Market Insights – 29/06/2020

Market Insights – 29/06/2020

Market Insights

29th June 2020

Top Stocks

CODE

PRICE

MOVEMENT

 

CODE

PRICE

MOVEMENT

CSL

$292.74

2.22%

 

NAB

$18.40

0.00%

CBA

$69.27

1.64%

 

ANZ

$18.80

0.80%

BHP

$36.05

3.59%

 

WES

$43.91

3.29%

WBC

$17.99

0.62%

 

TLS

$3.13

-1.57%

WOW

$36.39

-0.30%

 

RIO

$98.99

3.93%

Market and Exchange Rates

MAJOR FOREIGN MARKETS

 

AUSTRALIAN DOLLAR IS BUYING

All Ords

6,011.80

1.14%

 

US Dollar

0.6859

Dow Jones

25,015.55

-2.84%

 

Euro

0.6108

FTSE-100

6,159.30

0.20%

 

GB

0.5553

Nikkei 

22,512.08

1.13%

 

Yen

73.4520

Commodities

Oil (WTI)

38.070

-2.25%

Gold

1,780.30

0.55%

Iron Ore

103.080

0.15%

Major Market Announcements

– Wall Street’s major indexes tumbled more than 2% on Friday as several U.S. states imposed business restrictions in response to a surge in coronavirus cases.

– The ASX is likely to start the week under pressure after a fairly sharp fall on Wall Street last Friday, with the Dow Jones index falling 730 points, about 2.8 per cent, while the S&P 500 fell about 2.4 per cent. With futures contract pointing to a 91 points or 1.6 per cent fall for the benchmark ASX200 at the open, the resurgence of COVID-19 cases globally is making investors sweat about how quickly the local economy can recover from the pandemic.

– Rental property owners that have had their mortgage repayments deferred due to COVID-19 can still claim the interest on their tax bills, the Australian Taxation Office (ATO) says. But those that have been awarded insurance payouts for loss of rental income due to COVID-19, bushfires or floods will still be taxed on it.

– Telstra’s foray into the healthcare sector may have slipped below the radar of most investors, but after a close call in 2017 the Telstra Health business is not just alive and kicking but ready to step back into the spotlight. Led by managing director Mary Foley and the head of Telstra’s InfraCo division, Brendon Riley, Telstra Health’s journey closely resembles that of a Silicon Valley technology business propelled by an attractive vision and lots of cash but let down by poor execution.

– Play Travel is hoping to replicate the success of its backer Afterpay in enticing Millennial consumers to get through the coronavirus-induced squeeze on the travel sector, with the start-up’s founder Andrew Paykel saying the buy now, pay later model works just as well for paying for a holiday as it does for clothes. Mr Paykel launched Play, initially called LayAway Travel, in 2015 after almost 20 years working in his family business Fisher & Paykel which was sold to Chinese appliance manufacturer Haier. The online travel agency lets customers book holiday packages, including flights and accommodation, and pay for them in weekly instalments over three to 12 months.

Market Update

The Australian share market has risen strongly, with banks leading the rally following strong gains for financial stocks on Wall Street overnight.

By the close of trade, the ASX 200 was 1.5 per cent higher at 5,904 points.

The major banks were all up by more than 2 per cent, with the strongest gains made by Westpac (+3.3pc), followed by ANZ (+3pc), NAB (+2.7pc) and the Commonwealth Bank (+2.4pc).

The rise in Westpac shares came as the Federal Court dismissed an appeal by the corporate regulator ASIC, finding that Westpac did not breach responsible lending laws in making around 262,000 home loans between 2011 and 2015.

Qantas shares returned to trade after completing a $1.36 billion share placement to institutional investors.

The airline’s shares slumped, down 9.1 per cent to $3.81, after raising the capital as part of its plan to deal with the coronavirus fallout, which included slashing 6,000 jobs.

However, the airline’s share price remained above the discounted price of the new shares, which was set at $3.65.

Elsewhere in the airline sector, Virgin Australia’s administrators have entered a sale agreement with Bain Capital, after rival bidder Cyrus Capital Partners withdrew its offer.

The Australian dollar was buying around 68.8 US cents.

