Author: therawinformant

A fund manager has declared the share markets to now be at a “rare turning point” and has named the next sector ready to enjoy technology-like growth.

Frazis Capital Partners portfolio manager Michael Frazis said while there’s little chance of interest rates rising anytime soon, many “red hot tech stocks” seemed to have now passed their peak.

“Longer term yields have begun to rise, tech valuations are at record highs, and we believe a period of serious multiple compression has already begun,” he said in a memo to investors.

But Frazis added a possible rationalisation in the market means it’s an opportunity to buy.

And with tech seemingly overvalued, the Sydney portfolio manager is ready to put money into another sector set to take off in the post-COVID-19 world.

“We are increasing our investments in the life sciences,” he said. 

“Decades of painstakingly difficult and pedantic work in laboratories all around the world has lifted the state of genetic technology to [what was previously] science-fiction levels.”

Life science technologies are presenting investors with “extraordinary new greenfield opportunities”, according to Frazis.

“Many companies in the life sciences are coming off epidemically depressed revenues, are cyclically defensive, and have growth rates as high as any in tech.”

Frazis said companies that are in the COVID-19 vaccine race are already doing pretty well. But other life science companies not in that game are undervalued.

“Those associated with, say, elective surgery in hospitals or non-lethal conditions – a large group indeed – have struggled. Now those trends will reverse, and this is positive for some of our holdings like Progyny Inc (NASDAQ: PGNY), which focuses on fertility.”

Selling down technology

Frazis told The Motley Fool last month that his fund was up about 60% so far this year.

That success was built largely on the backs of amazing growth from technology shares. But he’s now cycling those out.

“We are dramatically reducing what little we have left invested in 40x revenue businesses,” he said.

“These have generated spectacular returns for us, but have now graduated into ‘lower return prospects’. We are focused on the next set of opportunities in the $1 billion to $20 billion market cap range growing at more than 100% [per year].”

Best year of travel ever

Aside from life sciences, Frazis is adding another sector to his portfolio.

It’s one that will obviously benefit from a future COVID-19 vaccination or treatment.

“We believe that the best year in travel on record will shortly start, and intend to be there for it.”

Frazis told The Motley Fool last month that his fund focuses on companies that its customers support with religious fervour.

“We want true customer love. We want explosive growth. We don’t even use these traditional metrics that other people use,” he said.

“It’s been extraordinarily effective. I think we’ve got 18 things that have tripled or more from when we first bought them. Got a number of 4x or 5x opportunities.”

More reading

• How I’d find the best shares to buy before this window of opportunity closes
• Aussie companies blast ‘knee-jerk’ COVID-19 border closures
• PointsBet (ASX:PBH) share price on watch after US update
• iCollege (ASX:ICT) share price on watch following strong trading update
• Is the Xero (ASX:XRO) share price a buy?

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. 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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Finding the best shares to buy today may be a worthwhile use of an investor’s time. It may allow them to capitalise on low valuations that may not be on offer permanently. Furthermore, it could mean that they purchase high-quality companies that have the capacity to deliver solid recoveries from their current price levels.

Through searching in unpopular sectors and analysing company fundamentals, it is possible for an investor to take advantage of the opportunities provided by the 2020 stock market crash. Over time, this could lead to impressive returns.

Finding the best shares in unpopular sectors

Searching in unpopular sectors could be a good starting point for an investor who is aiming to buy the best shares available today. Industries that are currently unfavoured by investors may contain a larger number of undervalued stocks. Their prices may reflect their short-term challenges, rather than their long-term financial prospects. As such, there may be opportunities to buy them while their prices do not account for their recovery potential.

Certainly, unpopular stocks and sectors can remain unfavoured among investors for an extended period of time. However, the track record of the global economy shows that it has always bounced back from its previous declines to post positive GDP figures. Therefore, the operating conditions of companies facing difficult near-term outlooks are likely to improve over the long run. This may help to justify higher valuations that result from improving financial performances and stronger investor sentiment.

