Flexigroup Limited (ASX: FXL) recently united its Flexigroup and flagship consumer brand under the name ‘Humm’. Humm is a buy now, pay later (BNPL) and interest free finance provider, currently operating in Australia, New Zealand and Ireland. Could its rebranding and recent capital capital raising make it an opportunity for those that missed out on the Afterpay Ltd (ASX: APT) share price run?

Did something happen to Flexigroup? 

Flexigroup has changed its business model and proposition to provide ‘interest free buying power for everything, everywhere and for everybody’. It’s been one year since the company launched its Humm brand. Humm has evolved into a leader in the BNPL space involving transactions over $1,000 and is achieving strong and profitable customer growth. Humm is ranked as the third largest BNPL player in Australia with 17.5% market share, 2.1 million customers, 56,700 retail partners and $2.1 billion in transaction volume in FY20. 

Flexigroup commented that since transforming its Ireland business from leasing to BNPL, its customer base doubled in FY20. It also delivered strong, double-digit growth across volumes and retail customers. With many of Flexigroup’s retail partners in Ireland also operating in the United Kingdom, this provides a strong optionality for further expansion. 

Capital raising 

On 26 August, in conjunction with the company’s FY20 results, Flexigroup announced a $140 million capital raising to ramp up its strategy under Humm. The net proceeds of the capital raising will be used to provide balance sheet strength to underpin funding of a sustainable growth outlook. The additional capital will further enable investment in enhancements to the customer experience and expansion of business partnerships and alliances. The capital raising had an entitlement offer price of $1.14 which is near the current Flexigroup share price.

Could this be an opportunity for those that missed the Afterpay share price run?

The Afterpay share price has shown a significant amount of strength in recent weeks, cruising past the $80 mark on Tuesday. Investors might be looking to Flexigroup as a cheaper BNPL alternative to make up for a missed opportunity in Afterpay. 

While Flexigroup has truly committed to being a BNPL player, I believe its shares are cheap for a reason. The Flexigroup share price has underperformed all its peers in the BNPL space and may not necessarily deliver the explosive growth we’ve sees from the likes of Afterpay and Zip Co Ltd (ASX: Z1P). While it does appear to be relatively cheaper than its peers, personally I would prefer to invest in the market leading BNPL shares.

More reading

• Why the Afterpay (ASX:APT) share price is charging higher today
• A2 Milk and Mesoblast were among the most traded shares on the ASX last week
• Why this ASX tech share could be better than BNPL stocks 
• Could the Zip share price be ready to have a crack at $10 again? 
• Why now is a great time to buy ASX shares

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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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Is the Commonwealth Bank of Australia (ASX: CBA) share price a buy right now?

The CBA share price has fallen around 11% since 11 August 2020, which is a fairly sizeable decline because that’s wiped out a lot of the gains made since May.

But lower prices could be a buy signal for investors because ultimately buying at a cheaper price should help future returns. 

The FY20 result was quite solid in my opinion, compared to other major ASX banks. Statutory net profit was up 12.4% because of gains on sales of divestments. Cash net profit after tax (NPAT) only dropped 11.3% to $7.3 billion.

However, COVID-19 had a sizeable effect on its loan impairment expense. It reported a $2.52 billion loan impairment expense, with a $1.5 billion COVID-19 provision. The net interest margin (NIM) fell by 2 basis points to 2.07%.

Loan payment holidays

One of the biggest worries for banks at the moment is that a large number of borrowers still aren’t making repayments due to the coronavirus-caused crisis. If these loans don’t start repaying to the banks in the next few months then the CBA share price could suffer more.

Last week CBA revealed some details about its loan book.

The total number of loan deferrals in August 2020 was 174,000, down from 182,000 in July and down from 210,000 in June. In terms of the dollar amount this represents, it was $59 billion in August, $62 billion in July and $67 billion in June.

In terms of home loans, the balance (in dollar terms) of loans that are still being deferred was 9.8% in August, 10.1% in July and 10.8% in June.

The number of loans where the deferral expired or was exited was $5.7 billion in August. However, there were $2.3 billion of new approved or extended loan deferrals in August, with $1.7 billion of those an extension of an existing deferrals.

