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The Althea Group Holdings Ltd (ASX: AGH) share price stormed higher today after the company announced it will be manufacturing US Cannabis brand Tinley’s products in Canada. Shares in the small cap closed today’s trade 6.19% higher at a price of 52 cents.

The news continues what has been a strong year for the company, which has seen its share price rise by more than 32%. For comparison, in the same period the All Ordinaries Index (ASX: XAO) has risen by 0.29%.

What Althea does

Althea is an Australian licensed supplier and exporter of pharmaceutical grade, medicinal cannabis. The company offers a range of products, education, and other services to support patients and healthcare professionals in navigating medicinal cannabis treatment pathways.

The group currently operates within select, highly regulated medicinal cannabis markets, which include Australia and the United Kingdom. However the company has plans to expand into Europe and emerging markets throughout Asia.

What happened

Althea announced a deal for one of its subsidiaries, Peak, to be used as the exclusive manufacturer of Tinley’s.

Tinley’s is a leading cannabis beverage brand in the United States and the company itself is listed on the Canadian Securities Exchange.

Under the agreement, Peak holds exclusivity for the manufacture and distribution of three Tinley’s products in Canada until Tinley’s meets minimum quantities. An initial order representing more than CA$100,000 in revenue for Peak is planned for delivery in the first quarter of 2021. The agreement is for an initial 3-year period.

What now

Shareholders were clearly pleased with the deal as the Althea share price stormed higher today.

This sentiment was shared by Althea’s CEO Joshua Fegan,  who said:

The agreement with Tinley’s is yet another key milestone for Peak and immediately follows the Company announcing an increase in its forecasted revenue of up to CAD$4.65M, over the next 12 months. With Peak having successfully obtained its Standard Processing Licence from Health Canada in only September 2020, the team has been quick to further ramp up business development. The addition of the Tinley’s Agreement to Peak’s growing list of contracts increases our 12 months expected revenue yet again and keeps the Company well on track to deliver on our revenue objectives in the short, medium and long term.

More reading

• Why the Althea (ASX:AGH) share price is climbing higher today
• Why Althea, BWX, Damstra, & GrainCorp shares are charging higher
• Althea (ASX:AGH) share price on watch following 2 new agreements
• ASX stock of the day: Elixinol Global (ASX:EXL) shares blaze new highs

Motley Fool contributor Daniel Ewing 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 S&P/ASX 200 Index (ASX: XJO) went up 1.1% today to 6,589 points.

Here are some of the highlights from the ASX today:

Collins Foods Ltd (ASX: CKF) FY21 half-year result

The fast food business boasted of generating strong earnings growth in FY20 despite COVID-19 impacts.

Collins Foods revenue grew 11.3% to almost $500 million. KFC Australia was the star performer with revenue growth of 15.6% to $415.5 million and same store sale growth of 12.4%.

The company decided to close its nine remaining Sizzler restaurants in Australia, which were shut by 15 November 2020 following a brand review.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 10.5% to $63.7 million – ‘underlying’ means before AASB 16.

Underlying net profit after tax (NPAT) went up by 15.1% to $27.5 million and net operating cash flow, before AASB 16, rose by $23.6 million to $57.3 million.

Net debt was down to $170.7 million from $217.3 million. Collins Foods decided to declare an interim dividend of 10.5 cents per share, which was an increase of 10.5%.

Collins Foods Drew O’Malley said: “Despite the challenges imposed by COVID-19, the business is in a strong position financially and operationally. Net debt and leverage levels have significantly reduced due to the strength of our operating cashflows, and the challenges brought on by the pandemic have allowed us to make significant improvements to digital and delivery platforms, which continue to perform well.”

The Collins Foods share price went up around 11% in reaction to this result.

Humm Group Limited (ASX: HUM) and Douugh Ltd (ASX: DOU)

These two businesses announced a joint venture today to expand into the US.

Humm, which used to be called FlexiGroup, announced that neobank Douugh will offer a Douugh ‘powered by humm’ branded buy now pay anywhere solution for the US market in the first half of 2022.

Douugh will utilise humm’s technology platform to manage a line of credit up to US$1,000 to eligible customers through a ‘credit jar’ on Douugh’s platform and virtual Mastercard. This is going to be an interest-free option which will be paid back over six weekly instalments.