Assessing company fundamentals

Analysing company updates may also help an investor to unearth the best shares to buy today. Assessing their financial position may paint an accurate picture of how they may fare in an uncertain economic period. Companies with low debt levels, strong cash flow and a solid financial position may be better equipped to overcome weak operating conditions. This may mean that they can not only survive a difficult near-term outlook, but may even be able to gain market share at the expense of their weaker peers.

Certainly, even financially-sound businesses may prove to be disappointing investments in some cases. However, a company that has a solid financial foundation is likely to stand a much higher chance of benefitting from any economic recovery compared to its weaker sector peers. Therefore, the most appealing investments are likely to be those stocks with the financial means to overcome today’s present economic challenges.

Long-term investment opportunities

Of course, even the best shares may fail to produce positive returns in the short run. The outlook for the economy is extremely difficult to predict at the present time. A number of factors, such as the coronavirus pandemic, could have a major impact on its outlook.

However, through buying financially-sound businesses at low prices, an investor can maximise their returns in the long run. They may be able to benefit from a likely upturn in economic conditions and investor sentiment in the coming years.

More reading

• Aussie companies blast ‘knee-jerk’ COVID-19 border closures
• PointsBet (ASX:PBH) share price on watch after US update
• iCollege (ASX:ICT) share price on watch following strong trading update
• Is the Xero (ASX:XRO) share price a buy?
• 2 fully franked ASX dividend shares with attractive yields

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. 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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Australian businesses have criticised state governments for immediately closing their borders in reaction to a new COVID-19 cluster in Adelaide.

South Australians have been told to wear masks in public after 20 locally acquired cases of coronavirus were found in the capital city.

Western Australia, Tasmania and the Northern Territory immediately shut its borders to anyone travelling from South Australia.

Employer group AI Group’s chief executive Innes Willox said COVID outbreaks could be resolved locally without interstate travel bans every single time they occur.

“A knee-jerk border closure sends a clear but terrible message to investors and nationally focused employers that there can be no regulatory certainty to doing business in Australia.”

The Business Council of Australia (BCA) represents many of the biggest ASX-listed companies, such as Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking GrpLtd (ASX: ANZ), Macquarie Group Ltd (ASX: MQG), AGL Energy Limited (ASX: AGL), BHP Group Ltd (ASX: BHP), Coca-Cola Amatil Ltd (ASX: CCL), Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES), Telstra Corporation Ltd (ASX: TLS), Scentre Group (ASX: SCG), and Qantas Airways Limited (ASX: QAN).

NSW demonstrated COVID-19 outbreaks could be managed with contact tracing and local containment, said BCA chief Jennifer Westacott.

“Rather than a confidence-destroying stop-start approach, we have to learn from what we’ve already been through to better manage outbreaks as they happen,” she told The Motley Fool.

“With the right systems in place for tracking and tracing and local containment, there is no reason we can’t manage outbreaks safely, keep borders open and create much needed new jobs.”

Is the federation broken?

Willox agreed, saying local clusters are a chance for state health systems to show their testing and contract tracing regimes are up to scratch.

“By closing their borders, states are making it clear they have no faith in their systems and are prepared to inflict enormous economic pain on each other and themselves.”

He said the spontaneous closing of state borders only showed the business sector that “our federation is irretrievably broken”.

“The agreed national strategy sensibly does not aim for elimination and states that go for this approach are following a road to economic ruin.”

Adelaide’s outbreak has been attributed to a person who worked in the state’s hotel quarantine system.

Unfortunately, 17 of the 20 cases were reportedly within one extended family, and some of those members attended work in high-risk sites like a nursing home and jail.

Victoria’s second wave that shut the state down from July to October is also believed to have been triggered from a biosecurity breach at hotel quarantine.

Market reaction to the latest state border closures could not be ascertained, due to computer troubles shutting down trade on the ASX on Monday.

More reading

• 2 fully franked ASX dividend shares with attractive yields
• What can you do when the ASX is down?
• 3 shares that have strongly outperformed their sectors this month
• Here’s what big brokers think about the Commonwealth Bank (ASX:CBA) share price 
• The Qantas (ASX:QAN) share price soared 12% higher last week

Motley Fool contributor Tony Yoo owns shares of Macquarie Group Limited and Qantas Airways Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and 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 PointsBet Holdings Ltd (ASX: PBH) share price will be on watch today following the release of an announcement ahead of its annual general meeting.