Whilst the picture is certainly not perfect for CBA, it seems to be improving every month which is obviously a good thing.

The CBA share price may improve as its loan book returns closer to normal.

The dividend

CBA paid a full year FY20 dividend of $2.98 per share, which was a 31% reduction compared to FY19. That was about as much as the bank could pay considering APRA’s direction to maintain strong balance sheets during this period. 

The interim FY21 dividend may also be reduced. But in my opinion CBA is probably the most reliable big four ASX bank for dividends because the profit remains more resilient thanks to its quality.

At the current CBA share price it offers a FY20 grossed-up dividend yield of 6.4%. But the FY21 grossed-up dividend yield could be about 5%.

Other options

The CBA share price may not do too much over the next few years with rising bad debts and a low NIM. There would need to be strong credit growth to make up for those negatives. I don’t think that CBA is a buy today. The dividend may not get back to FY19 levels for a long time.

There are other ASX shares with better dividend prospects in my opinion. For starters, Macquarie Group Ltd (ASX: MQG) could be the best ASX bank for dividends in my opinion with better potential growth. But Macquarie is not my top dividend pick.

I think ideas like WAM Microcap Limited (ASX: WMI), WAM Leaders Ltd (ASX: WLE), Vitalharvest Freehold Trust (ASX: VTH) and Pacific Current Group Ltd (ASX: PAC) could be picks for higher dividend income over the next few years compared to CBA.

In terms of the most reliable dividend options, I believe ASX shares like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), Rural Funds Group (ASX: RFF) and APA Group (ASX: APA) can continue to provide growing dividends over the coming years.

More reading

• Why this Federal Budget is good for many ASX shares
• Here’s where you could invest your Woolworths (ASX:WOW) dividends today
• Which ASX banking share is the cheapest today?
• ASX 200 jumps 2.6%, big 4 banks surge
• Top broker tipping turnaround in ASX big bank profit margins

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Macquarie Group Limited, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA 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 CSL Limited (ASX: CSL) share price has done well in 2020 and the Federal Budget could have more good news in store.

While the S&P/ASX 200 Index (ASX: XJO) has slumped 10.9% this year, the CSL share price has climbed 4.4% higher.

I think the Federal Budget contained good news for vaccines and those organisations involved with the push towards coronavirus treatments. This to me says the CSL share price could be on the move in the coming months.

What the Federal Budget means for the CSL share price

There were a lot of areas covered by Treasurer Josh Frydenberg in last night’s Federal Budget. One of those surrounded potential COVID-19 vaccine candidates such as that being developed by the University of Queensland 

CSL is partnering with the Aussie university as it researches a potential vaccination candidate. That’s already seen the Aussie biotech ink a deal with the government to supply 84.8 million doses of any COVID-19 vaccine.

However, Treasurer Frydenberg has earmarked billions of dollars for spending on COVID-19 vaccines, both here and abroad. $1.7 billion is already being spent in agreements for the University of Oxford and the University of Queensland vaccines.

There’s also more money going towards the CSIRO and the Medical Research Future Fund for more COVID-19 research.

I see more focus on healthcare and vaccine development as good news for the CSL share price. The more government support and goodwill towards the sector that exists, the better the operating environment for CSL.

Depending on the successful vaccine candidate(s), we could also see further deals signed with CSL depending on global and domestic demand.

Foolish takeaway

The CSL share price has already outperformed in 2020 but I think it has further to run. I think COVID-19 will continue to dominate share market movements in the next 6-12 months.

That means major partners like CSL may continue to hold their gains despite volatility in the market.

More reading

• Why this Federal Budget is good for many ASX shares
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 rises on mixed day, big gold merger
• Why the Coles Group (ASX:COL) share price just got upgraded to “buy”
• Why I would buy CSL (ASX:CSL) and this blue chip ASX share

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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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Every so often I like to take a look to see how investments in initial public offerings (IPOs) would have fared.

On this occasion, I’m going to take a look at electronic design software company Altium Limited (ASX: ALU).

When did Altium launch its IPO?

You might be surprised to learn that Altium isn’t a new listing and has actually been trading on the Australian share market for over two decades.

