What happened on the ASX today

The S&P/ASX 200 Index (ASX: XJO) has risen again today. The ASX 200 went up 0.84% to 5,992 points.

Another strong day for ASX travel shares

The ASX travel sector has had yet another strong day as confidence returns for the industry.

Today we learned that Qantas Airways Limited (ASX: QAN) plans to have about 40% of its domestic flights back up and running by the end of July 2020. The ASX 200 airline’s share price went up more than 7% today.

Other ASX 200 travel shares also rose today. The Corporate Travel Management Ltd (ASX: CTD) share price went up 8.8%, the Webjet Limited (ASX: WEB) share price climbed 2.5% and the Flight Centre Travel Group Ltd (ASX: FLT) share price rose by 8.4%.

Westpac Banking Corp (ASX: WBC) pleases investors with investigation

Westpac announced the findings of its AUSTRAC internal investigation today.

The bank said that there was a failure of technology, processes and human error. However, there was no evidence of intentional wrongdoing, instead it was a fault of omission.

Management said that the ASX 200 bank has learned from this and it needs to change.

The Westpac share price hit $18.70 in early trading, but ended 1.3% higher to $18.18.

Looking at the other major ASX 200 banks, the Commonwealth Bank of Australia (ASX: CBA) share price rose 2.3%, the Australia and New Zealand Banking Group (ASX: ANZ) share price went up 1.5% and the National Australia Bank Ltd (ASX: NAB) share price grew 1.2%.

Magellan Financial Group Ltd (ASX: MFG) makes two announcements

The share price of Magellan fell 0.75% today.

The internationally-focused ASX 200 fund manager revealed that its funds under management (FUM) increased by around $1.5 billion over May 2020 to $98.45 billion. Net outflows during the month amounted to $288 million which included net retail inflows of $228 million and net institutional outflows of $516 million.

Magellan has also launched the Airlie Australian Shares Fund, which is an exchange-traded fund (ETF) which can be bought through the ASX and through unlisted channels. It eliminates the need to have two separate funds.

More reading

• This ASX 200 stock is well placed to beat earnings expectations
• The 10 shares that significantly move the ASX 200 index
• ASX shares are in a bull market. What should investors do now?
• Telstra shares and 2 other ASX companies to buy in a low-interest rate world
• Top brokers just upgraded these 3 ASX 200 stocks to buy

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel 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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If you’re investing with a long term view, then I think the three ASX shares listed below could be the ones to buy.

I believe their strong business models and positive long term growth outlooks mean they could be market beaters over the next decade and beyond. Here’s why I’m bullish on them:

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is a donor management platform provider for the faith and not-for-profit sectors. It has been growing its share of the medium to large church market at a very strong rate in recent years. This has led to some very strong strong operating revenue and earnings growth. The good news is that Pushpay still only has a modest share of its target market and is aiming to grow its share to 50% in the future. This represents a US$1 billion opportunity, which is many times its current revenue. I think this makes Pushpay a fantastic buy and hold option.

REA Group Limited (ASX: REA)

Another great buy and hold option is REA Group. It is a leading property listings company with real estate websites in Europe, Asia, the United States, and of course Australia. While trading conditions are not easy at present, REA Group has still been able grow its earnings. I believe this demonstrates the resilience of its business model. I also feel it bodes well for the future and expect its earnings growth to accelerate when the headwinds ease.

ResMed Inc. (ASX: RMD)

A final buy and hold option is ResMed. I think the medical device company is one of the best healthcare shares on the ASX and a great long term option. This is due to its focus on the growing sleep treatment market. The company estimates that there are ~1 billion people suffering from sleep apnoea worldwide, with only ~20% of these sufferers having been diagnosed. Due to the quality of its industry-leading masks and software solutions, I believe it is perfectly positioned to capture a growing slice of this market..

More reading

• 3 large cap shares beating the ASX 200 this year
• Have $10,000? This is where I’d invest it into ASX shares
• 3 of the best ASX shares to buy with $3,000 right now
• Why I’m not afraid to invest in shares during this recession
• Here’s why long term investing can outperform shorter holding periods

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended REA Group Limited and ResMed Inc. 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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There’s one S&P/ASX 200 Index (Index:^AXJO) stock that’s likely to beat consensus forecast when it hands in its profit report card in August.

I am not talking about Qantas Airways Limited (ASX: QAN) or Corporate Travel Management Ltd (ASX: CTD) – although they could surprise as COVID-19 travel restrictions ease.

The one that could pull an earnings rabbit out of its hat is BlueScope Steel Limited (ASX: BSL), at least that’s according to Credit Suisse.