Share Watch

BetaShares S&P/ASX Australian Technology Fund (ASX: ATEC)

ATEC is an Exchange Traded Fund (ETF) that provides investors with diversified exposure to innovative companies leading Australia’s fast growing technology sector, including WiseTech Global, REA Group, Xero, Afterpay, carsales.com and many more!

ATEC can also provide further diversification benefits to existing portfolios with heavy weighting to large-cap financials and resource stocks.

 ATEC provides exposure to 51 companies, with the top 10 holdings representing 70% of the overall holding

Newly listed ETF in March 2020, although companies listed within are well known companies. ATEC was at $9.28 back in March, and is now trading at $17.03. Up 83.50% 

At all times, proceed with caution, and always follow a well-established investment plan, to ensure you take advantage of the market downturns for the potential longer term return.

All Ordinaries (XAO) 5 Day Chart

Disclaimer: The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

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June 2020 – Xero Tip

June 2020 – Xero Tip

June 2020 – Xero Tip

Customise Your Xero Dashboard

cyber-security-laptop

Did you know that you can move the panels on your dashboard around or hide them? Your dashboard is user-specific, so only you will see these changes.

To do this:

Click Edit dashboard at the end of the page.

You can then:

Click on the panel and drag it into the new position.

Click Hide or Show to remove or add a panel back to your dashboard.

Click Save Changes.

Below are examples of some items you can add and remove from your dashboard:

Panel Description
Total cashflow or Total cash in and out This shows the cash moving in and out of your organisation, based on figures in the Bank Summary Report.
Account watchlist

To display the Account watchlist panel, you need to edit an account in your chart of accounts and select the Show on Dashboard Watchlist checkbox.

The Account watchlist shows two balances:

  • This Month – balance posted to the account during the current month.
  • YTD – balance posted to the account for the financial year, to the end of the current month.

For balance sheet accounts, the YTD column will show a cumulative balance that includes all transactions posted to the account since you started using Xero.

Bank Accounts When you add a bank account, you have to option to show or hide bank accounts on your dashboard.
Invoices owed to you A summary of the invoices owing to you, and how long they’ve been owed based on the due dates of sales invoices you’ve sent to your customers (essentially an aged debtors/sales snapshot). Links through to the sales overview.
Bills you need to pay A graphical snapshot of the bills you need to pay, and when you need to pay them. Links through to the purchases overview.
Expense Claims

Depending on your user role, you’ll see a summary of all your expense claims to help you keep track of the status of claims.

Click New claim to submit a new expense claim, or select a status to view expenses with that status.

Business performance graphs If any business performance graphs are favourited, you’ll see them on your main dashboard under the heading Business performance.

Need more help or information?

Click the link below to contact us at Plus 1.

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Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

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1.75% Increase to Minimum Wages

1.75% Increase to Minimum Wages

1.75% Increase to Minimum Wages

cyber-security-laptop

The National Wage decision was announced on June 19th with a 1.75% increase awarded. This will be phased in over 3 dates.

Essential services awards such as Health, Electricity, Gas, Social & Community Services, Firefighters, Pharmacy will increase from July 1st, 2020.

The 2nd phase will increase from 1st November and includes the Clerical, Construction, Transport, Horticulture, Professional, Education, Veterinary and Waste management awards.

The final phase of increases will occur from 1st February 2021 and primarily cover the most affected COVID-19 industries such as Retail, Fitness, Hair & Beauty, Fast Food, Travel, Restaurant and Hospitality industries.

The absolute minimum wage applicable for an adult under any award will now increase to $19.84 per hour being $753.80 per standard 38 hour week.

Last week, the Victorian Government introduced a new bill to govern the issue of wages theft. The Wage Theft Bill 2020 will make underpayment of wages a criminal offence.

The bill will come into effect from 1st July 2021 and will place more stringent record keeping requirements on all employers.

For more information visit the Fairwork website

Need more help or information?

Click the link below to contact us at Plus 1.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

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T: (03) 5833 3000
F: (03) 5831 2988
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Don’t Judge a Stock by its Share Price

Don’t Judge a Stock by its Share Price

Don’t Judge a Stock by its Share Price

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Some people incorrectly assume that a stock with a low dollar price is cheap, while another one with a higher price is expensive. In fact, a stock’s price says very little about the stock’s value. Even more important, it says nothing at all about whether that stock is headed, higher or lower.

