to trend higher yesterday (ASX 200 Index +0.3%) as banking stocks outperform. Yesterday’s Australian labour force survey showed remarkable strength in employment up 179k against a fall of 28k expected.
Online lender Harmoney Corp's shares disappointed on its ASX / NZX listing debut, falling as much as -10% during its first day of trade.
On the flipside, shares in Bluescope steel were up +5% as it updated guidance for the first half of the 2021 financial year. According to the release, underlying earnings is expected to be approximately $475 million for the half (this includes the contribution made from the recent industrial warehouse property sale) which represents a rise of 80% over the second half. 2021 is turning out to be a much better than anyone would have expected, but 2022 is unlikely to be a repeat year.
The New Zealand market dipped on Thursday (NZX 50 Index -0.4%) as investors cashed in a number of stocks that had reached record highs in the two-week rally following the US election.
In stock news, Stride property rose after saying it was buying Grant Thornton House on Wellington’s Lambton Quay for $84.5 million, which has a three-year lease currently yielding a 6% annual return.
AFT pharmaceuticals shares were lower after a 1st half 2021 result which disappointed the market, due in large part to lower licencing income, which can be lumpy. Full year guidance was retained, as was the intention to start dividends in the 2022 financial year.
Bank of New Zealand will close 38 branches over the next seven months, despite an earlier commitment not to shut any regional branches until at least 2022.
3 Things Markets Will be Watching this Week
- Second wave COVID-19 news is back at the top of headlines with social distancing measures being re-introduced, while vaccine developments are also front-of-mind.
- Highlights this week include the latest employment data in Australia and earnings from Aristocrat, Ryman Healthcare, Orica, Serko and Napier Port Holdings.
- The AGM season continues with Afterpay, a2 Milk, Pointsbet Holdings, REA Group, Precint Properties, Altium, BlueScope Steel, Goodman Group, Mirvac, Resmed, Seek, Lendlease and Kogan.com scheduled to meet with shareholders
Team
