Stock Pick

  • ASX 200 rises again, ASX banks push higher

    ASX 200

    The S&P/ASX 200 Index (ASX:XJO) went higher today to 5,851 points.

    The Reserve Bank of Australia (RBA) continues to be a cautious voice on the economy. But Dr Lowe does see that things are looking better than perhaps was expected compared to a very negative scenario.

    ASX 200 banks continue to push the index higher

    The heavy lifting in the ASX 200 is being done by the banking sector.

    Bendigo and Adelaide Bank Ltd (ASX: BEN) did actually provide its quarterly update today which included a provision for the COVID-19 impacts of $148.3 million.

    The Bendigo Bank share price went up by 4.1% today.

    The rest of the ASX 200 banking sector also had a very solid day, though the ending gains were lower than earlier in the day. Investors are becoming more positive on the banks. 

    The Commonwealth Bank of Australia (ASX: CBA) share price rose by 2.2%.

    Westpac Banking Corp’s (ASX: WBC) share price went up by 4.4%.

    The National Australia Bank Ltd (ASX: NAB) share price climbed 4.75%.

    The Australia and New Zealand Banking Group (ASX: ANZ) share price rose by 4.5%.

    Blackmores Limited (ASX: BKL) returns to trade

    The ASX 200 vitamin business returned to trading on the ASX today after going into a trading halt yesterday to announce a capital raising.

    Blackmores is using the money to strengthen the balance sheet, accelerate Asian growth and pay for an efficiency program.

    The Blackmores share price ended the day higher by 3.25%.

    Nearmap Ltd (ASX: NEA) rockets

    The share price of Nearmap rocketed today. It went up 16.7% as the aerial imaging company gave a trading update.

    The ASX 200 business said that its annualised contract value (ACV) Is now more than $104 million at the current exchange rate between the Australian dollar and the US dollar. Customer churn has also fallen to less than 10% on a rolling 12 month basis.

    The company also announced that it has launched Nearmap AI.

    Finally the company said that thanks to cost cutting measures it is on course to be cash flow breakeven by the end of FY20.

    NEW: Expert names top dividend stock for 2020 (free report)

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    Edward has just named what he believes is the number one ASX dividend stock to buy for 2020.

    This fully franked “under the radar” company is currently trading more than 24% below its all-time high and paying a 6.7% grossed-up dividend.

    The name of this dividend dynamo and the full investment case is revealed in this brand new free report.

    But you will have to hurry — history has shown it can pay dividends to get in early to some of Edward’s stock picks, and this dividend stock is already on the move.

    See the top dividend stock for 2020

    More reading

    Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. 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.

    The post ASX 200 rises again, ASX banks push higher appeared first on Motley Fool Australia.

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  • Are ASX bank shares finally back in the buy zone?

    Holding piggy bank in hands, long term shares, shares to buy and hold

    Fuelled by surging ASX bank shares, the S&P/ASX 200 Index (ASX: XJO) has had a truly extraordinary week – and we still have one more day of trading left!

    Since Monday, the ASX 200 has risen from 5,497 points to close today at 5,851.1 points – a swing over 6.5%.

    Driving this, the big four ASX bank shares have taken off this week in a big way.

    Let’s take Commonwealth Bank of Australia (ASX: CBA). It was asking just $58.80 a share on Monday morning. Today, investors were seeking $65.73 a share at market close. That’s a four-day turnaround of almost 12% – as I say, extraordinary stuff.

    It’s an even better story with Australia and New Zealand Banking Group Ltd (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX: NAB) shares, all of which are up more than 20% since Monday. You can’t make this stuff up.

    So what’s going on here? And more importantly, are the ASX bank shares a buy today?

    Why ASX bank share prices are raising the roof

    In my view, what’s happening with the ASX bank shares is a pure shift in sentiment towards the economy, rather than anything specific to the banking sector.

    Banks are one of the most economically-reliant companies on the ASX. That means they are usually more profitable when the broader economy is going well, and decidedly less so if the economy is going poorly or is in a recession.

    Ever since the outbreak of the coronavirus pandemic, the market has more or less valued the banks at ‘recession prices’, which explains why the big four ASX banks have seen their market capitalizations smashed in 2020 so far.

    But this sentiment has decisively shifted this week. Why? Well, it’s likely to be a combination of factors. States around the country are increasingly lifting coronavirus-related restrictions and lockdowns, which is bringing thousands of businesses out of hibernation.

    And just today, the Reserve Bank of Australia (RBA) governor Philip Lowe told a Senate hearing that the RBA expects there to be less economic damage than they first feared.

    As you can imagine, these developments have likely contributed to a huge boost in confidence around where the economy is heading in the short- to medium-term.

    Are the ASX bank shares a buy today?