This is first proposed joint venture generated by humm ventures, an initiative to explore new and innovative ways to expand the global reach and distribution of humm.

Humm CEO Rebecca James said: “Through our proposed joint venture with Douugh, we are taking our first steps into the United States as a company. At the same time, we are demonstrating how humm ventures can create innovative and novel ways to take humm’s world class technology and capabilities to expand its relevance and distribution.”

Humm is also going invest $2.5 million into Douugh’s capital raising at an issue price of $0.22 per share.

The humm share price went up 1.2% and the Douugh share price went up 9.4%. 

Aussie house prices

CoreLogic’s latest monthly update showed that Australian house prices went up by 0.8% across the country in November 2020.

Sydney prices rose 0.4%, Melbourne prices grew 0.7%, Brisbane prices went up 0.6% and every other city went up more than 1% with Canberra and Darwin both going up almost 2%.

As you may be able to guess, the big four ASX banks responded by going higher. The Commonwealth Bank of Australia (ASX: CBA) share price went up 1.5% and the Westpac Banking Corp (ASX: WBC) share price rose 0.75%.

Santos Ltd (ASX: STO)

The oil and gas giant upgraded its 2020 guidance today. It said that its 2020 production guidance is now going to be in a range of 87 million to 89 million barrels of oil equivalent. This was an increase from previous guidance of 83 million to 88 million barrels of oil equivalent.

Santos also lowered its production cost guidance to $8 to $8.05 per barrel of oil equivalent.

The Santos share price rose 0.8% today. 

More reading

• Westpac (ASX:WBC) share price gaining ground despite slap by regulator
• CBA (ASX:CBA) and the ASX banks just had an amazing month
• Why the Afterpay (ASX:APT) share price and these ASX stocks could get a boost next week
• Why the Douugh (ASX:DOU) share price is rocketing 15% higher today
• How this ASX share is riding the rapid growth of ESG investing

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Collins Foods 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 Sensen Networks Ltd (ASX: SNS) share price rocketed today, rising 27.27% to close today’s trade at 14 cents a share. Sensen shares closed at 11 cents a share yesterday and opened at the same price this morning, before shooting up to their current level this afternoon.

Today’s open at 11 cents a share is actually the same price as Sensen shares were going for back in January, meaning the share price is now flat for the year. Even so, this company dipped as low as 5.2 cents a share back in March, so any lucky investor who picked up shares then is sitting tight on a gain of more than 100% on today’s prices.

So who is Sensen? And why did this company’s share price spike so dramatically today?

Sen-who?

Sensen is a business with that most sought-after moniker attached to its name – an AI (artificial intelligence) company. More specifically, Sensen calls itself a “world-leading, data-fusion enterprise” that applies “ingenuity to develop AI-powered products and solutions that address the needs of our increasingly urbanising society.”

It states:

We work with councils and the private sector to reduce road accidents, ease traffic congestion and automate monotonous, laborious tasks. In doing this, we strengthen local economies and simplify city administration, empowering those managing our urban livelihoods.

Sensen builds its business model on a platform called SenDISA. This platform takes raw input data from sources like cameras, smartphones, LIDARs and other sensors and interprets it for use in a wide variety of applications, which are divided into ‘Roads and Parking’ and Buildings and Spaces’.

‘Roads and Parking’ includes applications like road safety, parking, traffic analysis and tolling. ‘Buildings and Spaces’ includes applications like measuring traffic through ‘buildings and spaces’ like retail shops, shopping centres and casinos.

The SenDISA platform can also be altered for specific purposes, including SenFORCE (used for law enforcement operations) and SenGAME (real-time intelligence for games and the gaming industry).

SenDISA has been in the making for over 10 years, and according to the company it has “multiple patents awarded and pending”. It also works in conjunction with technology from some of the world’s best tech companies, including NVIDIA Corporation (NASDAQ: NVDA).

Why are Sensen shares racing ahead today?

Sensen’s rocketing share price today can most likely be put down to an announcement the company made today. That came just after 2 pm and detailed the company’s acquisition of Snap Network Surveillance. Snap is a private company, founded in 2009 and based in Adelaide

Sensen describes Snap as a “world-leader in AI-powered multi-camera tracking software” which allows it to use “surveillance camera operators to efficiently track persons of interest over large-scale video surveillance environments”.