What did PointsBet announce?

This morning the sports betting company announced that it has launched in the State of Colorado and has taken its first bet. This represents the company’s fifth online sportsbook operation in the United States.

Prior to its launch in Colorado, PointsBet signed a multi-year partnership with Kroenke Sports & Entertainment. This has made the company the official and exclusive partner of the Denver Nuggets of the National Basketball Association, Colorado Avalanche of the National Hockey League, Colorado Mammoth of the National Lacrosse League, and their home venue, The Ball Arena.

In addition to this, PointsBet has signed an agreement with Learfield IMG College, the media rights holder of University of Colorado Athletics. The two parties have agreed a multi-year corporate sponsorship agreement that makes PointsBet an exclusive partner of the Colorado Buffaloes.

PointsBet USA CEO, Johnny Aitken, commented: “Launching in Colorado, the site of PointsBet’s US headquarters, is an extra special moment for the business. This is our fifth state of operation in the US following our most recent launch in Illinois, and as always, we will be providing this passionate, sports-loving community with the fastest online sports betting product in the market and the most betting options for every NFL, NBA, MLB and NHL game.”

“It is a great feeling to now be able to officially introduce Colorado sports bettors to the competitive advantages PointsBet possesses in owning our technology end-to-end, as well as light up our major investments in the state like our fully exclusive deal with the Kroenke Sports and Entertainment team across the Denver Nuggets, Colorado Avalanche and the Ball Arena in advance of the upcoming NBA and NHL seasons,” he added.

What now?

It won’t be long until the company launches its sixth operation in the United States.

Management advised that the next launch is planned for Michigan in third quarter of FY 2021. Michigan will also see the inaugural launch of PointsBet’s iGaming product.

The iGaming launch will see PointsBet offer a mix of classic games such as online poker and game show games in the state.

More reading

• Why Laybuy, Oil Search, PointsBet, & Webjet shares are racing higher
• Why Afterpay, LiveTiles, PointsBet, & Santos shares are tumbling lower
• PointsBet (ASX:PBH) share price on watch after explosive Q1 growth
• Pointsbet (ASX:PBH) share price continues to excite investors
• 3 ASX shares I’d buy for summer 2021

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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.

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The iCollege Ltd (ASX: ICT) share price will be on watch this morning. This comes after the company announced a positive trading update yesterday morning.  

Just minutes after the announcement, the ASX went into lockdown, restricting all trades due to a technical glitch. It will be interesting to see where the iCollege share price will end up today.

Before the halt, shares in the organisation were up 4.1% to 12.5 cents.

What does iCollege do?

iCollege is an Australian-based organisation, comprising 7 business that deliver accredited and non-accredited vocational education and training solutions.

The company operates throughout Australia, but services both domestic and international markets.

Trading update

For the period ending 31 October, iCollege reported a solid trading performance for the first four months of FY21. The company revealed it is on track to deliver record revenue and earnings for the half-year to the end of December.

So far, iCollege has recorded revenue of $5.6 million, and earnings before interest, tax, depreciations and amortisation (EBITDA) of $1.1 million. The company attributes the robust result to significant growth in its domestic training operations and its ability to rapidly address skill shortages.

iCollege received its first cash receipts from the Western Australian government-funded ‘priority industry training scheme’. In addition, revenue is also expected to flow in from its infection control skills set training, which is being delivered as a part of an $80 million federal and state government initiative.

Despite border closures, the company is beginning to witness a recovery in enrolments for international students who remained in Australia. For pupils who are abroad, iCollege has focused its efforts on sales and marketing programs. This has led to an uptick of international students commencing online courses in their home countries.

To expand its revenue streams, the company has rolled out an online coding boot camp for children, specialising in gaming.

What did management say?

iCollege managing director Mr Ash Katta commented on the record results:

Year to date, iCollege has performed exceptionally well and we are on track to deliver a record first half performance. As we have previously stated, the Company’s ability to rapidly adapt in extremely challenging market conditions highlights the resilience of our business model.

