Afternoon Report / Banks take ASX to 12 weeks low (HVN, DXS)

By Market Matters 21 September 20

Banks take ASX to 12 weeks low (HVN, DXS)

Market Matters Afternoon Report 21st September 2020

WHAT MATTERED TODAY

The local market struggled today with sustained selling seen in market heavy weights of the banks and materials weighing on the index. CBA & ANZ fell to their lowest levels in more than 3 months taking the ASX to its lowest point since the turn of the Financial year. Virgin Money (VUK) was the worst performer with the investors increasingly concerned around earnings for the UK bank as the country looks destined for a second lockdown. Property fell more than 1% with Morgan Stanley raising concerns about Dexus earnings and Macquarie painting Unibail-Rodamco-Westfield’s (URW) recent raise in a negative light. On the flipside, energy was the standout sector today though bouncing off a low base here. Whitehaven (WHC) caught a bid too with thermal coal rallying towards breakeven for the coal miner.

By the close, the ASX 200 was down -41pts / -0.71% to 5894. Dow Futures are trading down -130pts/-0.47%

ASX 200 Chart

ASX 200 Chart

CATHCING MY EYE

Harvey Norman (HVN) +2.07%: Consumer names were higher today, though Harvey Norman paced the pack on continued growth in sales numbers. For the period 1 July to 17 September comparable sales were up over 30% across the network, with the bulk of the work done by a 34.5% lift in Australian stores. While there was little commentary, they did note profit before tax had increased 185.8% on an unaudited basis for the period to 31 August. Clearly the work, and entertainment from home spend has continued into the new year and HVN has benefitted, though continues to lag JB Hi-Fi (JBH) which is currently trading above pre-COVID levels.

Harvey Norman (HVN) Chart

BROKER MOVES

Morgan Stanley dropped Dexus (DXS) to a hold today with concerns around the return to work plan of many of the property manager’s larger clientele. Workplaces continue to grapple with the return to the office plan, and while Dexus has been a leader in terms of getting works back into the office, plenty of their renters are showing less certainty. Clients are requesting shorter leases and while a robust industrial portfolio will soften the potential blow, it can’t offset falling occupancy in office. The recommendation has been pulled back to a hold with the uncertainty to play out over the next 6-12 months.

Dexus (DXS) Chart

·         Virgin Money UK GDRs Cut to Hold at Bell Potter; PT A$1.80

·         Costa Rated New Buy at Bell Potter; PT A$4.05

·         Dexus Cut to Underweight at Morgan Stanley; PT A$8.15

·         CSR Cut to Sell at Morningstar

OUR CALLS

No change to the portfolios today.

Major Movers Today

Have a great night

Harry & the Market Matters Team

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