ASX rebounds, chalking up a healthy $42b as ‘tongues wag’ the RBA may cut rates again

September 23, 2020 - 1 month ago
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The ASX put in a stellar performance today and snap a four-day bearish streak after displaying its best session in two-months on Wednesday as ‘tongues were wagging’ following market speculation that the Reserve Bank of Australia will cut its cash rate once again.

On Tuesday, the RBA Deputy Governor Guy Debelle said that Australia’s central bank is assessing various monetary policy options, including currency market intervention and negative rates to meet its inflation and employment goals.

Mr Debelle had also suggested the Reserve Bank is a little uncomfortable with the level of the Australian dollar, saying a lower exchange rate would “definitely be beneficial” for the Australian economy.

Analysts expect the Reserve Bank could cut the cash rate to 0.10% as early as the next board meeting on October 6, coinciding with the release of the federal budget.

The benchmark index had fallen over -3% since last Thursday and erased roughly $50 billion in the selloff; however, today’s rally of +2.42% put the ASX 200 back on the bullish road after chalking up a healthy $42 billion of the value of Australian listed companies.

The benchmark S&P/ASX 200 index surged +139 points, or +2.42%, to 5,923.89 in its best day since July 21, while the broader All Ordinaries index rose +137.8 points, or +2.3%, to 6,111.3.

The Financial sector shined today after National Australia Bank lead the “Fab Four” (banks) higher after rallying +2.88% to $17.12, while Australia and New Zealand Banking Group climbed +2.37% to $16.85, with Westpac Banking Corp advancing +2.12% to +$16.39, the Commonwealth Bank added +1.9% to $64.27, and Macquarie Group added +1.86% to $122.23.

Mining heavyweights, meanwhile, also lead the index higher, with titans BHP Group climbed +1.31% to $37.15, while Rio Tinto rose 0.52% to $97.50, and Fortescue Metals added +0.69% to $15.98.

Biotechnology giant CSL rose +3.8% to close at a month-high $297.21.

Toll road operator Transurban rallied +4.9% to $14.44, and Sydney Airport rose +4.9% to $5.80.

Aristocrat Leisure surged +5.1% to $30.64 after JPMorgan tipped the slot machine company strong growth after forecasting it will enter the iGaming marker by the second half of the 2021 financial year.

The broker held its overweight rating on the stock and increased its price target to $38.60 from $28.50.

Elsewhere, Qantas was +4.5% higher at $3.94 after the airline announced it is ending its 30-year sponsorship with Rugby Australia after a review of its major sporting sponsorship deals.

Outdoor adventure retailer Kathmandu plummeted -8.5% to $1.07 after it said its net profit from continuing operations plunged 84.6 per cent to $NZ8.88 million ($8.2 million) in the year ended July 31, while revenue rose +48.7% to $NZ801.5 million.

Afterpay rose +2.9% to $78.73 to help the tech sector gain a collective +2.7%.

Its newly acquired surf brand Rip Curl added $NZ315.7 million of the sales total in the nine months it contributed to the full-year result.

It said COVID-19 related lockdowns lopped about $NZ135 million off full-year sales, with Rip Curl most affected because of the impact on global trade.

Wesfarmers surged +2.9% to $45.68, Woolworths added +3.8% to $38.25, and Telstra chalked up a +1.77% to $2.87.

Nufarm advanced +4.3% to $4.34 after reporting a day earlier, as it swung to a $456 million full-year loss that stemmed from $215 million in impairments related to its European assets’ value. Revenue rose +6.5% to $2.847 billion.

Internet network services business Service Stream surged +14% to $2.03 after the NBN Company said it would spend $4.5 billion in the next two years to provide almost 10 million households and businesses with the option of high-speed fibre connections.

Service Stream shares already have long-term contracts with NBN Co to provide multi-technology network operations, maintenance and optimisation services. Investors are betting it’s a prime beneficiary of the NBN’s upgrade plans.

The Australian Bureau of Statistics preliminary retail trade figures for the month showed national turnover fell from last month’s +3.2% to -4.2%.

Meanwhile, our local currency, the Australian dollar plummeted -1.03%, hitting its lowest level since early August at US$0.7102 and is currently buying US$0.7106 (as of writing).

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