Author: therawinformant

Yesterday, overnight Aussie time, all the major US and European share indexes closed well into the green. So what does this mean for ASX shares?

The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) gained 0.54%, closing at another new record high.

That will be good news for investors in Betashares NASDAQ 100 ETF (ASX: NDQ).

The ASX-listed exchange traded fund (ETF) comprises the 100 largest, non-financial businesses on the Nasdaq. Its top holdings include all the FAANG stocks and a host of other household names.

Year-to-date, the share price is up 20.3%. Yesterday the ETF closed at $25.61 per share. That’s 1.4% below its own record high of $26.01 per share set on 21 July. At time of writing it’s down 0.3%.

Betashares NASDAQ 100 ETF long ago caught the attention of The Motley Fool’s own Scott Phillips. On 22 June 2017, he recommended the stock to members of his Share Advisor service. Since then the share price is up 92.4%. By comparison, the wider Nasdaq index is up 75.5%, demonstrating the outperformance of the technology sector’s biggest players.

And in case you’re wondering, Scott remains bullish on this ETF, believing most of the big technology stocks it holds have further growth ahead.

ASX share market shoots higher in morning trade

At time of writing, the ASX share market is following the global share market rally. In mid-morning trading, the S&P/ASX 200 Index (ASX: XJO), comprising Australia’s largest 200 listed companies by market cap, was up 0.7% before dropping to 0.4% at midday.

And Australia’s own technology shares are helping fuel the gains. While the COVID-19 shutdowns have negatively impacted numerous stocks, many tech-focused companies have actually benefitted from the shift to working, shopping and socialising from home.

A recently launched ETF, the Betashares S&P/ASX Australian Technology ETF (ASX: ATEC), aims to help investors capitalise on this trend. The ETF is up 23% since first trading on the ASX on 4 March and up 87% since its 23 March low. 

Why it’s still a good time to buy ASX shares

If, like many investors, you’ve been sitting on the sidelines watching the markets rocket since their mid-March lows, I don’t believe you should let the recent gains scare you from picking up some of your favourite shares.

Candice Bangsund, portfolio manager of global asset allocation at Fiera Capital Corp, sheds some light on why not. As quoted by Bloomberg, Bangsund commented:

Stock markets in general have been underpinned by expectations for further stimulus out of the US. The second-quarter earnings season has also lent some notable support and helped to counteract some of the fears about the latest resurgence in Covid cases.

US lawmakers are still debating the exact size and nature of the next stimulus package, which is expected to pump an additional US$1 trillion to US$3 trillion into the economy. They often go down to the wire with these debates. But it’s highly unlikely they won’t deliver a new big wave of stimulus. And they’re getting pressure from some powerful players.

Like Federal Reserve Bank of Cleveland president Loretta Mester, who sits on the federal open market committee, which makes the decisions on US interest rates and growth of the money supply.

As Bloomberg reports, Mester says it’s clear that “more fiscal support is needed to provide a bridge for households, small businesses, and state and local municipalities that have borne the brunt of the economic shutdown until the recovery is sustainably in place.”

Fiscal support, if you’re wondering, involves government spending and taxation. Monetary support is provided by central banks by setting interest rates and guiding the amount of money in their economies.

Meanwhile, back in Oz…

The Reserve Bank of Australia backs its words with actions

On Tuesday, Reserve Bank of Australia (RBA) Governor Philip Lowe said the bank would resume buying bonds to keep the yields on three-year bonds from rising above 0.25%. He noted that “further purchases will be undertaken as necessary.”

Yesterday, the RBA backed its words with action. The Australian Financial Review reports:

The Reserve Bank’s first foray into the bond market in more than three months had its desired effect as the central bank scooped up $500 million of three-year government bonds on Wednesday at a yield only slightly higher than its 0.25 per cent target.

That’s a half billion dollars, folks. Though it pales in comparison to the $3 billion to $5 billion per day of bonds the RBA was snapping up in the latter days of March. Yesterday’s purchase brings the RBA’s total holdings of government bonds to almost $52 billion.

