As it happened: Miners, Sims help ASX creep higher again

As it happened: Miners, Sims help ASX creep higher again
Added 25 days ago
Summary: The ASX200 edged marginally ahead on Monday to set a new 13-month high of 7065.6. The materials sector was strong but property, energy, and tech shares slipped.
Sentiment: positive
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Summary

  • The ASX200 edged marginally ahead to set a new 13-month high of 7065.6. The materials sector was strong but property, energy, and tech shares slipped
  • Futures are pointing towards a flat session on the Nasdaq tonight, a 0.3% decline on the Dow Jones, and a 0.2% decline on the S&P500
  • Orocobre and Galaxy Resources, two of the nation’s top lithium producers, have agreed to a $4bn merger amid soaring prices and a brighter demand outlook
  • Metals processor Sims led the ASX200 on Monday as strong scrap prices and cost savings buoyed the company’s full-year guidance. Sims shares finished 9 per cent higher at $16.56 and touched a two-and-a-half-year high of $16.90

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Market wrap: Materials help ASX close narrowly in front

By Lucy Battersby

Australia’s stock market inched higher on Monday as strong commodity prices and a $4 billion merger between two lithium producers boosted the dominant materials sector and bank stocks firmed up ahead of quarterly results and potential increases in dividends.

The index touched 7094.8 points in the morning before closing flat at 7065.6 points. It has now closed above 7000 points four sessions in a row.

The first quarantine free trans-Tasman flights brought back a sense of travel normalcy and boosted Sydney Airport’s price 0.5 per cent to $6.14 and Auckland International Airport 2.3 per cent to $7.08, but travel companies declined and Qantas dropped 1.9 per cent to $5.08.

The ASX200 ended 2.1 points in front on Monday.

The ASX200 ended 2.1 points in front on Monday. Credit:Louie Douvis

Meanwhile the ongoing global economic recovery story continues to push indices to new highs, with the S&P/ASX 200 on Monday getting within 68 points of its February 2020 high.

Commonwealth Bank gained 1 per cent to $88.84, and ANZ Bank gained 0.4 per cent to $28.93. And iron ore producers surged on the back of ten-year high prices, with Rio Tinto up 1.7 per cent to a six-week high of $120.85 and Fortescue up 1.8 per cent to a five-week high of $21.20.

Lithium miner Orocobre gained 5.6 per cent to $6.55 and Galaxy Resources jumped 6.1 per cent to $3.83 after they revealed plans to merge. Sims Metal Group outperformed the market with a gain of 9 per cent to $16.56 after an earnings upgrade.

Chief executive of FP Markets, Nick Twidale, said traders were cautiously optimistic at the moment given indices were grinding back up towards record highs.

“It is a bit ‘up the stairs, down the elevator’ at the moment with the risk that we will have sharp deep corrections,″⁣ he said.

“Medium-term, we are looking for how quickly the US and other governments are going to turn off the taps. There is positive optimism that the taps will stay on.”

A Moody’s Analytics report noted Australia was one of the first countries in Asia-Pacific to ease its fiscal stimulus while Malaysia, Singapore and Japan were expected to keep support going until most of their populations were vaccinated.

As the ASX closed futures were pointing to a flat session on Wall Street overnight with slight declines in Dow Jones and S&P500 futures.

Chief executive of Kalkine Group, Kunal Sawhney, said Australian shares had been flying high on Monday morning thanks to upbeat economic data and optimistic corporate earnings season in the United States.

“It will be interesting to watch whether the corporate earnings justify sky-high valuations of companies or unearth a shady side of the visual economic boom,″⁣ he said.

“While banks and miners are riding high, ASX energy players are under some pressure amid softening crude oil prices over the weekend.”

Energy stocks underperformed the ASX with Whitehaven Coal down 2.7 per cent after reducing its production forecast last week, Woodside Petroleum down 1.9 per cent, and Origin Energy down 2.1 per cent. Santos and Oil Search both dropped more than 1 per cent.

ASX loses steam, closes marginally higher

By Alex Druce

The Australian sharemarket handed back its early lead to close marginally in front, adding 2.1 points on Monday as tech, property and energy stocks weighed.

The ASX 200 was up by as much as 0.4 per cent in early trade and reached a peak of 7094.8. It closed at 7065.6, its best finish since February 24 last year.

Monday’s meagre rise was the market’s most unconvincing in a five-strong winning streak. Nonetheless, it was yet another session that finished in a 13-month high.

Futures are pointing towards a flat session on the Nasdaq tonight and a 0.3 per cent decline on the Dow Jones and 0.2 per cent decline on the S&P500.

‘Exponential rate:’ Canva’s growth spurt revealed in regulatory filing

By Cara Waters

High-flying design software startup Canva has provided a glimpse into its booming business with documents filed to the corporate regulator showing it doubled its Australian revenue in its most recently reported financial year.

Accounts filed with the the Australian Securities and Investment Commission (ASIC) show Canva’s consolidated revenue for the company and its subsidiaries in the 2019 was $187.5 million, up 104 per cent from $83.6 million in 2018.