For example, Company A has a $100 billion market capitalization and has 10 billion shares, while Company B has a $1 billion market capitalization and 100 million shares, both companies will have a share price of $10. But company A is worth 100 times more than Company B.

A stock with a $100 share price may seem very expensive when compared to a stock with a $5 trading price. Some might think that the $5 stock has a better chance of doubling than the $100 stock does. However, the $5 stock could be considered overvalued, and the $100 stock could be undervalued. The opposite also could be true as well, but the share price alone is no sign of value.

Below is an example; CSL and ResMed are both Australian listed companies traded on the ASX, both offering exposure to Healthcare.

In early June, CSL was trading at $288.76 per share, and RMD was trading at $23.59 per share, therefore, RMD may seem like a better share based on its price and that you would get more quantity for your purchase.

cyber-security-laptop

As can be seen in the above table, CSL may look like the “expensive stock” based on the share price only. But when looking at the company’s fundamentals, both stocks have performed very similar over this period.

The main take away here is to not make the mistake of looking at the share price only, it is important to understand the company itself and what you are buying into, what are the companies goals, fundamentals, intrinsic value, to name a few. As Warren Buffett famously said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

We are always available to discuss your investment queries, options and ideas. Feel free to contact our office on 03 58 333 000.

Need more help or information?

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8:00am to 5:00pm

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F: (03) 5831 2988
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Market Insights – 29/06/2020

Market Insights – 22/06/2020

Market Insights

15th June 2020

Top Stocks

CODE

PRICE

MOVEMENT

 

CODE

PRICE

MOVEMENT

CSL

$288.25

2.18%

 

NAB

$18.67

0.76%

CBA

$68.68

2.17%

 

ANZ

$18.75

-0.95%

BHP

$35.01

-2.75%

 

WES

$43.14

3.60%

WBC

$18.17

1.62%

 

TLS

$3.19

1.27%

WOW

$36.55

0.97%

 

RIO

$96.28

-1.77%

Market and Exchange Rates

MAJOR FOREIGN MARKETS

 

AUSTRALIAN DOLLAR IS BUYING

All Ords

6,061.0

0.16%

 

US Dollar

0.6820

Dow Jones

25,871.46

-0.80%

 

Euro

0.6097

FTSE-100

6,292.60

1.10%

 

GB

0.5520

Nikkei 

22,478.79

0.55%

 

Yen

72.8240

Commodities

Oil (WTI)

38.000

1.52%

Gold

1,655.000

1.29%

Iron Ore

103.050

-0.01%

Major Market Announcements

– The S&P 500 ended lower on Friday after an up-and-down session as investors weighed spiking cases of COVID-19 and Apple Inc’s announcement of fresh store closures against anticipated stimulus and continued economic recovery.

– Retail trade rebounded a record 16.3 per cent in May, following a 17.7 per cent plunge in April, amid a gradual easing of coronavirus-related restrictions during the month. Retail turnover in May rose to $28.83 billion and was up 5.3 per cent from May 2019, the Australian Bureau of Statistics said on Friday.

– The minimum wage will increase by $13 a week, affecting the pay packets of more than 2.2 million Australians as the nation deals with its first recession in decades. The Fair Work Commission (FWC) made the decision to lift the minimum wage by 1.75 per cent on Friday morning, well down from the demands from the union movement for a 4 per cent increase. The increase takes the minimum wage to $753.80 per week, or a $19.84 hourly rate.

– After a dramatic escalation in new coronavirus cases, Victoria is going to offer people a cash incentive to stay home if they are sick. The government are now offering people a $1500 incentive to stay at home if they know they’re sick. The payment is part of a Hardship Fund aimed at covering people who can’t rely on sick leave.

– Mining giant Rio Tinto has announced a board-led review of its “heritage management processes” following criticism of its destruction of ancient rock shelters in Western Australia.

– The Federal Tourism Minister says short-term international visitors will probably not be allowed into Australia until at least next year. That has prompted Qantas to cancel all its international flights up to late-October, with the potential exception of flights to and from New Zealand that may be facilitated if a travel “bubble” between the two countries is put in place.