In fact, Altium wasn’t even known as Altium when it first landed on the ASX boards. In August 1999, it listed on the share market as Protel Systems, raising $30 million at $2.00 per share.

By many measures, the Altium/Protel IPO was a huge flop and a series of failures led to the Altium share price falling very heavily over the first couple of years.

So much so, the Altium share price at one stage dropped as low as 9 cents in 2011. That represents a 95.5% decline from its IPO price.

But anyone that stuck with the company through its hard times certainly has been rewarded today.

Thanks to a series of successful acquisitions that have transformed the company into the leading player in the industry, the Altium share price is now fetching $35.40.

This means that if you had invested $10,000 into the Altium IPO in 1999, you would have received 5,000 shares. These shares would now have a market value of $177,000.

In addition to this, in FY 2021 the company is forecast to pay shareholders dividends of 40 cents per share. Which means that those 5,000 shares would generate dividends of $2,000. This represents a yield on cost of 20%.

But perhaps the best thing is the company’s outlook. Due to the Internet of Things and artificial intelligence markets driving strong demand for its services, I believe Altium is well-positioned to generate very strong returns for investors over the next 20 years.

Combined with the power of compounding, I suspect these 5,000 shares will be worth significantly more than $177,000 in 2030 and 2040.

Foolish Takeaway.

The Altium IPO has proven to be a very successful one, but it did go through a number of ups and (mostly) downs before getting there.

I believe this demonstrates both the risks and rewards of investing in IPOs. Things have worked out for Altium and its shareholders, but it could have been a very different story if it were not for its game-changing acquisitions.

In light of this, I think investors looking to invest in IPOs should consider companies which are already positioned for long term growth and won’t require acquisitions to get them there.

More reading

• 2 exciting ASX tech shares to buy and hold for a decade
• Altium (ASX:ALU) updates market on restructure
• ASX 200 jumps 2.6%, big 4 banks surge
• 2 outstanding ASX tech shares to buy for the long term
• 3 ASX shares I’d buy if the share market crashes again

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 Altium. 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 $10,000 invested in the Altium (ASX:ALU) IPO is worth how much now? appeared first on Motley Fool Australia.

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ASX gold shares were on fire on Tuesday as Saracen Mineral Holdings Limited (ASX: SAR) and Northern Star Resources Ltd (ASX: NST) announced a new mega merger. That’s good news for shareholders in those companies, but what does it mean for the Newcrest Mining Limited (ASX: NCM) share price?

What was announced on Tuesday?

Northern Star and Saracen are set to combine forces under a $16 billion merger of equals. The merger would form a top 10 global gold company with target production of 2 million ounces of gold per year.

This is the latest step in the companies’ relationship after both become 50% joint venture partners in the Kalgoorlie Super Pit Mine.

Northern Star will acquire 100% of Saracen shares for 0.3763 Northern Star shares for each Saracen share to form the new company.

Both companies’ boards have supported the move as a way to unlock more value and give Saracen broader international reach.

What does this mean for the Newcrest share price?

The Newcrest share price closed 0.2% lower following Tuesday’s news. Clearly, a bigger, badder ASX gold company isn’t good news for Newcrest’s position as top dog.

However, I don’t think there is too much to fear from the planned merger. Newcrest is still Australia’s largest gold producer and will continue to be after the merger.

However, there are a couple of issues that might weigh on the Newcrest share price. One is potentially higher supply which may impact on gold prices.

I’m not sure that’s too much of a problem given the company’s target 2 million ounces per year production level. There’s also a potential threat to Newcrest’s status as the leading Aussie gold producer around the globe.

I think that’s what is weighing on investors’ minds as the Newcrest share price closed slightly lower on Tuesday. 

Foolish takeaway

It’s still too early to determine what the impact of the merger will be on the Newcrest share price as well as its market share and profits.

I don’t think it’s particularly good news but it may not be too much of an issue given Newcrest’s scale and dominance.

More reading

• ASX 200 rises on mixed day, big gold merger
• ASX 200 down 0.2%: Northern Star & Saracen announce mega merger, IAG settles class action
• Why Baby Bunting, Northern Star, Oil Search, & Telix shares are storming higher
• Northern Star (ASX:NST) and Saracen (ASX:SAR) announce mega merger
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Ken Hall 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.