Sensen notes that the company has been making inroads into the casino market, especially in the United States, which is an area Sensen is targeting for growth. The company told investors that it plans on integrating Snap’s technology into its SenDISA platform. 

The takeover will involve Sensen acquiring all intellectual property including patents, trademarks and know-how from Snap, for a price of $1 million. The acquisition will be made via the issuance of 9,881,423 new shares, priced at 10.12 cents a share.

It appears investors have given this acquisition their blessing, judging by today’s share price performance.

More reading

• ASX 200 rises on Tuesday
• Why the Xero (ASX:XRO) share price zoomed 20% higher in November
• Westpac (ASX:WBC) share price gaining ground despite slap by regulator
• Why are ASX property shares on the rise today?
• Leading brokers name 3 ASX shares to sell today

Motley Fool contributor Sebastian Bowen 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 Xero Limited (ASX: XRO) share price was among the best performers on the S&P/ASX 200 Index (ASX: XJO) last month.

Despite weakness in the tech sector, the cloud-based business and accounting software platform provider’s shares stormed 20% higher over the month.

Why did the Xero share price surge higher in November?

As well as benefiting from improving investor sentiment thanks to positive COVID vaccine developments, Xero’s shares were given a boost from the release of a strong half year result.

For the six months ended 30 September, Xero reported a 21% increase in operating revenue to NZ$409.8 million. Management revealed that this was driven largely by a 19% increase in total subscribers to 2.45 million.

Xero finished the period with 1 million subscribers in Australia, 414,000 in New Zealand, 638,000 in the UK, 251,000 in North America, and 136,000 in the Rest of the World.

This led to its total subscriber lifetime value (LTV) metric growing once again. Its LTV increased 15% over the prior corresponding period to NZ$6.2 billion.

Earnings growth accelerates.

Also growing strongly was the company’s earnings thanks to operating leverage.

Xero’s earnings before interest, tax, depreciation and amortisation (EBITDA) increased by a massive 86% to NZ$64.9 million during the half.

And on the bottom line, Xero’s net profit after tax came in a whopping 26 times greater at NZ$34.5 million.

Management revealed that its strong earnings growth was reflective of its disciplined financial control during a highly uncertain period. This approach led to a 10% reduction in sales and marketing costs when compared to the prior corresponding period.

What about the future?

Due to the continued uncertainty created by COVID-19, the company was unable to provide guidance for the full year.

However, management spoke positively on its long term prospects.

Xero’s CEO, Steve Vamos, commented: “This result demonstrates the value our customers attribute to their Xero subscription and the underlying strength of Xero’s business model. We continue to prioritise investment in customer growth and product development in line with the long term opportunity we see.”

More reading

• Why healthcare, tech and consumer staples shares underperformed the ASX 200 in November
• Top brokers name 3 ASX shares to sell next week
• ASX 200 falls on Thursday
• Top brokers name 3 ASX shares to sell today
• ASX 200 up 0.8%: Fisher & Paykel Healthcare impresses, Harvey Norman’s profits surge

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 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 Westpac Banking Corp (ASX: WBC) share price has climbed by 0.65% despite being slapped by a temporary 10% increase to its liquidity capital ratio (LCR) by the regulator, due to errors in calculations of its liquidity requirements going back to 2019.

At the time of writing, the Westpac share price is trading at $20.26.

What did the regulator say

The Australian Prudential Regulation Authority (APRA) has ordered Westpac to initiate an independent review of its systems, and apply a 10% increase to its liquidity ratio immediately until the matter has been fully investigated. This order came following the bank admitting to making several errors in its LCR calculations during the past two years. 

LCR refers to the percentage amount of liquid assets such as cash or short-term securities that large banks are required to hold as reserves to meet their short-term financial obligations during a crisis event. 

Westpac has since revealed that the problem stemmed from its New Zealand operations, and that it has now been rectified. Following Westpac’s revelation, the Reserve Bank of New Zealand says it’s now considering its options with regards to the bank’s LCR. 