– Virgin Australia’s bondholders are preparing to tip the bankrupt airline’s sale process on its head by lobbing an eleventh-hour proposal to swap their $2 billion of debt for equity and become the new owners in a relaunched airline. The proposal is expected to be presented to Virgin’s administrators Deloitte this week and comes after warnings that unsecured bondholders would be wiped out if Virgin was sold to the shortlisted bidders, Bain Capital and Cyrus Capital Partners.

Market Update

Australian shares jumped after the nation recorded its best-ever retail sales figures, but that rally completely fizzled out by Friday afternoon.

The ASX 200 closed 0.1 per cent higher at 5,943 points, while the broader All Ordinaries index ended its day 0.3 per cent higher at 6,067 points.

In the end, the local share market followed a downbeat mood from US and European markets over a continued surge in COVID-19 infections.

Shortly before midday, the ASX jumped as high as 1.2 per cent and briefly crossed 6,000 points.

That was the market’s reaction to preliminary retail figures from the Bureau of Statistics, which revealed that sales had rebounded by 16.3 per cent to almost $29 billion in May.

This has largely erased April 17.7 per cent decline, its worst result ever.

Combined with strong retail numbers from March, due to panic buying ahead of the COVID-19, the Bureau of Statistics said that retail turnover was 5.3 per cent higher in May this year than it was in May 2019.

The ABS noted there were particularly large rises for clothing, footwear and personal accessory retailing and cafes, restaurants and takeaway food services, as many restrictions on trade were lifted last month.

However, despite the strong rises, both these industries remain well down on the levels of May 2019.

Areas that continued to perform most strongly were household goods — such as furniture, home improvement, home entertainment and offices — and food and liquor retailing as people spend more time at home and less at restaurants.

The Australian dollar was steady at 68.63 US cents.

Predicting a Stock Market Crash

The potential for further stock price declines after the recent market crash may discourage some people from buying high-quality businesses today.

However, predicting the stock market’s performance over a short time horizon can be difficult due to the wide range of inputs that can affect its predictions.

Therefore, buying companies while they offer wide margins of safety could be a smart move. They may be able to deliver impressive performance in the coming years.

Trying to forecast when a market crash will occur is exceptionally difficult. For example, the recent pandemic was an unprecedented event that was not on the radar of the vast majority of investors. Trying to predict what happens next when risks such as a possible second wave and geopolitical challenges between the United States and China are ongoing may prove to be an equally difficult task.

Other crises such as the global financial crisis were also not foreseen by many. And, perhaps more importantly, the scale of recovery from them was not anticipated by most investors while the economic outlook was at its worst and stock prices were at their most attractive.

Buying undervalued stocks

Predictions about the prospect of a further market crash may prove to be of little value in the coming months. By contrast, a strategy that focuses on buying the best-quality companies in an industry that faces an uncertain future could be highly profitable. They may be in a strong position to survive a period of economic difficulty, and could even seek to expand their market positions through taking market share away from competitors.

Moreover, even if the stock market experiences a further downturn, its recovery prospects appear to be bright. The stock market has been able to produce annualised total returns in the high-single digits over the long run. It has also successfully recovered from even its very worst bear markets to rise to new record highs. Therefore, a strategy of purchasing stocks and holding them for the long term is likely to yield a higher return then on offer via other mainstream assets – especially since interest rates are expected to remain low over the medium term.

Portfolio management

Of course, some people may wish to hold some cash over the coming months in case there is a market crash. Doing so may provide the opportunity to capitalise on short-term mispricing’s among high-quality companies.

However, in many cases, stocks appear to include wide margins of safety at the present time that reflect the risks they face during an uncertain period for the world economy. Buying a diverse portfolio of them now and holding them through what could prove to be a volatile period for stock prices may lead to high returns that improve your long-term financial outlook.

Reference: https://www.fool.com.au/2020/06/20/market-crash-2020-could-further-stock-price-declines-be-on-the-horizon/

All Ordinaries (XAO) 5 Day Chart

Disclaimer: The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

Plus 1 Group logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

CPA Logo
Professional Standards Legislation logo
Platinum Xero Partner
MYOB logo
Quickbooks logo

Sentinel Wealth Unit Trust T/As Plus 1 Wealth Advisors (ABN:11 408 695 672) is an Authorised Representative of Sentinel Wealth Managers Pty Ltd
(ABN: 73 108 328 294) AFS Licence 322211 | Financial Services Guide