With Lowe promising “further purchases … as necessary”, you can expect that figure to grow.

And with central banks and governments doing whatever it takes to keep their economies afloat, I expect some of the biggest beneficiaries should be ASX shares.

More reading

• Deepening partnership with Telstra fails to excite the Dubber share price
• Expert warns that record-breaking gold price is facing painful correction
• ASX 200 up 0.6%: ResMed & Scentre tumble, big four banks rise
• Overvalued or a strong buy? Nextdc and 1 more ASX growth share to watch
• Will the Domino’s share price continue to surge in August?

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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Earlier today the Rio Tinto Limited (ASX: RIO) share price traded ex-dividend for the mining giant’s fully franked interim dividend of 216.5 cents per share.

This dividend will now be paid to eligible shareholders on Thursday September 17 2020.

While many shareholders will use this as a source of income and others may use its dividend reinvestment plan, I suspect some will look to invest the funds back into the share market.

With that in mind, here’s where I would reinvest these funds:

a2 Milk Company Ltd (ASX: A2M)

If you’re interested in growth shares, then you might want to consider this infant formula and fresh milk company. I’m a big fan of the company due to its very positive long term outlook. This is thanks to the growing appetite for its infant formula in China. The good news is that despite its incredible sales growth in this lucrative market, it still only has a consumption market share of 6.6%. I believe this gives a2 Milk Company a long runway for growth, which should be supported by its expanding fresh milk footprint and potential acquisitions/new product launches.

Telstra Corporation Ltd (ASX: TLS)

If you’re looking for more dividends then I think Telstra would be a good option for these funds. The telco giant may have had a tough few years, but I believe its outlook is arguably the brightest it has been in a long time. This is due to the end of the NBN rollout being in sight, competition in the industry becoming more rational, and its major cost reductions. In addition to this, the arrival of 5G could be a big boost to its earnings in the coming years, especially given its leadership position. At present, I estimate that Telstra shares offer investors a fully franked 4.7% dividend yield.

More reading

• Overvalued or a strong buy? Nextdc and 1 more ASX growth share to watch
• ASX 200 drops 0.6%, Telstra sells data centre for $416.7 million
• 3 top ASX shares that could be quality buy and hold options
• The latest ASX stocks to be hit by broker downgrades today
• Why Cochlear, NAB, Tabcorp, & Telstra shares are tumbling lower

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of A2 Milk. 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 Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

AMP Limited (ASX: AMP)

According to a note out of the Macquarie equities desk, its analysts have downgraded this financial services company’s shares to an underperform rating and cut the price target on them to $1.40. The broker made the move after AMP’s first half results guidance fell short of expectations. Looking ahead, Macquarie has concerns about its future performance and suspects that material cost reductions (beyond those planned) will be required to maintain its operating earnings. The AMP share price is trading at $1.44 this afternoon.

Cochlear Limited (ASX: COH)

Analysts at UBS have retained their sell rating and $160.50 price target on this hearing solutions company’s shares. The broker is expecting Cochlear to deliver a sharp decline in full year profits later this month due to a combination of margin weakness and elective surgery delays because of the pandemic. And while it does expect implant sales to rebound once the pandemic passes, it isn’t enough for it to change its view at this point. The Cochlear share price is changing hands for $189.49 on Thursday.

Virgin Money UK PLC (ASX: VUK)

A note out of Morgans reveals that its analysts have downgraded this UK-based bank’s shares to a reduce rating with a lowered price target of $1.30. According to the note, the broker was underwhelmed by its third quarter update and notes that its net interest margin is under pressure. In light of this and the tough operating environment in the UK, it has downgraded its earnings forecasts for the medium term. The Virgin Money UK share price is currently fetching $1.64.

