ASX expected to follow Wall Street’s bullish footsteps

February 13, 2020 - 2 weeks ago
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Wall Street pushed solidly higher overnight, with all three major U.S. benchmarks indexes hitting all-time highs, buoyed by signs of a slowdown in the number of new cases of COVID-19 — a strain of coronavirus that emerged in Wuhan, China late last year.

Global equity markets climbed to fresh highs on Wednesday after China reported on Wednesday its lowest number of new coronavirus cases in two weeks, bolstering a forecast by Beijing’s senior medical adviser for the outbreak there to end by April, but United Nations health authorities warned it could still “go in any direction.”

The outbreak of the virus, also known as COVID-19, has now claimed 1,115 lives, with confirmed China cases resulting in 44,653.

Airlines have cancelled more than 85,000 China flights because of the outbreak, according to aviation consulting firm Cirium. That count is set to rise in the coming weeks as more than a dozen international airlines have scrapped or reduced China service altogether.

The cancellations, logged between Jan. 23 through Feb. 11, account for more than a third of scheduled flights, too, from and within China, Cirium said.

Close to 20% of international flights to and from China, or 9,239 trips were cancelled, and 37% or 76,338 flights were cancelled. The impact will likely dent airlines’ first-quarter results as they process refunds to customers booked on those routes.

Meanwhile, U.S. Federal Reserve Chairman Jerome Powell wrapped up his semiannual economic report before congress, during which he reiterated that the central bank is closely monitoring the coronavirus and other threats.

Looking ahead, the local share market is set to trek higher as the SPI 200 futures climbed +34 points or +0.5% to 7,053.

Later today, the arena is open for another big attraction for investors. Telstra (TLS), Treasury Wine Estates (TWE), AGL, AMP, ASX, NCM, GMG, WPL, S32 and NST are set to post earnings. National Bank (NAB) is expected to release its quarterly results while the RBA Governor Philip Lowe will participate in a panel discussion at 11:15 am AEDT.

Daily outlook on the benchmark S&P/ASX 200

On the local share market yesterday, the ASX bulls staged another advance by lifting its horns upward, elevating the local share market on Wednesday, with the finishing trading session adding +32.9 points, or +0.47% to the index, with the close inking in at 7,088.20, extending a +0.6% advance made in the previous session, with CBA accounting for +60% of the day’s gains.

Meanwhile, the broader All Ordinaries index climbed +33.9 points, or +0.47%, to 7,185.3.

Stellar results from Commonwealth Bank boosted shares by +4.1% thanks to its half-year results exceeding market expectations.

Commonwealth Bank of Australia has reported a better-than-expected $4.48bn interim profit, buoyed by higher net interest income which offset lower fee revenue and a $100m hit from bushfires and drought.

Its Net Interest Margin (NIM) managed to edge higher by 1bp to 2.11% (on 2H19) despite super lower interest rates.

CBA maintained its dividend at $2/share. Its gains on Wednesday accounted for around 60% of the market’s total improvements.

Elsewhere, medical biotech giant CSL reported a whopping +11% increase in both revenues and net profit after tax.

The company pulled in roughly $7.3 billion in revenue for the half-year and $1.82 billion in profits. CSL spiked sharply when the market opened but has since pared things back to close to a gain of -0.77% and a new all-time-high closing price of $328.25.

Shares of Australian health supplements firm Blackmores (BKL) plummeted -12.8% after cutting its earnings guidance for the year. It now expects to make between $17-$21m in net profit in FY20. It blamed this partly on the Oct 2019 purchase of a manufacturing facility in Victoria, which pushed costs higher. The coronavirus has also slowed down business, as China is an essential market for the group (20% of sales).

China has experienced a dip in travel which has impacted Duty-Free, e-commerce partners and imports into China.

Miners ended the session weaker, with Titans, BHP tumbling -0.4% to $38.40 and Rio Tinto slipped -1.2% to $97.50.

Evolution Mining gained +2.6% after posting a +62% lift in underlying profit, improved margins, doubled its interim dividend to 7c and paid off all its debt.

The main driver of the result was a significant lift in the gold price received for each ounce of gold sold.

Beach Energy shares sank -4.3% to $2.21 after it released its profit result a session earlier. Packaging firm Orora close was disappointing with its shares falling -4.1% to $3.01.

Other strong improvers Idp Education Ltd (IEL), which soared +28.42%, while, Tassal Group Ltd added +11.89%. Carsales surged +8.3%, and Bapcor advanced by +6.1%.

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