Westpac called “immature’ by APRA

In a busy day for Westpac, the news of the LCR breach happened just one hour before the bank released a statement on APRA’s response to Westpac’s deep-dive review into its risk governance. In that statement, Westpac said that APRA has now notified the bank of its progress, findings, and proposed next steps. In particular, APRA identified that Westpac has an “immature and reactive risk culture, unclear accountabilities, capability shortfalls and inadequate oversight.”

Westpac chief executive Peter King said, “We acknowledge the findings of APRA’s review and accept the need to work faster to address our shortcomings.”

As part of the next steps, Westpac says it expects to enter into an enforceable undertaking over risk governance remediation. The bank says it will work constructively with APRA on the detail of the enforceable undertaking, and expects to update the market when it is finalised.

Westpac share price in 2020

Westpac has had a year to forget. In September, the bank agreed to pay the largest fine in Australian corporate history — a $1.3 billion civil penalty for more than 23 million breaches of anti-money laundering laws.

The Westpac share price has lost around 19% in 2020. This fall is also partly due to the subdued markets arising from the COVID-19 pandemic. 

More reading

• CBA (ASX:CBA) and the ASX banks just had an amazing month
• Fund managers are snapping up these ASX stocks at a record pace
• Bank of Queensland (ASX:BOQ) issues Capital Notes 2 as bank shares fall
• Here’s when your ASX bank dividends are being paid in December
• Why the banks are back in the ASX 200 spotlight

Motley Fool contributor Eddy Sunarto 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 ASX 200 Real Estate Sector Index (ASX: XRE) has risen by more than 0.9% today. This comes after a CoreLogic report released today shows that Australian property prices rose for the second consecutive month in November, rising overall by 0.8%.

The report says that regional Australia has driven this growth, with regional home values rising on average by 1.4% — double that of the capital cities.

Here’s what moved the ASX property shares today

CoreLogic publishes daily and monthly residential value indices, including summary monthly movement data. Today’s release provided a strong boost to the property sector, which has seen a 2.1% drop in home values between April and September as a result of the construction slump caused by the COVID-19 pandemic.

The report says that across all the capital cities, Canberra and Hobart led the pack with prices increasing 1.9% and 1.4%, respectively, in November. Adelaide saw a 1.3% growth, while Perth grew by 1.1%. Australia’s three biggest cities, Sydney, Melbourne and Brisbane, saw more modest growths of 0.4%, 0.7%, and 0.6%, respectively.

Regional Australia saw the biggest growth in property prices during November of 1.4%, with regional Queensland posting a 3,2% lift, followed by regional NSW where values are up 3.1%. The trend towards regional areas is consistent with people’s living preferences away from heavily populated metropolitan areas after the pandemic struck.

Corelogic’s head of research, Tim Lawless, provided more optimism to the data, saying:

The national home value index is still seven tenths of a per cent below the level recorded in March, but if housing values continue to rise at the current pace we could see a recovery from the COVID downturn as early as January or February next year.

I’d be surprised if the growth rate started to falter between now and then.

ASX property shares reacted positively to the report

The release of today’s report has breathed some life into most of the ASX property shares today. 

Australia’s biggest property company, Goodman Group (ASX: GMG), has risen by more than 2% to $19.06 at the time of writing. The Charter Hall Group (ASX: CHC) share price also reacted positively to the report, and is currently trading higher by 3.24% to $14.18. Meanwhile the Lendlease Group (ASX: LLC) share price is up more modestly by 0.64% to $14.25.  

More reading

• ASX 200 up 1%: Domino’s rockets, Collins Foods delivers strong result, GPT offloads asset
• 2 of the best ASX shares for your retirement portfolio
• 2 ASX 50 shares to buy today
• Stockland (ASX:SGP) share price up 3% after new chief announced
• ASX stock winners from the $23 billion Victorian state budget

Motley Fool contributor Eddy Sunarto 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 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 that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

According to a note out of Credit Suisse, its analysts have retained their underperform rating and $58.71 price target on this pizza chain operator’s shares. This follows the company’s investor day event. Although it took away a number of positives from the event, such as store growth plans and strong operating leverage potential, it still appears concerned over its valuation. And with nothing on the horizon with the potential to support a re-rating, Credit Suisse is sticking with its underperform rating. The Domino’s share price is up 12.5% to $83.36 this afternoon.