The company told this masthead earlier this year its total global revenue surpassed $US500 ($650 million) in the year ending March 31, 2021. That implies another doubling in revenue in the ensuing 15 months from the ASIC filing, a period that encompasses the coronavirus pandemic which in turn let dramatic changes to the way people work.

Canva co-founders Cameron Adams, Cliff Obrecht and Melanie Perkins have found the shift in the way people are working has driven platform’s growth through the pandemic.

Canva co-founders Cameron Adams, Cliff Obrecht and Melanie Perkins have found the shift in the way people are working has driven platform’s growth through the pandemic.

Canva this month cemented its status as Australia’s most hyped private company after raising a fresh round of funding that valued its operations at $US15 billion ($19.7 billion).

A spokesman for Canva said the startup was squarely focused on its international, rather than local performance.

“Our ASIC filings are representative of our Australian entity only, for the 12 months ended 31/12/19, and are not indicative of Canva’s global financial performance,” he said. “Canva has been profitable on an adjusted EBITDA basis since 2017 and continues to grow at an exponential rate.”

The spokesman added that Canva expected to double its revenue for the financial year ending March 31, 2022 to turn over $US1 billion.

Read the full story here 

An invasion of corporate zombies may still be on the horizon

By Stephen Bartholomeusz

Opinion

A year ago it appeared the global economy was about to fall into a pandemic-carved abyss. Now, according to the International Monetary Fund, it is experiencing its strongest growth on record.

That global growth – the IMF has forecast six per cent this year and 4.4 per cent in 2022 – means an economic catastrophe has been averted, or at least largely blunted hasn’t, however, come without a cost.

The global economy has roared back to life but debt levels are soaring.

The global economy has roared back to life but debt levels are soaring. Credit:Bloomberg

The IMF’s estimate of the fiscal responses of government to the pandemic is $US16 trillion ($20.7 trillion), a number that is still rising and which may even now be conservative. It has said the peak for global fiscal deficits last year was about 14 per cent of world GDP – a 10 percentage point increase on 2019.

The four major central banks – the US Federal Reserve, the European Central Bank, the Bank of Japan and the Peoples’ Bank of China – have so far expanded their balance sheets by about $US10 trillion over the course of the pandemic.

There’s also been a surge in global debt as governments, businesses and households have loaded up with cheap borrowings, whether through pandemic-inflicted necessity or opportunism.

Read Bartho’s full column here

MoneyMe beats quarterly estimates

By Alex Druce

Digital lender MoneyMe was trading higher this afternoon thanks to a strong third-quarter update that showed an improving loan book.

Shares in MoneyMe were last 0.4 per cent ahead for the session at $1.45.

The $250 million firm - which listed on the ASX in December 2019 - offers online loans of up to $50,000.

Clayton Howes, CEO of MoneyMe.

Clayton Howes, CEO of MoneyMe.Credit:Ryan Stuart

The company hit a share price high of about $1.90 just before the market’s coronavirus plunge in February last year.

It said quarterly loan origination growth - the process that people go through to secure a mortgage - was up 20 per cent on February’s run-rate, ahead of RBC Capital estimates.

RBC Capital Markets analyst Tim Piper also said MoneyMe’s credit quality remained healthy, with the average Equifax credit reporting score continuing to improve.

MoneyMe’s guidance for its financial year-ending loan book was up 13 per cent on RBC estimates at $265 million.

With funding costs continuing to improve towards mid-single digit levels … and credit quality remaining stable, (MoneyMe) appears well placed for generate healthy earnings growth in (the second half),” Mr Piper said.

“The company is a key beneficiary of the structural shift to online and digital credit products.”

Gold price hits seven-week high

By Alex Druce

The gold price is at its highest in about seven weeks so, naturally, the companies who dig it up are also on the rise.

Spot gold was last $US1776.94 an ounce and earlier rose above $US1780 an ounce for the first time since late February. In the local currency it is trading at $2,297.44 today.

Visitors inspect Kirkland Lake’s Gold Mine near Bendigo, Victoria.

Visitors inspect Kirkland Lake’s Gold Mine near Bendigo, Victoria. Credit:Bloomberg

Gold miners have been among the biggest ASX gainers so far this month as the precious metal continues its recovery from near 12-month lows.

ANZ’s research team says the precious metal is coming off its biggest weekly gain since December amid lower bond yields and a weaker US dollar.

“A move above its 50 day moving average could also see prices break out of its recent tight trading range,” ANZ said in a note this morning.

“The market was also buoyed by reports that China has given banks permission to import large amounts of bullion to meet domestic demand.”

The $22 billion Newcrest Mining was up 0.9 per cent today at $27.965 and has gained 14.5 per cent so far this month. Northern Star was up 1.7 per cent at $11.40, and has gained 20.2 per cent in April, while Evolution Mining rose 2.5 per cent to $4.725 and is 15.8 per cent higher for the month.

