ASX set to rise; Wall Street ends higher

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Wilsons rates Collins Foods overweight

Tom Richardson

Broker Wilsons has put an overweight rating on KFC merchants Collins Foods saying trading conditions are robust in FY 2021 thanks to consumer preferences for contactless sales channels and higher basket sizes.

The broker is tipping more earnings growth this financial year. “KFC Europe and Taco Bell continue to offer significant growth potential and represent the key drivers in our group earnings growth accelerating materially from FY23,” it added. “Notwithstanding the strong share price performance in recent months, we continue to see good value.”

KFC merchants Collins Food is tipped to grow earnings out to FY 2023. 

It’s tipping strong same-store sales growth in FY 2021 partly due to the impact of COVID-19, although it adds store costs such as labour and cleaning will remain elevated due to the pandemic.

In Europe it says KFC and Taco Bell could benefit from operating leverage, acquisitive growth, and new store rollouts through to FY 2023.

Wilsons has pencilled in dividends of 23 cents per share on earnings of 46.1 cents per share in FY 2021. It has a 12-month price target of $10.87, versus a last closing price of $9.92.

Auckland Airport July passengers down 70.8 per cent

Sarah Turner

Auckland Airport’s total passenger volumes dropped 70.8 per cent in July compared to the same month a year ago.

 Bloomberg

International passenger volumes were down 96.9 per cent, transit passenger volumes were down 94.7 per cent and the volume of domestic passengers declined 39.2 per cent.

The decline in passengers reflects travel restrictions imposed by the New Zealand government in response to COVID-19.

In a traffic preview, it said that total passengers decreased by 85.1 per cent in August compared to a year ago. Domestic passengers fell 71.7 per cent, international passengers were down 97 per cent.

‘It’s a bull market’ and tech is pacing it: BofA survey

Timothy Moore

If you hadn’t noticed, you weren’t watching.

 AP

The Bank of America monthly survey of global fund managers has confirmed that technology shares continue to both lure, and scare, investors.

Long-tech – or long-term positions in technology shares – are now the “most crowded trade of all time”, according to the survey’s results for September.

“We’re paranoid tech” is how BofA characterised it.

When asked what do they think is the most crowded trade, 80 per cent of survey respondents pointed to long tech, that’s up from 59 per cent in August.

When asked about what they consider to be the biggest “tail risk”, COVID-19’s second wave came in at 30 per cent and a tech bubble followed at 22 per cent.

The results are far more a confirmation than a revelation.

Read the full story here

PM’s gas plan ‘overkill’ for market

Phillip Coorey

Scott Morrison’s threat to intervene in the energy market by building a gas-fired power station and underwriting pipelines has sparked a backlash from gas and energy suppliers, who say it will distort the market and demonstrates once more the need for a settled energy policy.

Heavy on gas: Scott Morrison addressing the Hunter Business Chamber in Newcastle on Tuesday. AAP

The Prime Minister’s multi-pronged gas strategy was welcomed by big gas users but sparked internal rumblings with Nationals Senator Matt Canavan arguing the government should build a coal-fired power station in the Hunter Valley, not gas.

Mr Morrison indicated there was no point pursuing coal-fired power.

“I’m not interested in having a 10-year debate with people about getting an approval for a project that may never happen,” he said.

“I want to focus on something that will happen. And we know that we can get something up here in Newcastle with a gas-fired plant. We have to dwell in the realm of reality.”

ASX set to rise 0.8 per cent

TImothy Moore

Australian shares are poised to rise, bolstered by gains in New York though investors there turned cautious ahead of the conclusion of the latest US Federal Reserve policy meeting.

On Wall Street, the Dow ended up 2.27 points; a more than 200 point opening advance faded through the day and the index traded negatively for a short period of time.

The S&P 500 and Nasdaq closed higher, up 0.5% and 1.2% respectively.

Investors were seen to be turning somewhat cautious ahead of a policy decision from the Federal Reserve, to be released at 4am Thursday AEST.

“The global economy has been steadying faster than many expected,” said LPL Financial chief investment officer Burt White. “But we still have a long way to go, and central banks will still be focused on risk, which means the story of the week from central banks will likely be all about steady support for as long as it’s needed.”

ASX futures up 44 points or 0.8% to 5941 near 7am AEST

  • AUD +0.2% to 73.00 US cents (Overnight peak 73.43)
  • On Wall St: Dow flat S&P 500 +0.5% Nasdaq +1.2%
  • In New York: BHP +1% Rio +2.5% Atlassian +1.3%
  • Tesla +7.2% Apple +0.2% Netflix +4.1% Facebook +2.4%
  • In Europe: Stoxx 50 +0.5% FTSE +1.3% CAC +0.3% DAX +0.2%
  • Spot gold flat at $US1956.13/oz at 3.04pm New York time
  • Brent crude +2.7% to $US40.68 a barrel
  • US oil +3.2% to $US38.44 a barrel
  • Iron ore -1.3% to $US128.52 a tonne
  • 2-year yield: US 0.14% Australia 0.18%
  • 5-year yield: US 0.27% Australia 0.33%
  • 10-year yield: US 0.68% Australia 0.86% Germany -0.48%
  • US prices as of 4.25pm New York time

Read the full story here

Good morning

Good morning and welcome to Markets Live for Wednesday.

This blog is not intended as investment advice.

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