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ASX200 jump again, BHP records broken

21.1.21

ASX200 jump again, BHP (ASX:BHP) records broken, Ansell (ASX:ANN) demand continues

The ASX200 had another strong day, this time a combination of energy (1.34%) and IT (2.54%) sending the price higher.

It seems overseas investors may have identified Afterpay (ASX:APT) as a cheaper alternative to their own Affirm (NASDAQ:AFRM) with the company hitting another all-time high today.

BHP Group (ASX:BHP) released their quarterly activities report which made for a good read, the company reported record iron ore production of 128.4 million tonnes for the half.

With iron ore prices now exceeding US$170 per tonne the company has been able to reduce gross debt by another US$4.1 billion in a half, opening the door for higher dividends and buybacks.

Copper production fell 5% but is becoming a key growth driver, with every renewable energy or electric vehicle assets requiring the in-demand commodity.

Shares finished 1.4% higher but likely require a sustained iron ore price to justify the valuation.

Glovemaker Ansell (ASX:ANN) upgraded their earnings guidance, expecting organic growth of 20% in the second half which will take their earnings to a 62-68% improvement for the year.

Most importantly, management announced that they expect current heightened demand to continue for the remainder of the financial year; shares jumped 4.1% with the company looking fully valued.

Australian Foundation (ASX:AFO) profit crashes, Regis AND 360 Capital

Listed investment company Australian Foundation reported a 42% fall in profit in the first half, down from $164.1 million to $95.2 million.

The key driver was dividend cuts from investments in CBA (8.1% of the portfolio), Westpac (3.8%), and Transurban (4.1%).

Despite the fall management kept the dividend in line with 2020 levels at 10 cents per share.

This is both a drawback and a benefit of the structure, with dividends able to continue despite profit falling and the underlying portfolio performing poorly, but obviously, this can only be sustained for so long.

Elsewhere, 360 Capital’s (ASX:TGP) bid for under pressure financial advisory group Evans & Partners (ASX:EP1) suffered a set-back with the Takeover Panel refusing to consider the deal due to the inclusion of a condition ‘relating to the withdrawal, discontinuation, settlement or determination of certain ASIC proceedings concerning a wholly-owned subsidiary of EP1’; shares remain below the $0.66 offer price.

Shares in aged care provider Regis Healthcare (ASX:REG) also fell 8.1% after Washington H. Soul Pattison (ASX:WSP) abandoned their $1.85 per share takeover offer.

US markets spike on new stimulus, Alibaba’s Jack Ma resurfaces, Netflix subscribers hit 200 million

US markets were buoyed by the inauguration of President Joe Biden, along with the confirmation of Janet Yellen’s confirmation as Secretary of the Treasury.

Both are clearly committed to the debt-funded stimulus programs and now have the majority in both houses to pass them.

The Nasdaq moved 2.0% higher and the S&P500 1.4%, with Netflix (NASDAQ:NFLX) and Alibaba (NYSE:BABA) key contributors.

Shares in Netflix added 16.8% after smashing expectations by reporting a total of 200 million subscribers to their video streaming platform.

The group added 37 million subscribers in just 12 months, or around 3 million per month, hitting a total of 200 million. Interestingly, this number could be usurped solely from India, where the company recently launched.

Management now estimating the company will be cash flow breakeven in 2021, earlier than expected.

The company is at the centre of one of the most powerful trends of this decade, seeing huge subscriber growth but losing billions of dollars to create content to sustain the growth.

Alibaba on the other hand added 8.5% after Jack Ma resurfaced several months after facing regulatory pressure regarding the listing of ANT Group.

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