    Even though ASX bank shares are storming higher this week, I’m not too interested myself.

    We still don’t know the extent of the economic damage that will stem from the coronavirus. We still don’t know how badly the banks will be hit for the rest of 2020 and in 2021 and beyond. And we still don’t know when the banks (who have always been known for their dividend payments) will be able to pay dividend cheques anywhere near the levels they used to.

    As such, I think there are better places to put your money today. And if you were really bullish on ASX bank shares, you probably should have been buying last week!

    So instead of the ASX bank shares, why not check out the Foolish dividend pick below!

    NEW: Expert names top dividend stock for 2020 (free report)

    When our resident dividend expert Edward Vesely has a stock tip, it can pay to listen. After all, he’s the investing genius that runs Motley Fool Dividend Investor, the newsletter service that has picked huge winners like Dicker Data (+92%), SDI Limited (+53%) and National Storage (+35%).*

    Edward has just named what he believes is the number one ASX dividend stock to buy for 2020.

    This fully franked “under the radar” company is currently trading more than 24% below its all-time high and paying a 6.7% grossed-up dividend.

    The name of this dividend dynamo and the full investment case is revealed in this brand new free report.

    But you will have to hurry — history has shown it can pay dividends to get in early to some of Edward’s stock picks, and this dividend stock is already on the move.

    See the top dividend stock for 2020

    More reading

    Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. 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.

    The post Are ASX bank shares finally back in the buy zone? appeared first on Motley Fool Australia.

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  • Jamie Dimon Captures the Stock Market Moment

    Jamie Dimon Captures the Stock Market Moment(Bloomberg Opinion) — Don’t fight the U.S. Federal Reserve — repeat that mantra until it sticks.Jamie Dimon, the boss of JPMorgan Chase & Co., put it well this week. “This wasn’t the bazooka,” he said, referring to Jay Powell’s response to the coronavirus crisis. “The Fed took out the whole military and applied it. Just announcing these programs reduced spreads (the difference between corporate bond yields and their benchmarks) in the market. It’s going to save a lot of small businesses.” In the past month, the equity market’s glass has gone from pretty much empty to at least half full and that’s down to the coordinated fiscal and monetary effort from authorities far and wide. You want some quantitative easing? Please, have some more and take some for the journey home. Even those foot draggers at the European Union are talking about radical fiscal action. We won’t really see a V-shaped economic recovery, but it seems seem like we’ve stopped the L.Nonetheless, this is a recovery based so far on asset-price inflation rather than any economic data. Central bank and government action may have restored financial valuations but real incomes will still suffer dramatically for a long while to come. Unemployment and diminished consumption cannot be magicked away.The stock market is looking even further into the distance than usual to justify its valuations, which is sometimes hard to square away against a constant stream of dire economic statistics and evaporating company earnings. Since QE came to life during the global financial crisis, it has paid for investors to cast aside their usual forward-earnings analysis and focus instead on the rising tide of money. The central banks have learned their post-2008 lessons and have barely put a foot wrong this time. This is having uneven effects, however. The bulk of the stimulus is coming into investment-grade assets because that’s where central banks feel more comfortable. Credit spreads have recovered most in BBB and A-rated bonds. High-yield yield assets improved sharply at first, but this has abated. The spread between the yields on investment-grade debt and those of junk bonds is still nearly double the levels seen in February. Similarly, new debt issuance is motoring again but only for the better-quality names. While U.S. banks such as Citigroup Inc. and Wells Fargo & Co. are returning for the fifth or sixth time this year to replenish capital, the junk sector has been restricted to one-off selective deals — often with eye-watering yields.The change in stock market sentiment isn’t just about QE. The oil price collapse has come and gone and fears of a devastating second wave of Covid-19 are easing. Short-selling bans have quietly been lifted in several European countries too, and some of the recent improvement may be explained by that. The sound of economies cranking back into life can just about be made out over the whirring of the monetary printing presses, allowing even bombed-out old economy stocks to recover, not just the new technology darlings.Notably, some of the recent action has been in high-dividend stocks, which had been forced to skip shareholder payouts at the height of the crisis. Investors had feared that the dividend bans might last several years; now they think it may be a quarter or two. Many investment funds work off a dividend-yield model.Investment managers may be doing the natural thing right now and chasing the rising stock market indexes, but that doesn’t mean they’re brimful of confidence. The Bank of America fund manager survey for May shows extreme bearishness pervades, with only 10% expecting a V-shaped recovery and 68% expecting stock prices to fall. Given the recent positive news on the virus and the gradual ending of lockdowns, the June survey might be different.The fiscal response will determine how the economy recovers over the long term but the monetary triage has worked better than anyone could have expected in those ugly days of March. For that we should be grateful, and for the stock market’s semi-rational exuberance.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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