We expect November to be another strong month ahead of the traditionally quieter Christmas and New year period, but we are rolling out a series of short courses to boost revenue streams across these months. As well as our strong organic growth, we are using our balance sheet to acquire complementary businesses and scale up existing operations.

iCollege share price summary

The iCollege share price has been on the move in the last 5 months. Shares in the education and training provider have risen from 3 cents to 12.5 cents, representing a gain of 300%.

The company has a market capitalisation of $72.7 million, making it a small-cap ASX share with considerable room to grow.

More reading

• Why the iCollege (ASX:ICT) share price is flying 8%

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. 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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Is the Xero Limited (ASX: XRO) share price a buy after it reported its FY21 half-year result?

The Xero share price has comfortably beat the market over 2020 in the calendar year to date, rising by 51%.

What was in the FY21 half-year result?

The cloud accounting software business reported that for the six months ending 30 September 2020, its operating revenue grew by 21% to NZ$409.8 million.

Total subscribers rose by 19% to 2.45 million whilst net subscriber additions decreased by 30% to 168,000. The total lifetime value of subscribers increased by another 15% to NZ$6.17 billion.

The rest of the world subscribers demonstrated the fast growth rate with an increase of 37% to 136,000, with revenue growth of 38%. This was led by South Africa, with progress in Singapore.

UK subscribers rose by 19% to 638,000 with revenue growth of 33%. Australian subscribers grew by 21% with revenue growth of 18%. New Zealand subscribers rose by 13% with revenue also increasing by 13%.

The average revenue per user decreased by 4% to NZ$29.81 whilst annualised monthly recurring revenue increased by 15% to NZ$877.55 million. The number of months it takes to recover customer acquisition costs increased from 12.3 months to 14.9 months.

The ASX 200 share’s gross margin percentage rose by 0.5 percentage points to 85.7%. This means more of the new revenue falls to the next profit line.

Xero’s earnings before interest, tax, depreciation and amortisation (EBITDA) went up by 86% to NZ$120.8 million. The net profit after tax (NPAT) rose from NZ$1.3 million to NZ$34.5 million and the free cash flow jumped from NZ$4.8 million to NZ$54.3 million.  

During this period of uncertainty, the company pointed out that COVID-19 has made it harder to market its product. This led to a reduction in advertising spending, which meant the cost of marketing (as a ratio of sales) declined, which is partly why its profit margins went up. Management expect to spend more on marketing as life returns to normal.

The company’s monthly recurring revenue (MRR) churn continued to remain low. In the first half of FY21 it saw MRR churn of 1.11%.

On the balance sheet the company’s net cash on the balance sheet improved by NZ$76.3 million to NZ$177.7 million.

The Xero share price has gone up 9.4% in November 2020 so far.

What is Xero’s outlook?

The company itself said that it’s a long-term orientated business with ambitions for high-growth. It said it continues to operate with a disciplined cost management and targeted allocation of capital.

Xero wants to remain agile so it can continue to innovate, invest in new products and customer growth, and respond to opportunities and changes in its operating environment. Due to the uncertainty caused by COVID-19, Xero said it couldn’t provide any guidance for its FY21 performance.

Is the Xero share price a buy?

The Motley Fool Pro team recently commented on the result: “We’re pleased with Xero’s performance through the first half. While customer acquisition was certainly impacted, we’re encouraged by management’s ongoing dedication to product development and its ability to continue offering significant value through the pandemic: not only does it allow its customers to continue operating remotely, much of its development was also based around creating new tools and functionality to help customers through. As an example, it was the first major cloud-accounting platform in Australia to enable small business customers to access JobKeeper through Single Touch Payroll. We expect customer growth, and its all-important SaaS metrics, to improve over time.”

The Pro team still rate Xero as a buy.

More reading

• 3 big things you might have missed from the Xero (ASX:XRO) results
• Why Orocobre, Ramsay, Webjet, & Xero shares are dropping lower
• The ASX 200 fell 0.5% on Thursday
• Why are ASX tech shares all over the place today?
• ASX 200 down 0.1%: Xero hits record high, Telstra and Wesfarmers updates impress

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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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The good news for income investors in this low interest rate environment is that there are a large number of dividend shares on the Australian share market.