Too much bad news in the share price

The broker reviewed its forecasts across the steel products manufacturer’s business segments and accounted for steel spreads and the coronavirus impact.

This led to Credit Suisse lowering its second half FY20 earnings before interest and tax (EBIT) estimates to $506 million, but that’s still 22% higher than the average broker forecast for the same period.

Volumes at BlueScope’s Australian Steel Products division isn’t expected to be too badly hit by the COVID-19 fallout in the current half.

This is because of the long lead times for construction projects where work scheduled for this period would have continued.

Impact from COVID-19

“We do, however, see risk to 1H21 volumes, factoring in the time lag from COVID-19 on future activity decisions, particularly around the Alterations & Additions market which accounts for ~20% domestic volumes,” said Credit Suisse.

On the other hand, I believe the government’s $688 million HomeBuilders stimulus could provide some support for volumes in the new financial year.

Meanwhile, Credit Suisse is forecasting a utilisation rate of 85% for BlueScope’s US business, North Star, as it believes the March quarter should be “solid” as the COVID-19 shutdown had yet to come into effect.

April and May would be quite a different story although the US is restarting its industries since.

Why BlueScope could beat consensus

“At current levels, the market appears to be pricing in depressed FY20/21 earnings in perpetuity, an unrealistic future outcome, in our view,” said the broker.

“While the current trading climate is challenged with uncertainty around COVID-19’s impact and duration, we see a clear value opportunity on even partial restoration towards what could be considered reasonable mid-cycle trading conditions and earnings.”

The broker rates the stock as “outperform” (meaning a “buy”) with a price target of $12.80 a share.

Buying opportunity for patient investors

But if the business returns to its post-coronavirus glory, the stock could be worth as much as $15 a share, based on Credit Suisse’s estimates.

While no one knows when that might happen, it goes to show that BlueScope is a value buy for patient investors as the full recovery is a question of “when” and not “if”.

More reading

• ASX 200 rises again, rises 0.8%
• The 10 shares that significantly move the ASX 200 index
• Top brokers just upgraded these 3 ASX 200 stocks to buy
• Why the Alliance Airlines’ share price is surging higher
• Is the Qantas share price a buy?

Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management 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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As a big fan of growth shares, I feel quite fortunate that the Australian share market is home to a large number of them.

Three quality ASX growth shares that I would buy this week are listed below. Here’s why they could be future market beaters:

Appen Ltd (ASX: APX)

Appen is one of my favourite growth shares on the ASX. It prepares the data that goes into artificial intelligence (AI) and machine learning models. This is a key part of the process, as high quality data is vital for successful models. And given how important AI is becoming to businesses, I expect demand for Appen’s services to continue to grow over the next decade. This should underpin strong earnings growth for a long time to come.

Nanosonics Ltd (ASX: NAN)

Another ASX growth share which I think is a great option for investors is Nanosonics. The infection control specialist has been growing exceptionally strongly in recent years thanks to the increasing market share of its trophon EPR system. This disinfection system for ultrasound probes is the best in its class and has a material global market opportunity. However, it won’t be the only thing driving Nanosonics’ growth in the coming years. The company is due to release new products that are targeting unmet needs in the near future. If these are half as successful as the trophon EPR system, then Nanosonics will have a very bright future.

Xero Limited (ASX: XRO)

A third ASX growth share I would buy is Xero. I think the cloud-based business and accounting software provider is one of best growth shares on the ASX and well-placed to be a long term market beater. This is due to the increasing popularity of its platform with small businesses, its high retention rate, and the stickiness of its product. And although Xero now has ~2.3 million subscribers globally, this is still only scratching at the surface of a massive global market opportunity. 

More reading

• Are Megaport shares the ones to buy and hold beyond 2030?
• 3 large cap shares beating the ASX 200 this year
• Should the Xero share price have a P/E ratio of 4,000?
• 2 cheap ASX 200 shares to buy right now
• ASX 200 investor in your 40s? 3 shares to buy now

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 Nanosonics Limited and Xero. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Nanosonics 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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Is the global share market in a bubble?

I think that’s a key question that many investors should be asking themselves.

There are many phrases to keep in mind with investing. The market tends to price in all known information into the share price. Investing in shares is (or should be) a long-term idea. Shares have historically returned an average of around 10% per annum over the long-term. It can be futile to fight the US Federal Reserve.

But it’s also a part of investing that the current share price should reflect some uncertainty. The best outcome isn’t necessarily the most likely outcome. The S&P 500 Index (INX) is currently higher than it was six months ago. The NASDAQ is higher than it was in the first half of February 2020. Is that reasonable?