The post Will the Newcrest (ASX:NCM) share price fall after the Saracen merger? appeared first on Motley Fool Australia.

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Investors in ASX shares have a lot to like about last night’s Federal Budget. Tax cuts and monetary incentives look set to boost profits and encourage business activity in 2021.

Why the Federal Budget is good for ASX shares

There were some clear winners from last night’s budget announcement by Treasurer Josh Frydenberg.

These include construction leaders like Mirvac Group (ASX: MGR) with further infrastructure spending. There were also coronavirus-related companies like CSL Limited (ASX: CSL) that could receive a boost alongside innovation companies in the fintech space.

But there are also the generic tax cuts that will sweep across most of corporate Australia. For one thing, the government wants to spark more capital expenditure by allowing full expensing of ‘eligible capital assets’. 

That could trigger a spending spree that boosts ASX shares higher. More long-term investment is good for growth provided the assets deliver future benefits.

There’s also the microeconomic impacts we could see flow through to earnings. These include a big boost for consumer discretionary shares with $17.8 billion in personal income tax cuts.

The government is hoping more handouts and bigger tax cuts will stimulate greater spending. That could see ASX retail shares like JB Hi-Fi Limited (ASX: JBH) and Super Retail Group Ltd (ASX: SUL) continue to book strong sales.

Looking even further upstream, we arrive at the ASX bank shares. I think investors in the Aussie banks would have to be happy with this budget and we could see shares like Commonwealth Bank of Australia (ASX: CBA) climb higher.

A stronger economy and lower unemployment, also boosted by incentives in the latest budget, are good for banks. These mean lower default rates and better loan quality which is good for investors.

Foolish takeaway

Overall, I feel this was a very ‘business-friendly’ Federal Budget given the sweeping tax cuts and government spending across the economy.

For investors worried about buying into ASX shares right now, I think this sends a strong signal that corporate Australia could bounce back strongly in coming years.

More reading

• Why the JB Hi-Fi (ASX:JBH) share price could soar into Christmas
• Why the Coles Group (ASX:COL) share price just got upgraded to “buy”
• Why I would buy CSL (ASX:CSL) and this blue chip ASX share
• Here’s where you could invest your Woolworths (ASX:WOW) dividends today
• Which ASX banking share is the cheapest today?

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Super Retail Group 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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Vanguard US Total Market Shares Index ETF (ASX: VTS) is a popular investment option for many Aussies. Is it one of the best exchange-traded funds (ETFs)?

A quick overview of Vanguard US Total Market Shares Index ETF

This ETF is provided by Vanguard, one of the world’s best operators. Vanguard is owned by its investors, it shares its profit by lowering management fees further if it can. It is one of the cheapest ETF providers in the world.

Vanguard US Total Market Shares Index ETF aims to give investors exposure to the American share market. The US is where many of the world’s best businesses are based, so this ETF gives access to many of those top names like Apple, Microsoft, Amazon, Alphabet, Facebook, Berkshire Hathaway, Visa and Mastercard.

Whilst the biggest businesses get the largest allocation in the ETF, it actually has around 3,500 investment positions – making it very diverse in terms of the number of holdings.

Vanguard US Total Market Shares Index ETF has an annual management fee of 0.03%, which is one of the cheapest available to Aussies. Extremely low fees are great because it leaves nearly all of the returns in the hands of the investor.

Positives

The biggest positive has been the returns, which is ultimately what investing is all about. Over the past three years its net returns have been an average of 16.6% per annum. Over the past decade it has returned 17.1% per annum.

That level of return shows how good the underlying businesses in its portfolio are. The strength of those large tech shares has been undeniable. They seem unstoppable looking into the foreseeable future, unless there is some sort of government or regulation interference.

People may think of this ETF as a US one, but you have to remember that many of the larger businesses generate earnings from across the world. This is largely a global portfolio when you look at the underlying earnings of the holdings.

Vanguard US Total Market Shares Index ETF has an extremely low fee. Whilst 0.20% of fees or even 1% may not seem like much in one year, it can make a big difference over several years when compounding takes effect.