More reading

• 3 top ASX shares that could be quality buy and hold options
• Why Cochlear, NAB, Tabcorp, & Telstra shares are tumbling lower
• Leading brokers name 3 ASX shares to sell today
• Why you should buy ASX shares in this resilient market
• Why Alliance Aviation, Cochlear, Kogan, & Netwealth shares are storming higher

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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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Automotive retail group, AP Eagers Ltd’s (ASX: APE), share price rose 20.2% in July. And that came after falling 9.4% from the beginning of the month through to 10 July. The impressive rise in the AP Eagers share price was enough to place it in the top group of gainers on the All Ordinaries (INDEXASX: XAO).

By comparison, the All Ords gained 0.9% in July.

The AP Eagers share price was hit hard by the COVID-19 shutdowns, tumbling 72% from its 20 January peak to its 25 March trough. By the end of July, however, it had rebounded a remarkable 180% from that low to trade at $8.11 per share.

Even with that huge gain, though, the share price still ended July down 18.5% from the opening bell on 2 January.

With an additional 2.6% share price gain so far in August, the company currently has a market cap of $2.1 billion.

What does AP Eagers do?

AP Eagers Ltd is Australia’s oldest listed automotive retail group, operating new and used car, truck and bus dealerships across the country.

The company traces its origins all the way back to 1913. It officially listed on the ASX in 1957. Notably, in 2019, AP Eagers completed a transformative merger with the formerly ASX-listed Automotive Holdings Group.

Today, AP Eagers has a portfolio comprising over 200 new car dealerships across Australia and New Zealand. With this, the company operates dealerships for a range of automotive brands including 19 of the 20 top-selling car brands in Australia and 9 of the top 10 luxury car brands.

Additionally, AP Eagers has a number of truck and bus dealerships in Australia and owns more than $300 million of real estate in prime locations across the nation.

AP Eagers has paid a dividend to shareholders every year since listing in 1957.

Why did the AP Eagers share price soar in July?

The AP Eagers share price really took off on 20 July, gaining 28.3% from 20 July through to the end of the month. This surpasses the 20.2% share price gain achieved over the full month.

The company’s share price was most likely spurred by a broker note from Swiss multinational investment bank and financial services giant, UBS, after its analysts initiated coverage with a buy rating and $7.90 price target. At the time of writing, the AP Eagers share price is trading at $8.30.

More reading

• The ASX stocks hit by Victoria’s stage 4 forced shutdowns
• These were the best performing shares on the ASX 200 last week
• ASX 200 drops 0.2%, APRA boosts big 4 ASX banks
• Here’s why the AP Eagers share price has motored 11% higher today
• ASX 200 flat: Big four banks higher, St Barbara and IGO sinks on Q4 updates

Motley Fool contributor Bernd Struben 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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The PointsBet Holdings Ltd (ASX: PBH) share price is moving higher today following an announcement the company has secured online iGaming market access in New Jersey. At the time of writing, the PointsBet share price is up 0.34% up to $6.13. The share price rose to an intraday high of $6.31 before being sold off.

What is the new opportunity?

PointsBet announced that it has entered into a ‘primary skin’ agreement with Twin River Worldwide Holdings Inc (NYSE: TRWH). The details of the agreement are that PointsBet is to provide iGaming/online casino services in the State of New Jersey. However it is worth noting that the opportunity is contingent upon Twin River completing its acquisition and PointsBet obtaining the necessary regulatory licenses and approvals.

Some of the key features of the agreement include:

• The term of the agreement is 10 years. 
• PointsBet will pay Twin River a portion of the net gaming revenues derived from its New Jersey iGaming/online casino operations.
• The agreement involves PointsBet and Twin River partnering to launch iGaming/online casino via PointsBet’s mobile app and website platforms pending final regulatory licenses and approvals.

CEO of Twin River, George Papanier, spoke of his enthusiasm regarding “adding an exciting iGaming experience with such a prominent partner.” Papanier also proclaimed that he was “extremely excited to have the opportunity to participate in the best-in-class mobile gaming environment that New Jersey has created and that we believe will bring new and innovative offerings to the market.”

What now for the PointsBet share price?

The PointsBet share price has been on a solid run recently with the company releasing news of multiple deals from the United States trickling through. Just yesterday, the PointsBet share price rose on news the company had partnered with the Indiana Pacers team.