Perseus Mining, Silver Lake Resources, Ramelius Resources, Gold Road Resources, and Resolute Mining have each added more than 15 per cent to their value in April.

The wider materials sector was 0.7 per cent higher with 90 minutes left in Monday’s session.

Asia-Pacific economic recovery dependent on vaccine rollouts

By Lucy Battersby

China’s stock market is up 2.1 per cent today following Friday’s better than expected retail sales and strong economic growth, with annual GDP growth running at 18.3 per cent. Mainland China’s CSI300 index is still below the 13-year highs reached in February 2020, but is outperforming the rest of the region today.

Hong Kong’s Hang Seng is up 0.8 per cent and Japan’s Nikkei is up 0.2 per cent. Meanwhile the S&P/ASX 200 is just ahead at +0.1 per cent.

Thailand’s economy is heavily reliant on tourism and has been hit hard by the pandemic.

Thailand’s economy is heavily reliant on tourism and has been hit hard by the pandemic. Credit:Bloomberg

Moody’s Analytics notes Australia is one of the first countries in the Asia-Pacific region to ease its fiscal stimulus and that our unemployment rate is expected to rise later this year. On the other hand, Malaysia, Singapore and Japan are expected to keep their fiscal support going until most of their populations are vaccinated at the end of this year.

“The entire region will continue to recover from last year’s deep downturn as vaccines become more widely available, as global demand for goods improves, and as local domestic economies strengthen on the back of pent-up consumer demand,” Steven Cochrane from Moody’s Analytics wrote in his latest report.

China, Taiwan, and Vietnam are likely to lead the recovery given they are linchpins in the high-value supply chains. Hong Kong’s economy could “receive an extra jolt” if it goes ahead with plans to re-open its border with mainland China. But Thailand was expected to be the weakest performer as its economy is heavily reliant on tourism.

“Given its struggles to roll out vaccines and the heightened social distancing measures that recently have been put in place, it is questionable when Thailand will be able to open its borders freely to international travel,” Mr Cochrane noted.

Japan and South Korea’s domestic economies are “still hobbled by social distancing measures employed in stubborn COVID-19 clusters”, while the Philippines lags dues to surging COVID-19 cases and a severe vaccine shortage.

“The global economy will accelerate in the coming months as stimulus spending in the US kicks in, followed later this summer by a re-bounding European economy,” he predicts.

ESR set to nab Blackstone portfolio

By Carolyn Cummins

ESR Australia has emerged the victor on the sale of the Blackstone industrial property portfolio, paying $3.8 billion for what is known as the milestone assets.

Blackstone entered the country through the takeover of the former Valad Property, now known as 151 Property, and the funds raised could be used to boost the Blackstone local business and help its $8 billion offer to take over James Packer’s Crown Resorts.

ESR being a front-runner was first revealed in this column last Thursday.

The group, run by Phil Pearce, beat other contenders of Dexus, LOGOS and the Singapore-based Mapletree. ESR Australia partnered with GIC as its capital partner for the acquisition under a newly formed investment vehicle, EMP, which will see ESR contribute 20 per cent of the equity.

ANZ Banking Group, Mitsubishi UFJ Financial Group, Standard Chartered and United Overseas Bank are providing fully underwritten debt facilities for the acquisition of the real estate asset.

ESR entered the Australian market in 2018 through the acquisition of industry leaders, Propertylink Group and Commercial & Industrial Property Pty Ltd, which now operate wholly as ESR Australia.

The portfolio comprises 45 industrial assets across Australia’s major capital cities. With a land area of 3.6m sq m and gross lettable area (GLA) of 1.4m sq m the site cover is a modest 38 per cent and provides significant scope for further development.

Tenants in the properties include Woolworths, Lineage Logistics, Toll (Japan Post), Daimler Benz, Australia Post, Mazda and WesTrac.

Mr Pearce said the transaction will see ESR emerge as the third-largest logistics landlord in Australia with assets under management increasing to $7.9 billion.

“The opportunity to secure such a large portfolio with extremely well-located assets across Adelaide, Brisbane, Melbourne, Perth and Sydney, strategically positions EMP to benefit from the continued growth in demand for warehouse space, particularly as the robust demand for logistics real estate is expected to remain strong due to sustained growth in e-commerce sales,” he said.

Whitehaven shares slump further

By Alex Druce

Investors continue to punish coal miner Whitehaven, with the company’s shares now down 21 per cent since its dire trading update last week.

The NSW coal miner was 2.2 per cent lower at $1.455 on Monday, extending losses of 4.5 per cent on Friday and 15.5 per cent on Thursday.

A Whitehaven Coal mine near Narrabri.

A Whitehaven Coal mine near Narrabri.Credit:AP

The $1.5 billion Whitehaven had been trading at a 10-month high of $1.845 last Thursday when it cut its full-year production and sales outlook following disruptions at its Narrabri mine.

Shares in the company are currently at a four-month low.

Whitehaven slumped to a more than four-year low of 83 cents in September amid coal pricing pressure, but rallied in a year-ending reflation trade

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