Many of the world’s most promising businesses choose to list in the US, so this ETF will likely always have good growth potential.

Negatives

There aren’t many negatives with this ETF. But there are a few if you try to find them.

Vanguard US Total Market Shares Index ETF’s dividend yield is pretty low at just 1.6%. Several of the ETF’s largest holdings like Amazon, Alphabet, Facebook, Berkshire Hathaway and Tesla don’t pay a dividend. The valuation of the ETF has risen strongly too, pushing down the potential yield. But more growth is a good alternative. 

Indeed, that valuation for Vanguard US Total Market Shares Index ETF now stands with a price/earnings ratio of 27.5x. That’s pretty hefty when you compare that to the ASX, European shares or even Asia.

The ETF offers plenty of diversification, but by being a US ETF you miss out on plenty of quality global shares like AMSL, LVMH, Tencent, Alibaba and so on. But global ETFs cost a bit more in fees, so it’s a balance of finding the right mix.

There is also the consideration of currency risks. It can add a risk to your investing when you invest in businesses that earns in different dollars and are traded in different currencies. It’s better to buy overseas shares when the Australian dollar is high. The Australian dollar is quite when when compared to the US dollar over the last couple of years. But when the Australian dollar falls it becomes more expensive to buy American shares.

I also think that the US election may cause uncertainty over the next few months, so if you’re thinking about investing, it may help to wait a few weeks first.

Foolish takeaway

Vanguard US Total Market Shares Index ETF is one of the best ETFs around in my opinion. It generates good returns with very low costs. It gives exposure to some of the best businesses in the world. However, as someone who is willing to invest any type of investment on the ASX, I’m not jumping today because the US share market has run hard, looks a bit expensive and the election could be bumpy. But if you just invest in ETFs, I think this is one of the best ones to regularly invest in. 

More reading

• Here are the 10 most popular ETFs on the ASX
• Want to invest in US shares? This ETF is a top option
• 2 ultra-cheap ASX ETFs any investor can add to a share portfolio
• The 3 best ETFs for passive investing

Motley Fool contributor Tristan Harrison 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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If you’re looking to boost your income with some ASX dividend shares, then I think the ones listed below would be worth considering.

I believe both companies are in a good position to pay more generous dividends in FY 2021 and beyond. Here’s why I would buy them:

Aventus Group (ASX: AVN)

The first ASX dividend share to look at is retail property company Aventus. It has been a remarkably positive performer during the pandemic when many of its peers have struggled. This has been thanks to its focus on large format retail parks and the high weighting of its tenancies towards everyday needs. Aventus counts the likes of ALDI, Bunnings, Officeworks, and The Good Guys as tenants.

Given how these companies have continued to thrive during the pandemic, its rental collections were solid in FY 2020 and look likely to be equally strong this year. In light of this and based on the current Aventus share price, I estimate that it provides investors with an FY 2021 dividend yield of ~5.5%.

Fortescue Metals Group Limited (ASX: FMG)

Another ASX dividend share to consider buying is Fortescue. I think the iron ore producer would be a great option due to the high prices that the steel making ingredient is commanding this year. And thanks to an improving outlook for steel production in China, these lofty iron ore prices look likely to stay in or around current levels for longer.

Combined with its low cost operations, this should put Fortescue in a position to deliver high levels of free cash flow again in FY 2021. Pleasingly, given the strength of its balance sheet, I expect the majority of this free cash flow to be returned to shareholders. Which, based on the current Fortescue share price, I estimate will lead to a fully franked dividend yield of at least 6% this year.

More reading

• My 3 favourite ASX dividend shares to buy this year
• Top brokers name 3 ASX shares to buy next week
• Why Beach, Fortescue, Mesoblast, & SeaLink shares are tumbling lower
• How to generate $50k a year from ASX dividends
• Top ASX Stock Picks for October 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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 Australian share market has been a very positive performer this week and is charging notably higher week to date.

And while the All Ordinaries Index (ASX: XAO) is still down materially from its pre-pandemic high, that hasn’t stopped some ASX shares from charging to new highs.