Other areas of the global share market haven’t recovered as strongly, such as Europe, but there is a recovery there too.

I do think that the Australian and New Zealand share markets are justified in their recoveries. The coronavirus is almost gone and the economies could bounce back fairly quickly with the large government support, though there is still pain out there. Places like South Korea and Taiwan are also in good shape.

Is the global share market in a bubble?

Momentum can be a strong force in lifting share markets, gathering steam by itself. But protests combined with a pandemic could be a real hit to confidence in the US. There could be a second infection wave there, although the first hasn’t really ended yet.

There are plenty of US shares that now look as though they’re valued as if everything is fine. Unless there is more government financial support, there could soon be a painful period of missed rental payments, credit card payments, mortgage payments and so on in the US. I certainly hope there isn’t, but the ongoing issues may make it more likely. I’m not confident about the US share market over the next six to nine months.

Perhaps the market is already pricing in these possibilities. Maybe there is no global share market bubble at all considering how low interest rates are? There is a lot of investment money out there wanting a home. 

It can be a mistake to be too cautious. That’s why I have kept investing during this period. But I wouldn’t sell all my belongings to invest in global shares at these prices. There are a few overseas-focused shares I’d consider like MFF Capital Investments Ltd (ASX: MFF) where the stronger Australian dollar helps. But I’d prefer to stick to Australian businesses through ASX shares.

More reading

• Have $10,000? This is where I’d invest it into ASX shares
• Why it’s a good week to buy international shares
• Should your share portfolio actually be 50% cash right now?
• Why I’m not afraid to invest in shares during this recession
• 10 top ASX growth shares to buy in June for strong returns

Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund 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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When you hear about ‘the share market’ on the news or when scrolling on your phone, it’s likely you will actually be hearing about the movements of the S&P/ASX 200 Index (ASX: XJO).

See, the share market is made up of over 2,000 different companies, all being bought and sold in one marketplace. As such, it’s very difficult to ascertain what the ‘entire market’ is doing by just looking at these thousands of different company names.

How the ASX 200 really works

That’s why the concept of an index is so useful. An index like the ASX 200 is really a collection of a select group of shares, usually those with the highest market capitalisation (or value).

The thinking goes that if we look at how the biggest companies are fairing, we’ll get a good idea of how the market is trading as a whole.

The ASX 200 index does just this by selecting the largest 200 public companies trading on the ASX.

But most indexes, including the ASX 200, don’t treat each company equally but rather adopt a system known as ‘weighting’. Weighting involves giving the larger companies a higher ‘weight’ or value within the index. By doing this, the movements of the largest shares are going to influence the overall index much more than the movements of the smaller companies.

So if we look at the index today, we can see how the largest companies come to dominate. Here’s a table of the top 10 shares within the ASX 200, and how much weight each share has.

All-stars of the ASX

ASX 200 share name	Index weighting (%)
CSL Limited (ASX: CSL)	8.12
Commonwealth Bank of Australia (ASX: CBA)	7.09
BHP Group Ltd (ASX: BHP)	6.57
Westpac Banking Corp (ASX: WBC)	3.72
National Australia Bank Ltd. (ASX: NAB)	3.60
Australia and New Zealand Banking Group Limited (ASX: ANZ)	3.29
Woolworths Group Ltd (ASX: WOW)	2.94
Wesfarmers Ltd (ASX: WES)	2.94
Telstra Corporation Ltd (ASX: TLS)	2.41
Transurban Group (ASX: TCL)	2.40

Table: Author’s own

As you can see, it’s really only the largest few ASX 200 companies that have significantly different weightings to the others in the top 10. As you move further and further down the table, each company’s individual ability to influence the overall index diminishes.

A massive 43% of the power to affect the overall movement of the ASX 200 index resides with these top 10 companies. Therefore, when you hear about the index rising or falling on any one day, it’s usually because a combination of the shares you see above are doing so.

So when you next hear about what the ASX 200 index or ‘ASX shares’ are doing, you’ll know that it’s the movements of the above companies that are really being discussed most of the time.

More reading

• Employees rewarded with $50 million in Woolworths shares and gifts
• ASX shares are in a bull market. What should investors do now?
• Telstra shares and 2 other ASX companies to buy in a low-interest rate world
• Top brokers just upgraded these 3 ASX 200 stocks to buy
• Is the Qantas share price a buy?

