ASX update; strongest in three months
Strongest day in three months, Service Stream (ASX:SSM) leads on NBN expansion, US sell of continues, ASX to open lower
The ASX 200 (ASX:XJO) recovered strongly on Wednesday, bouncing 2.4% higher with just seventeen stocks finishing lower.
The industrial sector lead the market higher, 4%, boosted by 4% behind a strong recovery in Transurban Group (ASX:TCL) and Sydney Airport (ASX:SYD), as cases continued to fall in Victoria and border restrictions are loosened.
Service Stream Ltd (ASX:SSM) was the standout, the NBN installer finishing 14.0% higher after NBN Co announced it would be offering a fibre to the home service for up to $10 million Australian households.
The depth of the Victorian lockdowns was reflected in August retail sales, which fell 4.2% month on month, but more than 12% in Victoria.
This was still 4.9% higher than 2019, showing the sharp recovery once conditions return to normal. Adventure retailer Kathmandu Holdings Ltd (ASX:KMD) fell 8.5% on the news announcing an 85% fall in profit for the financial year to just $8.9 million.
Keating backs MMT, Telsa (NASDAQ:TSLA) battery day disappoints, RBA to cut, don’t get your hopes up
Paul Keating delivered an extraordinary and much needed rebuke to the perceived lack of action from the RBA, calling out the Boards ‘indolence’ on the issue.
He continued suggesting the central bank should be explicitly supporting the government, so the country does not experience a massive fall in unemployment.
Instead of directly funding Government stimulus, the RBA is buying bonds from the banking sector to keep rates artificially low. It’s clear fiscal stimulus is needed and the cost of a job saved today is far higher than an extended period of unemployment.
It’s difficult not to agree with the sentiment, given the pain experienced in Australia, and await what is expected to be an expansive Federal Budget in October.
Elsewhere, Westpac economist Bill Evans forecast the RBA will cut interest rates to just 0.1% in October, the AUD has fallen to $0.71 during the week.
TSLA remains under selling pressure down 10.4%, announcing its $25,000 car would not be available for at least another three years and flagging issues with the stubbornly high cost of batteries.
Lack of stimulus catching up with markets, IPO’s ramping up, Nike delivers
The selloff continues in the US, with the Nasdaq down over 3% on the back of weakness in TSLA, with the S&P 500 similarly falling 2.4%.
It has become clear that a second round of stimulus measures is unlikely to be forthcoming, the Republicans and Democrats at an impasse to the detriment of the US population.
This despite the Federal Reserve continue to stress the importance of more economic support.
With COVID-19 cases spiking globally again, Johnson and Johnson’s (NYSE:JNJ) announcement of a drug trial with 60,000 people didn’t capture the excitement of markets.
Nike Inc. (NYSE:NKE) showed its resilience, surging 13%, after announcing an 11% increase in profit in the quarter, to $1.5 billion, pushed higher by online sales and its Chinese expansion.
European markets bucked the trend, finishing 0.5% higher, as both Adidas (DE:ADS) and Puma (DE:PUMA) rallied by over 4% on Nike’s strong performance.