The development of PointsBet’s proprietary iGaming platform is also progressing well. The company is currently in advanced discussions with various market leading iGaming product/game providers for its use. PointsBet will launch iGaming in Michigan first, with the launch in New Jersey expected to follow in the first half of FY2021. Shareholders will be hoping that these launches continue driving up the company’s share price. The PointsBet share price is up 419% since its lows in March this year.

However it is worth noting that PoinstBet is one of the most shorted shares on the ASX, with many brokers believing it has overshot on the upside. This may be a result of the company’s Q4 earnings that disappointed the market and saw the PointsBet share price tumble.

More reading

• Why Mesoblast, Northern Star, PointsBet, & Splitit shares are racing higher
• PointsBet share price jumps 4% on new US deal
• Short-sellers are targeting these ASX stocks ahead of the reporting season
• Why Bubs, PointsBet, Perpetual, & Waypoint shares are dropping lower
• PointsBet share price tumbles lower on Q4 update

Motley Fool contributor Daniel Ewing owns shares in Pointsbet (ASX:PBH). 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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ASX gold stocks continue their golden run as the precious metal holds around record highs and looks poised to push even higher.

But the analysts at Macquarie Group Ltd (ASX:MQG) is warning that gold is running ahead of fundamentals, and the higher it runs, the harder it will fall.

This could see the strong price gains made by S&P/ASX 200 Index (Index:^AXJO) gold miners come undone.

The Evolution Mining Ltd (ASX: EVN) share price surged 61% since the start of the year, while the St Barbara Ltd (ASX: SBM) share price and Newcrest Mining Limited (ASX: NCM) share price have jumped 33% and 22%, respectively.

It’s deflation, not inflation lifting gold

“Gold has finally pushed through the $2k psychological target, at a high of [US]$2,030/oz at time of writing,” said Macquarie.

“The move continues to benefit from USD weakness and the ongoing slide in US real rates through -1%.”

I noted some media commentary about how low inflation is a negative for the gold price. But I believe this misses the point. Gold isn’t running to record highs due to expectations of runaway inflation.

If anything, no one is expecting much inflation over the next few years, and this was evident even before the COVID-19 pandemic.

Gold bulls are drawing their latest breath from expectations of deflation or dis-inflation, as highlighted by Macquarie’s comment on “real rates”.

Gold overshot on the upside?

Don’t get me wrong, history shows how effective gold is as an inflation hedge. But the 3,000-year-old store of value is also a relatively good way to protect against falling real asset prices.

“Even with these supportive factors, however, gold continues to look rich on a cross-asset basis, trading [US]$150-$200 above our ‘fair value’ estimates,” explained Macquarie.

“We believe this is the overshoot move that we have been looking for and, while momentum could carry prices further, it raises the risk of a sharp correction.”

Is it time to sell ASX gold miners?

I don’t share this bearish view, but I do believe what goes up will come down when it comes to commodity prices. And the faster something rises, the harder it is likely to fall when the day of reckoning comes. I just don’t think this will happen in the next year or two.

But if you want a foot in both camps, Macquarie suggested investors dump the large cap gold producers and buy their smaller counterparts.

Some of the gold miners that the broker has an “outperform” (or buy) rating on include the Resolute Mining Limited (ASX: RSG) share price, Silver Lake Resources Limited. (ASX: SLR) share price and OceanaGold Corp (ASX: OGC) share price.

More reading

• ASX 200 up 0.6%: ResMed & Scentre tumble, big four banks rise
• Overvalued or a strong buy? Nextdc and 1 more ASX growth share to watch
• Will the Domino’s share price continue to surge in August?
• Why this leading fundie likes the Newcrest share price
• Nick Scali share price bolstered by strong outlook and dividend upgrade

Motley Fool contributor Brendon Lau owns shares of Evolution Mining Limited and Newcrest Mining Limited. 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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At lunch on Thursday the S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and pushed higher. At the time of writing the benchmark index is up 0.6% to 6,038.9 points.