Sebastian Bowen owns shares of National Australia Bank Limited and Telstra Limited. 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 Telstra Limited. The Motley Fool Australia owns shares of Transurban Group, Wesfarmers Limited, and Woolworths 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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Woolworths Limited (ASX: WOW) will be rewarding its Australian and New Zealand staff with $50 million in shares and gift cards. Here’s why Woolworths is rewarding its workers and what it could do for the company’s share price.   

Why is Woolworths rewarding its staff?

Earlier this week Woolworths Group CEO, Brad Banducci released a statement announcing the company will reward its employees for their hard work during the bushfires and coronavirus pandemic. Banducci said the reward is in recognition of “extraordinary efforts and contributions during a year of unprecedented challenges.”

The supermarket giant will be rewarding more than 100,000 employees. As part of its rewards system, Woolworths will be giving full-time members up to $750 worth of shares in the company. Part-time members will be allocated shares on a pro-rata basis.  In addition, all Australian full and part-time workers will receive a $250 Woolworths gift card, with casuals to receive a $100 gift card.

Once completed, the share reward program will see Woolworths boast one of Australia’s biggest worker-dominated share registers.

How has Woolworths performed?

The coronavirus pandemic saw staff members inundated as panicked shoppers flocked to buy essential items. The unprecedented surge in demand was reflected in the company’s third-quarter sales results in late April. Woolworths reported its strongest quarterly sales growth through group sales surging more than 10% to $16.5 billion for the quarter.

Woolworths also received a $5 million boost from its stake in subscription-based meal kit provider Marley Spoon AG (ASX: MMM). In 2019, Woolworths invested $30 million in Marley Spoon through a debt and equity transaction. The Marley Spoon share price has since surged as the company enjoyed a boom in demand for at-home meal consumption.

Despite strong sales growth in its supermarket and liquor divisions, Woolworths has also incurred increased costs. According to the company’s management, increased costs for wages, security, supply chain and e-commerce will partially offset sales growth.

Should you buy Woolworths shares?

Many companies on the ASX say they put the well-being of their workers and customers first, however, few put their money where their mouth is. Although, Woolworths is far from perfect. The supermarket giant is in the midst of backpay claims after underpaying 5,700 workers $315 million over the past 10 years. However, despite these issues, I think the rewards program is a great initiative from Woolworths that should see the company win over new suitors.

More reading

• The 10 shares that significantly move the ASX 200 index
• Is the Qantas share price a buy?
• 3 large cap shares beating the ASX 200 this year
• Fund managers have been buying these ASX shares
• Why Coles and Woolworths shares were flat in May

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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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ASX shares seem to be in a bull market. What should investors do? The S&P/ASX 200 Index (ASX: XJO) is up another 1% today, it’s back to 6,000 points.

The ASX 200 has risen 32% since 23 March 2020. An incredible run in such a short amount of time. If you’re just thinking ahead to 2030 and beyond then today is probably still a good time to buy shares because plenty of ASX shares are still not back to their February 2020 highs.

The coronavirus is still spreading around the world, particularly in the US and emerging markets like Brazil. ASX shares like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) are benefiting from the tough conditions mining environment in South America.

ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) are flying higher. The buy now, pay later sector is going nuts – the share prices of Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P), Splitit Ltd (ASX: SPT) and Sezzle Inc (ASX: SZL) are soaring.

Australia certainly has done a better job at managing the spread of the infection as well as limiting the worst of the potential economic damage.

But should ASX share investors keep buying or remain patient?

Some investors may have a regular investment plan into an exchange-traded fund (ETF). If that’s the case, I wouldn’t worry too much about delaying your next ASX share investment.

But investors trying to pick the right shares should continue to be cautious and considered. The RBA has reduced the official interest rate to a very low level. But that doesn’t mean businesses are out of the woods yet. Some businesses may never be the same again. The unemployment rate is still much higher than before COVID-19.

I’ve always said that investors should just focus on whether the potential investment is good value (and ignore the rest of the noise). There aren’t many obvious bargains like there were before a couple of months ago.

Hoping that everything will turn out fine over the six months is not an investment strategy. ASX shares that generate most of their earnings in Australia and New Zealand seem to have an easier path out of this. But ASX shares that rely on growth of the economies of China and the US may yet see a wobble later this year.

I’m being more careful with my ASX share buying, but I do intend to keep investing for the long-term.

More reading

• The 10 shares that significantly move the ASX 200 index
• Telstra shares and 2 other ASX companies to buy in a low-interest rate world
• 3 ASX dividend shares with big yields above 9%
• 3 top ETFs you can easily diversify your portfolio with immediately
• Are Megaport shares the ones to buy and hold beyond 2030?

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 AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has recommended Sezzle Inc. 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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