Three ASX shares which have just hit record highs are listed below. Here’s why they are soaring:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price jumped to a new record high of $4.96 on Tuesday. Investors were buying the baby products retailer’s shares after the release of a trading update ahead of its annual general meeting. That update revealed that Baby Bunting’s positive form has continued in FY 2021, with comparable store sales growth (to 2 October) of 17%. Excluding stores in the Melbourne metropolitan region, the company’s comparable store sales would have been up 28.5%. Management also revealed very strong online sales and click & collect growth.

Objective Corporation Limited (ASX: OCL)

The Objective Corp share price reached a record high of $13.20 yesterday. This latest gain means that the content, collaboration, and process management software solutions company’s shares have now more than doubled in value in 2020. The catalyst for this was its strong performance in FY 2020, which led to Objective Corp delivering a 22% lift in net profit after tax to $11 million. Also getting investors excited was management’s guidance for the year ahead. It expects “a material lift in revenue and profitability” in FY 2021.

Piedmont Lithium Ltd (ASX: PLL)

The Piedmont Lithium share price surged to a new high of 48 cents on Tuesday. Investors have been buying this U.S. based lithium miner’s shares after the release of a major announcement at the end of September. That announcement revealed that Piedmont Lithium has signed a binding sales agreement with electric vehicles giant Tesla. The two parties have signed an initial five-year term for the supply of spodumene concentrate (SC6) from Piedmont Lithium’s North Carolina deposit. The deal also includes the option for a further five-year extension by mutual agreement.

More reading

• Why Baby Bunting, Northern Star, Oil Search, & Telix shares are storming higher
• Meet the latest ASX small cap stock that’s racing ahead during COVID
• Baby Bunting (ASX:BBN) share price on watch after very strong Q1 sales growth
• Could these US-based ASX lithium shares land a deal with Tesla (NASDAQ:TSLA)? 
• Forget day trading and buy and hold these fantastic ASX shares

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 Objective 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.

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On Tuesday the S&P/ASX 200 Index (ASX: XJO) fought back from a morning decline to continue its positive run. The benchmark index rose 0.35% to 5,962.1 points.

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

ASX 200 expected to drop lower.

The ASX 200 looks set to end its winning streak on Wednesday. According to the latest SPI futures, the benchmark index is poised to open the day 8 points or 0.1% lower. This follows a poor night of trade on Wall Street. Late in the session the Dow Jones is down 1.1%, the S&P 500 is 1.1% lower, and the Nasdaq is tumbling 1.2% lower. News that President Trump is calling off COVID-19 stimulus talks until after the election led to the selloff.

Federal Budget reaction.

A number of ASX 200 shares will be on watch today after the release of the Federal Budget last night. Retail shares may be among the biggest winners after the government cut personal tax rates to put more funds in consumers’ pockets. Elsewhere, R&D tax incentives have been left untouched, manufacturers have been allocated $1.5 billion in grants, and states have been given $10 billion to boost infrastructure projects. All in all, Australia’s debt is expected to reach almost $1 trillion in the coming years.

Oil prices storm higher.

Energy shares including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could push higher again on Wednesday after oil prices continued their recovery. According to Bloomberg, the WTI crude oil price is up 2% to US$40.01 a barrel and the Brent crude oil price is up 2% to US$42.10 a barrel. Traders were buying oil amid supply disruptions due to an approaching hurricane on the Gulf Coast.

Gold price sinks lower.

Gold miners Evolution Mining Ltd (ASX: EVN) and St Barbara Ltd (ASX: SBM) could have a tough day ahead after the gold price sank lower. According to CNBC, the spot gold price has fallen 1.15% to US$1,898.10 an ounce. The price of the precious metal came under pressure after U.S. Treasury yields climbed.

BHP rated as a buy.

The BHP Group Ltd (ASX: BHP) share price will be on watch after analysts at Goldman Sachs reiterated their buy rating and $40.10 price target on the mining giant’s shares. The broker notes that BHP has acquired a greater share of the Shenzi asset in the Gulf of Mexico. Based on Goldman Sachs’ long run oil prices of US$60 a barrel, it expects the acquisition to be highly accretive to earnings.

More reading

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• ASX 200 down 0.2%: Northern Star & Saracen announce mega merger, IAG settles class action

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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