Two ASX dividend shares with attractive yields are listed below. Here’s what you need to know about them:

BHP Group Ltd (ASX: BHP)

BHP, also known as the Big Australian, is one of the world’s biggest mining companies. It owns a collection of high quality assets across various commodities and regions. This includes the Escondida and Olympic Dam copper operations and the Western Australia Iron Ore and Samarco iron ore operations. Thanks to favourable prices and its low costs, BHP is currently generating significant free cash flow from its operations in 2020.

This bodes well for shareholders in FY 2021 according to analysts at Macquarie. The broker expects BHP to pay a ~$2.80 per share fully franked dividend this year. Based on the current BHP share price, this would mean a very generous 7.7% dividend yield.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is one of Australia’s leading conglomerates. It owns a wide range of popular businesses including Kmart, Target, Catch, Officeworks, and Bunnings. The latter is the company’s key business and contributes materially to its overall earnings. The good news is that the hardware giant has been in fine form this year and delivered sales growth of 25.2% for the first four months of FY 2021.

One broker that believes this has left the company well placed to grow its dividend in FY 2021 is Morgans. According to a note out of the broker, its analysts have pencilled in a 157 cents per share fully franked dividend this year. Based on the current Wesfarmers share price, this represents an attractive forward 3.2% dividend yield.

More reading

• What can you do when the ASX is down?
• ASX 200 Weekly Wrap: ASX continues to hit post-COVID highs
• Is the Wesfarmers (ASX:WES) share price a buy for dividends?
• These blue chip ASX dividend shares offer 5%+ yields
• Is the Wesfarmers (ASX:WES) share price a buy?

Motley Fool contributor James Mickleboro 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 S&P/ASX 200 Index (ASX: XJO) could be given a boost today from news that there is now a second potentially effective COVID-19 vaccine.

Overnight, biotechnology company Moderna released an update on its Phase 3 study of mRNA-1273.

What did Moderna announce?

According to the release, the National Institutes of Health-appointed Data Safety Monitoring Board (DSMB) for the Phase 3 study informed Moderna that the trial has met the statistical criteria pre-specified in the study protocol for efficacy, with a vaccine efficacy of 94.5%.

This study enrolled more than 30,000 participants in the U.S. and is being conducted in collaboration with the National Institute of Allergy and Infectious Diseases (NIAID).

The primary endpoint of the phase 3 study is based on the analysis of COVID-19 cases confirmed and adjudicated starting two weeks following the second dose of vaccine.

This first interim analysis was based on 95 cases, of which 90 cases of COVID-19 were observed in the placebo group versus 5 cases observed in the mRNA-1273 group. This resulted in a point estimate of vaccine efficacy of 94.5% (p <0.0001).

Pleasingly, the interim analysis did not report any significant safety concerns. A review of solicited adverse events indicated that the vaccine was generally well tolerated.

“A pivotal moment.”

Moderna’s Chief Executive Officer, Stéphane Bancel, commented: “This is a pivotal moment in the development of our COVID-19 vaccine candidate. Since early January, we have chased this virus with the intent to protect as many people around the world as possible. All along, we have known that each day matters.”

“This positive interim analysis from our Phase 3 study has given us the first clinical validation that our vaccine can prevent COVID-19 disease, including severe disease,” he added.

The company expects to have approximately 20 million doses of mRNA-1273 ready to ship in the U.S. by the end of the year. After which, it remains on track to manufacture 500 million to 1 billion doses globally in 2021.

Moderna’s vaccine candidate, like that of the Pfizer vaccine, is using mRNA technology. This is a new approach to vaccines that uses genetic material to provoke an immune response.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASIC to investigate if ASX is fit to hold market licence
• How the pandemic is making some investors super-rich
• ASX ends trading early, ASX 200 up 1.2%
• Update: Trading on ASX remains in ‘enquire’ state after market data error

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week in a strange manner. The benchmark index rose 1.2% to 6,484.3 points but was only open for 24 minutes after a system failure at the Australian stock exchange.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to edge lower.

