RBA Lower for Longer | WiseTech Result

2 September 2020

Global markets were mostly higher overnight (S&P 500 index +0.8%) with US markets reaching new record highs on favourable economic data and as stimulus talks refuelled optimism.

The Tech sector continued to charge on, with Apple rising another +4%, while Zoom Video Communications Inc surged +40.8% after the videoconferencing company raised its annual revenue forecast by more than +30% as it converted more of its huge free user base to paid subscriptions – benefiting from persistence of the pandemic. 
Closer to home, the RBA announced it would keep rates unchanged at 0.25%, and that it expects a slow and bumpy economic recovery with rates likely to remain lower for longer. Tension between China and Australia is mounting further, with China putting a ban on Australia's largest grain exporter CBH (a  cooperative of ~4,000 farmers) after claims customs found pests in a shipment. 

WiseTech Global (WTC:ASX)

Shares in WiseTech Global (WTC), surged recently after releasing a solid result for 2020 financial year, showing the logistic company was only partially impacted by the covid-19 pandemic. Total revenue grew to $429.4m, up +23% on the prior year., which  included a +20% jump for its CargoWise core platform with revenue from newly acquired businesses up +29% to $166.4m. Operating earnings (EBITDA) grew by +17% to $126.7m on a healthy EBITDA margin of 30%. 

More importantly, guidance for 2021 remains sound as management anticipate revenue to growth of +9% to 19%,and operating earnings to grow +22% to +42%.

Keep an eye on our weekly for a full update on WTC.

Australia & New Zealand Market Movers

The Australian market was down on Tuesday (ASX 200 Index -1.8%) experiencing its worst session in four-weeks as concerns emerged about a strengthening Aussie dollar with all major sectors ending the day in red.  

The sell off led by the high flying buy now, pay later, sector on Tuesday after payments giant PayPal unveiled plans to launch a competing product in the US 'Pay in 4', which saw industry leader AfterPay fall -8%, and others experience heavy falls. The major banks were also weaker in light of the RBA's decision to keep rates lower putting pressure on the sector.

The New Zealand market (NZX50 Index -1.2%) fell again yesterday as the NZ dollar continues to impact exporters and  its two biggest companies A2 Milk (-1.6%) and Fisher and Paykel Healthcare (-3.6%). 

Tourism Holdings posted the day’s biggest gain, rising +4.4%, while on the flip side SkyCity Entertainment another company reliant on tourism led the market lower, dropping -4.3% as social distancing measures in public spaces creates some limitations. 


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. With reporting season all but over, focus in the week ahead returns to macro data including monthly employment figures (nonfarm payrolls) and ISM manufacturing data in the US
  3. The RBA also meets on Tuesday.
Global markets were mostly higher overnight (S&P 500 index +0.8%) with US markets reaching new record highs on favourable economic data and as stimulus talks refuelled optimism.

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