Here’s what is happening on the market today:

ResMed lower following results release.

The ResMed Inc. (ASX: RMD) share price has dropped lower today despite delivering a stronger than expected sales result during the fourth quarter. The medical device company posted a 10% increase in revenue to US$770.3 million thanks to strong ventilator demand. This compares to the consensus estimate of US$752 million. Investors may be concerned by weaker than expected mask sales.

Scentre half year update.

The Scentre Group (ASX: SCG) share price is in the red today after it provided the market with its expectations for the first half. The shopping centre operator revealed that it expects to report a 10% decline in the carrying value of its property portfolio. This is due to the estimated impact of the pandemic. In addition to this, Scentre advised that it expects to report net operating cashflow in excess of $250 million for the half. This compares to net cash flows from operating activities of $619 million a year earlier.

Big four banks rise.

It has been a volatile week for the big four banks, but on Thursday they are heading in the right direction again. All four banks are pushing higher at lunch and are helping underpin the ASX 200’s gains. The best performer in the group has been the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price with a gain of 1%.

Best and worst performers.

The best performer on the ASX 200 on Thursday has been the Harvey Norman Holdings Limited (ASX: HVN) share price with a 6.5% gain. This may be in response to a very positive update from furniture retailer Nick Scali Limited (ASX: NCK) this morning. The worst performer has been the ResMed share price with a decline of 5%. This follows the release of its aforementioned full year results.

More reading

• Expert warns that record-breaking gold price is facing painful correction
• Why Advance NanoTek, ELMO Software, ResMed, & Scentre shares are dropping lower
• Scentre share price falls 3% following results update
• Why BHP, Corporate Travel, Harvey Norman, & Nick Scali shares are pushing higher
• Overvalued or a strong buy? Nextdc and 1 more ASX growth share to watch

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. and Scentre Group. 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) is on course to bounce back with a solid gain on Thursday. In late morning trade the benchmark index is up 0.75% to 6,045.5 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Advance NanoTek Ltd (ASX: ANO) share price is down 9% to $3.43. This follows the release of the advanced materials company’s full year results. Although Advance NanoTek reported a 121% increase in profit before tax to $7.46 million, it fell short of the guidance of $8.4 million it gave on 11 May. In addition to this, the company warned that its first half performance will be weak. This is due to distributors selling down inventory before reordering.

The ELMO Software Ltd (ASX: ELO) share price has fallen 7% to $6.49. This is despite the cloud-based HR, payroll, and rostering software provider delivering a strong full year result this morning. ELMO reported annualised recurring revenue (ARR) of $55.1 million and statutory revenue of $50.1 million for FY 2020. This represents a 19.7% and 25% increase, respectively, over the prior corresponding period. Strong customer growth played a key role in this solid top line result. Next year management expects its ARR to be in the range of $65 million to $70 million, which represents year on year growth of 18% to 27%.

The ResMed Inc. (ASX: RMD) share price is down 5% to $26.55. The catalyst for this was the release of its fourth quarter and full year update. Although the sleep treatment-focused medical device company delivered a very strong year of sales and profit growth, investors appear concerned by softer than expected mask sales during the pandemic. Management’s guidance for FY 2021 was cautious but optimistic.

The Scentre Group (ASX: SCG) share price has dropped over 2% to $1.92. This follows the release of an update on its expectations for the first half. The shopping centre operator advised that it plans to report a 10% decline in the carrying value of its property portfolio because of the pandemic. Scentre also expects to report net operating cashflow in excess of $250 million for the half. This compares to net cash flows from operating activities of $619 million during the first half of FY 2019.

More reading

• Scentre share price falls 3% following results update
• ResMed share price lower despite delivering strong growth in FY 2020
• Is the National Storage share price a buy in August?
• ELMO Software share price on watch after delivering more strong growth in FY 2020
• 5 things to watch on the ASX 200 on Thursday

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 and recommends Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Advance NanoTek Limited. The Motley Fool Australia has recommended Elmo Software, ResMed Inc., and Scentre Group. 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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