The Australian share market looks set to edge lower this morning if it opens as planned. According to the latest SPI futures, the ASX 200 is expected to fall 3 points this morning. In late trade on Wall Street, the Dow Jones is up 1.15%, the S&P 500 has risen 0.75%, and the Nasdaq is up 0.5%.

Moderna COVID-19 vaccine 94.5% effective.

And then there were two. Overnight Moderna revealed that preliminary phase three trial data shows that its COVID-19 vaccine is 94.5% effective in preventing COVID-19. This follows an update by Pfizer last week which revealed that its vaccine was more than 90% effective again COVID-19. Moderna’s vaccine candidate, like that of the Pfizer vaccine, is using mRNA technology. This is a new approach to vaccines that uses genetic material to provoke an immune response.

Oil prices charge higher.

It could be a good day for energy shares such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) after oil prices charged higher. According to Bloomberg, the WTI crude oil price is up 2.9% to US$41.34 a barrel and the Brent crude oil price is up 2.5% to US$43.86 a barrel. These gains were driven by the COVID-19 vaccine news.

Afterpay annual general meeting.

The Afterpay Ltd (ASX: APT) share price could be on the move today when it holds its annual general meeting. Last month the payments company released a business update which revealed first quarter underlying sales growth of 115% to $4.1 billion. If Afterpay releases another trading update, investors will no doubt be keen to see if this sales growth has been maintained.

Gold price flat.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch today after the gold price traded flat. According to CNBC, the spot gold price is fetching US$1,886.20 an ounce. The precious metal gave back its earlier gains after the COVID-19 vaccine news sunk in.

More reading

• ASIC to investigate if ASX is fit to hold market licence
• These ASX shares have been unstoppable in FY 2021
• How the pandemic is making some investors super-rich
• ASX ends trading early, ASX 200 up 1.2%
• This cheap ASX share is supplying US giants: fundie

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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ASX Ltd (ASX: ASX)’s nightmare Monday could spill over into Tuesday as the corporate watchdog announced it would examine whether the company met its licence obligations.

The trading day was cancelled on Monday after the ASX could not recover from technology issues understood to have arisen from a systems upgrade.

Late in the afternoon, the Australian Investments and Securities Commission announced that such outages are of “significant concern”.

“The ASX is one of the world’s most active and visible public markets and forms a critical part of Australia’s national economic infrastructure,” stated ASIC.

“Well-functioning financial market infrastructure is critical to the integrity and reputation of the Australian equity market and the trust and confidence investors have in it.”

As such, the commission on Tuesday would investigate whether ASX had met its Australian Market Licence requirements. 

“Market licensees are required to operate a market that, to the extent reasonably practicable, is fair, orderly and transparent, and to have sufficient resources (financial, technological and human) to operate the market, including for any outsourced services,” ASIC announced.

ASIC will also examine ASX’s regulatory compliance under the Corporations Act.

Sorry, but upgrades will continue

The watchdog stated it is in regular contact with the ASX, and is focused on a reopening of markets on Tuesday morning in “an orderly manner”.

“In addition to ASIC’s expectations that this outage will be resolved as soon as is possible in a safe manner, ASX will be required to provide a full incident report to ASIC.”

ASX Ltd apologised to the market for the outage while announcing it would reopen at the normal 10am AEDT time on Tuesday.

The company and its technology supplier Nasdaq have found the root cause and a resolution.

“Notwithstanding the extensive testing and rehearsals, and the involvement of our technology provider, ASX accepts responsibility,” said ASX Ltd chief executive Dominic Stevens.

“The obligation to get this right and provide a reliable and resilient trading system for the market rests with us.”

Stevens said the company would nevertheless continue on with its tech upgrades.

“We are determined to continue our program of contemporising ASX’s technology stack from top to bottom. This initiative is critical to ASX building an exchange for the future.”

More reading

• How the pandemic is making some investors super-rich
• ASX ends trading early, ASX 200 up 1.2%
• Update: Trading on ASX remains in ‘enquire’ state after market data error
• ASX 200 up 1.2%: Afterpay ASIC response, Elders result, CSL vaccine facility
• Afterpay (ASX:APT) share price underperforming after ASIC finds more BNPL customers falling behind

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. 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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