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ASX ends slightly higher at fresh 13-month high

Daily Market Update

ASX struggles to another record, Sims upgrades guidance, lithium giants to merge

The ASX200 (ASX:XJO) struggled to another record close, finishing just three points higher as a sell off in the energy sector, down -1.4%, offset gains in the mining sector, +0.8%.

The news of the day was the planned merger between Australia’s pureplay lithium miners, Orocobre (ASX:ORE) and Galaxy (ASX:GXY), with the former set to acquire 100% of the shares in the latter to create a $4 billion lithium giant.

  • GXY shareholders will receive 0.569 new shares for every one share held, owning 45.8% of the combined entity.

    The shares prices of both companies benefitted, up 5.7% and 6.1% respectively, with the group set to be a top five lithium producer globally.

    Sims Metal (ASX:SGM) was the other key contributor, jumping 9.0% after upgrading earnings guidance for the financial year. Management now expects earnings in a range of $260 to $310 million with intake volumes of steel recycling around 95% of FY19 levels.

    The company is also benefitted from margin improvement as $70 million in cost reductions combined with higher volumes to deliver bumper profits.

    Clean energy deals continue, Crown’s double act, Bitcoin tumbles amid regulation

    Clean energy assets remain in high demand with NZ-based Tilt Renewables (ASX:TLT) receiving an NZ$8.0 offer from Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), forcing AGL and QIC to respond with an increased bid of NZ$8.10 (AUD$8.77); the share price remains at $7.36.

    Distressed debt investor, Oaktree Capital, has entered the fray to take control of Crown, announcing their interest in a $3 billion debt and equity deal to assist the company in buying out James Packer’s holding; shares added 0.7% on the news.

    As the Coinbase IPO falls post listing, the Bitcoin price tumbled by around 15% overnight as investment banks push for greater regulation of the popular digital asset.

    In a positive sign for yield starved investors, GPT Group has guided to strong dividend and rental growth, expecting an 8% improvement in income receipts and 12% in dividends on 2020’s depressed levels, the share price fell 3.1% on the news.

    Finally, Ramsay Healthcare (ASX:RHC) received confirmation that the French Government will continue to supplement their revenue given the huge value being delivered in the fight against COVID.

    Markets finish lower, IBM posts rare revenue increase, Tesla falls

    US markets snapped their winning streak, the Nasdaq falling 1%, S&P500 0.5%, and Dow Jones 0.4% with little in the way of news being released to start the week.

    Reporting season is set to ramp up with unemployment figures set for later in the week. 

    Concern is growing about the global case count, which hit a daily record of 5.2 million yesterday, driven primarily by India and Brazil, increasing concerns that new variants may emerge.

    Tesla (NYSE:TSLA) shares fell 3.4% after it was reported a car with ‘no one’ driving crash and killed its passengers in the US, opening the threat of more regulation.

    International Business Machines (NYSE:IBM) reported its first quarter revenue increase since 2018, seeing sales rise 1% on 2020 levels to US$17.7 billion.

    The company is seeking to pivot towards cloud software and AI, allowing customers to access the likes of Amazon and Microsoft through its platform. Thus far it seems to be paying off with total cloud revenue increasing 21% during the quarter.