It has been a very eventful day for the S&P/ASX 200 Index (ASX: XJO). At lunch the benchmark index has recovered from a sharp decline in early trade to be up 0.1% to 5,784.3 points.

Here’s what has been happening on the market today:

Big four banks rocket higher.

The performance of the big four banks on Wednesday has been the ASX 200’s saving grace. The banking sector has been storming higher for a third day in a row, which has offset heavy declines in other parts of the market. Investors appear to believe the banks were oversold over the last three months and have been piling in. The best performer in the group has been the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price with a stunning 8.5% gain.

Afterpay sinks.

It looks as though investors have decided to take profit on a few growth shares today. One of the most notable examples of this is the Afterpay Ltd (ASX: APT) share price which is down 5.5%. Prior to today the payments company’s shares were up over 400% from their March lows. This impressive share price performance has been driven largely by its strong sales and customer growth and the arrival of Tencent Holdings as a substantial shareholder.

ALS result impresses.

The ALS Ltd (ASX: ALQ) share price is pushing higher on Wednesday after the release of a solid full year result. For the 12 months ended 31 March, the testing services company reported a 10% increase in revenue from continuing operations to $1,831.9 million and a 4.3% lift in underlying net profit to $188.8 million. ALS’ profits were in line with management’s guidance. Pleasingly for shareholders, the ALS board had enough confidence in its outlook and balance sheet to declare a final dividend. It will be paying shareholders a partially franked 6.1 cents per share.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Wednesday has been the Southern Cross Media Group Ltd (ASX: SXL) share price with a 31% gain. This was despite there being no news out of the beaten down media company. The worst performer has been the Saracen Mineral Holdings Limited (ASX: SAR) share price with an 8.5% decline after a decent pullback in the gold price.

More reading

• The ASX 200 stock hit by the Brazilian COVID-19 wave
• Why the NAB share price is surging higher today
• Why Afterpay, CSL, Fortescue, & Newcrest shares are dropping lower
• Why ALS, Metcash, NAB, & Pointsbet shares are racing higher
• Where I would put $10,000 into ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Wesfarmers Ltd (ASX: WES) recently consolidated part of its Target store network and made changes to its online strategy.

Is Wesfarmers in the buy zone in light of these recent changes?

Overhaul of Target store network

Last week, Wesfarmers announced it will implement a strategy to reduce its underperforming Target store network, including converting some larger Target stores into Kmart stores. Some of the Country Target stores will also be converted to either smaller Kmart stores or closed completely.

Wesfarmers’ aim is to end up with a stronger and more sustainable chain of retail businesses. The group’s network of Target stores has underperformed for quite some time despite implementing strategies to improve performance. The sharp downturn in foot traffic during the coronavirus crisis appears to have triggered Wesfarmers to take this latest action.

Enhancement of online retail strategy

Wesfarmers’ online offerings have seen strong growth over the past year or two, in particular, increased demand during the coronavirus crisis. This includes its online Target and Kmart offerings, as well as its pure online offering, Catch.

In a market update at the end of April, Wesfarmers revealed its retail businesses are expanding and upgrading their online offerings to support an increase in demand for product driven by the pandemic. Initiatives recently deployed include a ‘drive and collect’ service at its Bunnings and Officeworks stores nationwide.

Wesfarmers provided a further update on its evolving online strategy through a release last week, revealing that its Target network overhaul will be complemented by increased investment in its online capabilities.

Foolish takeaway

I am attracted to Wesfarmers as a potential company to buy during the coronavirus crisis due to its high level of diversification. Wesfarmers has operations in general retail segments of home improvement, merchandise and office supplies and other segments including industrial.

Wesfarmers has a track record of performing relatively well during challenging economic times such as the one we are in and the group’s strong balance sheet positions it well to ride out the current crisis.

I believe this latest move to consolidate its Kmart and Target portfolio and enhance its online offering should further strengthen an already solid business.

On current prices, Wesfarmers also pays an attractive trailing fully franked dividend yield of 3.87%.

More reading

• 3 easy rules for building a massive ASX share portfolio
• Where will the Coles share price be in 1 year?
• 3 top ASX dividend shares I would buy for income right now
• 3 top ASX dividend shares to buy in June
• Leading brokers name 3 ASX 200 shares to sell today

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The big four ASX banks are surging higher this morning with the National Australia Bank Ltd. (ASX: NAB) share price leading the charge after it boosted its capital raise limits due to strong demand.

The NAB share price jumped 5.3% to a more than two month high of $17.52 at the time of writing.

The Westpac Banking Corp (ASX: WBC) share price and Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price aren’t far behind with a gain of around 5% each.

Commonwealth Bank of Australia (ASX: CBA) is the laggard with a 2.4% rise to $62.79, although that is still well ahead of the S&P/ASX 200 Index (Index:^AXJO), which slipped 0.4% into the red.

More demand than supply

Optimism towards NAB was likely triggered by its share purchase plan (SPP) update. The bank more than doubled its intended takings from the SPP after receiving better than expected demand from retail shareholders.

NAB said it will now accept $1.25 billion in new capital from the SPP compared to its original target of $500 million.

It could have accepted even more as the bank will be scaling back valid applications from shareholders. Its promising to allocate a minimum of 176 SPP shares, which are priced at $14.15 each, but said around 98% of shareholders will at least receive their pro-rata allocation.

Extra cash means extra options

The SPP amount is on top of the $3 billion it raised from institutional investors through a placement, and I think this is a good outcome for NAB.

The extra cash injection will go a long way to remove any worries about its capital adequacy. NAB is the only one of the big four that undertook a cap raise although its bad debt provisioning is the smallest at around $800 million.

Analysts believe that is too little when CBA and Westpac have set aside around $1.5 billion each to buffer against loan defaults in the wake of the COVID-19 pandemic.

Money buys time

NAB will likely have to increase its provisioning and the extra cash will come in useful. The extra ammunition will also give its new boss Ross McEwan extra flexibility for the scandal-prone banks to play catch up.

Further, the scale-back of the SPP will likely leave pent-up demand for its stock on the secondary market (i.e. shares trading on the ASX). This means investors are unlikely to be able to buy shares in the bank as cheaply as the $14.15 offer price – at least not for the foreseeable future.

Foolish takeaway on ASX banks

The banks aren’t out of the woods yet and are still trading well below where they were earlier in the year. But the worst may be over unless we get a big second wave of coronavirus infection or some other black swan event.

This bodes well for the broader market and the economy as both can’t outperform if the banking sector is sick.

As my wise former colleague at the Australian Financial Review, Andrew Cornell, once told me during a discussion about super profits – the only thing worse than a profitable bank is an unprofitable one!

More reading

• Why ALS, Metcash, NAB, & Pointsbet shares are racing higher
• Where I would put $10,000 into ASX 200 shares today
• How much money should you have in your emergency fund going forwards?
• 3 easy rules for building a massive ASX share portfolio
• Where to invest $5,000 in ASX 200 shares today

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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