Afternoon Report / Shorts are for the beach at Christmas! ASX rallies 1.2%, tech leads with energy & resource close behind, Z1P raises capital (Z1P, BAP)

*Some email issues yesterday afternoon and this morning for a small number of our members. We apologies for the inconvenience and we believe this is now fixed. We do post all reports on the website (www.marketmatters.com.au).  

WHAT MATTERED TODAY

The ASX rallied strongly today adding 1.2% for the best daily gain in a few weeks, the Santa rally seems to be starting underpinned by a stronger than expected economic update today. Technology was led higher by Afterpay (APT) +5.7% which hit another all time high, so too did Xero (XRO) on a close basis which we hold in the growth portfolio, while Zip Co (Z1P) tapped the market for $120m in growth capital.

Not all was positive though today with the travel stocks feeling some heat after a new COVID outbreak on the Northern Beaches of Sydney, which is where I live. WA are now thinking about shutting their borders while Queensland thus far are saying it’s too early – in any case, it’s a negative for travel stocks and we saw the likes of Flight Centre (FLT) -3.03% and Corporate Travel (CTD) -4.37% trade lower today.

Aside from the strong economic update from the Treasurer today, we also had a decent set of employment figures with the unemployment rate falling to 6.8% v 7% expected plus there was a stronger than expected participation rate.  

Source: Bloomberg

All up a solid session for the ASX with a backdrop of better economic trends and a hugely stimulatory environment with low rates and fiscal support, we remain bullish equities well into next year.

The ASX 200 finished up +77pts / 1.16%% to close at 6756. Dow Futures are trading up +64pts / +0.29%

ASX 200 Chart

ASX 200 Chart

CATCHING MY EYE

Zip Co (Z1P) +1.08%: Ended the session higher today after announcing a $150m capital raising to fund international growth. The raise was a poorly kept secret and perhaps the reason why the stock has been on the nose of late relative to Afterpay (APT), however they ripped the Band-Aid off overnight and tapped insto’s for 120m at $5.34 (4.1% discount to last close) and they’ll raise another $30m in a share purchase plan through retail.   The proceeds will be used for: 1) US growth ($85m); 2) UK expansion ($15m); 3) new markets ($35m); 4) product expansion ($12m). They should now be very well placed to execute on a variety of growth strategies, and with some luck, the stock might rally – APT is certainly showing how it’s done.

Zip Co (Z1P) Chart

Bapcor (BAP) +3.01%: came off the boil through the session, though finished higher on a solid update for the first 5 months of the new year. Certainly, a winner out of COVID, the car parts business has ridden the coat tails of the new world order in terms of travel. Revenue was 26% higher through to the end of November with profit eyeing a 50% boost for the first half. This sort of trend is indicative across the retail landscape as present as cashed up consumers consume…

Bapcor (BAP) Chart

BROKER MOVES

  • Maas Group Rated New Buy at Moelis & Company; PT A$3.08
  • APA Group Raised to Hold at Morningstar; PT A$9.50
  • Saracen Mineral Raised to Buy at Citi; PT A$5.30
  • Perseus Raised to Buy at Citi; PT A$1.55
  • Northern Star Raised to Buy at Citi; PT A$13.90
  • Zip Co. Raised to Neutral at UBS; PT A$5.70
  • Countplus Raised to Overweight at Wilsons; PT A$1.30
  • Service Stream Cut to Hold at Canaccord; PT A$2.25
  • Codan Raised to Buy at Canaccord; PT A$13
  • Adbri Cut to Sell at Morningstar
  • Centuria Capital Group Rated New Neutral at Goldman; PT A$2.52
  • Zip Co. Rated New Negative at Evans & Partners Pty Ltd
  • Sezzle GDRs Rated New Positive at Evans & Partners Pty Ltd

OUR CALLS

No changes today

Major Movers Today

Have a great night

James, Harry & the Market Matters Team

Disclosure

Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.

Disclaimer

All figures contained from sources believed to be accurate.  All prices stated are based on the last close price at the time of writing unless otherwise noted. Market Matters does not make any representation of warranty as to the accuracy of the figures or prices and disclaims any liability resulting from any inaccuracy. 

Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The Market Matters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.

The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.  Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.

The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports. Market Matters may publish content sourced from external content providers.

If you rely on a Report, you do so at your own risk. Past performance is not an indication of future performance. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.