Treasury Wine Estates Ltd (ASX: TWE)

Analysts at Citi have downgraded this wine company’s shares to a sell rating and cut the price target on them to $8.20. According to the note, the broker is expecting Chinese tariffs to have a significant impact on Treasury Wine’s earnings in the near term. In addition to this, it has concerns over the excess supply of its wine after effectively being shut out of the lucrative market. The Treasury Wine share price is fetching $8.41 on Tuesday.

Virgin Money UK CDI (ASX: VUK)

A note out of Morgans reveals that its analysts have retained their reduce rating but lifted the price target on this UK-based bank’s shares to $2.00. Morgans notes that Virgin Money UK fell short of its expectations in FY 2020 due to its higher than expected impairments. However, the prospect of a working COVID-19 vaccine being released in the near future has led to the broker lowering its impairment estimates and boosting its earnings estimates. Though, not enough for a change of rating. Morgans still believes its valuation is looking stretched. The Virgin Money UK share price is trading at $2.40 this afternoon.

More reading

• Why healthcare, tech and consumer staples shares underperformed the ASX 200 in November
• ASX 200 up 1%: Domino’s rockets, Collins Foods delivers strong result, GPT offloads asset
• Why Collins Foods, Domino’s, Macquarie Telecom, & PolyNovo shares are charging higher
• Leading broker upgrades Domino’s (ASX:DMP) share price to conviction buy rating
• These were the worst performing ASX 200 shares in November

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Facebook Inc (NASDAQ: FB) announced in a blog post on Monday that it would acquire privately held start-up Kustomer. The company provides a customer-relationship management (CRM) platform that helps businesses manage customer communications across a variety of channels.  

The price of the deal wasn’t disclosed but was reportedly worth just over $1 billion, according to a report in The Wall Street Journal, citing “people familiar with the matter.” 

One of the consequences of the pandemic has been an acceleration in the digital transformation. Facebook noted this shift, pointing out that “texts and messages have become just as important as that phone call — and businesses need to adapt.” More than 175 million people contact businesses via its WhatsApp social media platform, and the number is growing, according to Facebook.

After releasing several tools recently to allow customers to communicate with businesses more easily via Messenger and WhatsApp, Facebook was ready to take the next step, bringing Kustomer onboard. The CRM platform is an omnichannel tool that gathers customer communications from a variety of channels and brings them together in a single screen. It also automates repetitive tasks, allowing customer-service personnel to “maximize the time and quality of interactions with customers.”

Kustomer allows businesses to aggregate and respond to customer communications, and was previously integrated with Messenger. Facebook began incorporating similar capabilities into Instagram just last month.

Kustomer’s founders, Brad Birnbaum and Jeremy Suriel, spent a previous stint at Salesforce.com Inc (NYSE: CRM) and have a history of successful start-ups. The pair sold their cloud-based customer app Assistly to Salesforce in 2011 for $80 million.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• How the biggest companies are the worst investments
• 10 most searched shares in Australia
• I have too many tech shares: Do I sell, buy or hold?
• It’s official: Like it or not, millions will own Tesla stock soon
• Here are the shares Magellan has been buying recently

Danny Vena owns shares of Facebook. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook and Salesforce.com. The Motley Fool Australia has recommended Facebook. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Legend Mining Limited (ASX: LEG) shares are up nearly 15% in afternoon trading following the company’s positive drilling announcement at its Mawson prospect in Western Australia. Today’s gains comfortably put long-term shareholders in the green for the year, with the Legend share price up 37.5% since 2 January.

By comparison the All Ordinaries Index (ASX: XAO) is flat year to date, despite a strong performance today.

What does Legend Mining do?

Legend Mining is an Australian minerals exploration company. Its focus is on the company’s nickel-copper Rockford Project in the Fraser Range of Western Australia, alongside its Joint Venture partners and major shareholders, Creasy Group and Independence Group NL.

The Legend Mining share price first began trading on the ASX in 1999.

What did Legend announce to send its share price higher today?

In its ASX release this morning, Legend Mining reported it had achieved its best diamond drillhole results to date at its Mawson prospect within the Rockford Project.

The company stated its first drillhole, RKDD033, tested the northern extension of the “strong 25,000-70,000S off hole conductor”, which had been identified during previous test drilling.

Legend drilled its second drillhole, RKDD034, to provide a representative massive nickel-copper sulphide sample for Phase 1 metallurgical test work.

Commenting on the drill results, Legend Managing Director, Mark Wilson, said:

The 2020 field season has ended in spectacular fashion at Mawson with hole RKDD034 intersecting 43.1m of massive nickel-copper sulphide including one section of 31.1m of continuous massive mineralisation. The scale of the massive mineralisation in this hole talks to the potential of Mawson. The hole was designed to provide samples for phase 1 met testing, the results of which are expected in February next year.

Diamond hole RKDD033 has also provided a potentially significant pointer for work next year, with nickel-copper sulphide intersected within intrusive host rocks at a deeper level than previously drilled at Mawson.

Both nickel and copper are forecast to remain in strong demand over the coming years. Nickel is primarily used in stainless steel, but you’ll also find it in batteries and mobile phones. Copper is used in plumbing and electrical wiring, and its demand is forecast to grow as the world turns towards renewable energy solutions and electric vehicles.

With the company potentially having unearthed a trove of both, it will be interesting to see where the Legend share price goes from here.

More reading

• What you need to know about the RBA’s rate decision today
• Flight Centre and Mesoblast were among the most traded shares on the ASX last week
• Why the Sandfire Resources (ASX:SFR) share price is soaring 10% higher
• The Lynas share price (ASX:LYC) rose 34% in November. Here’s why
• CBA (ASX:CBA) and the ASX banks just had an amazing month

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 Reserve Bank of Australia (RBA) has good news for ASX investors but not so good news for workers.

Our central bank believes it will need to keep pumping liquidity into the market and the job market won’t be firing on all cylinders for at least three years.

Equity markets have developed an unhealthy addiction to monetary stimulus and this is one of the key reasons that have sent stocks soaring since March.

RBA to act as safety net for ASX stocks

The S&P/ASX 200 Index (Index:^AXJO) surged 45% since the COVID‐19 market low and investors will keep partying into 2021 as the RBA isn’t showing any signs of removing the punch bowl.

While RBA Governor Philip Lowe kept the current policy settings, the Reserve Bank appears to be resigned to the fact that it will need to do the heavy lifting over the next few years.

Job market the Achilles heel

Dr Lowe acknowledged that global news has been mixed. Infection rates have soared in Europe and the United States and their economies are suffering as a result.

On the other hand, a number of COVID vaccines are showing promise and their widespread use will reinvigorate the global economy.

“The recovery is also dependent on ongoing support from both fiscal and monetary policy,” said Dr Lowe.

“Hours worked in most countries remain noticeably below pre-pandemic levels and inflation is low and below central bank targets.

“The extended period of high unemployment and excess capacity is expected to result in subdued increases in wages and prices over coming years.”  

Why some inflation is desirable

So, while a rebound in recent job ads here is a cause for celebration, Australia remains stuck in a low growth world. This was a similar situation pre-COVID, although the pandemic has pushed back hopes for a return of “good” inflation for at least three years.

You will be forgiven to think that inflation is a bad thing as no one likes paying higher prices for things. But we need some inflation to get wages growth and the sweet spot, in the RBA’s view, is between 2% and 3%.

No growth without inflation

We won’t see those types of numbers for a while yet. The central bank is forecasting inflation of just 1% in 2021 and 1.5% the year after.

“The Board views addressing the high rate of unemployment as an important national priority,” added Dr Lowe.

“Its policy decisions over recent months will help here. These decisions are complementary to the significant steps taken by Australian governments to support jobs and economic growth.”

Why ASX investors are the lucky bunch

At least on the gross domestic product (GDP) front, we might not need to wait as long for conditions to return to what they were before COVID.

The RBA’s central scenario predicts GDP will recover to the levels at the end of 2019 by the end of 2021.

As I mentioned at the start, ASX investors have much more reason to feel optimistic about the future than other Aussie battlers.

More reading

• The Legend Mining (ASX:LEG) share price is rocketing 15% higher. Here’s why
• Flight Centre and Mesoblast were among the most traded shares on the ASX last week
• Why the Sandfire Resources (ASX:SFR) share price is soaring 10% higher
• The Lynas share price (ASX:LYC) rose 34% in November. Here’s why
• CBA (ASX:CBA) and the ASX banks just had an amazing month

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. 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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