Investment Ideas From the Edge of the Bell Curve
A sharp rally in interest-rate-sensitive technology and real estate stocks helped push the Australian share market to a fresh record high today.
The ASX 200 climbed 0.73%, to 8057.9 at the closing bell, with all 11 sectors well in the green.
The benchmark also touched a fresh intraday record of 8081.6 points at around midday before paring some of those gains in afternoon trade.
The All Ords added 0.7%, with investors taking their cues from a buoyant US share market, which is broadening beyond the big names.
Property stocks were among the best performers, rallying 1.5%. Goodman increased 1.16% to $36.67, Scentre jumped 1.83% to $3.34, and Charter Hall rose 1.83% to $12.83.
Other notable moves in the wider ASX were seen by Step One Clothing, up +23.29% after a strong FY24 trading update that saw 29% revenue growth and 42% earnings growth.
While falling behind was Aic Mines, dropping over -12% after its quarterly update failed to impress shareholders despite record production.
The Australian Council of Trade Unions (ACTU) has suspended the construction division of the CFMEU from the peak union body.
The move comes as the CFMEU faces intense allegations of corruption and links to biker gangs and organised crime, with multiple major investigative reports coming out in the past week.
ACTU secretary Sally McManus announced the change this afternoon, saying:
‘We’ve resolved to suspend the construction and general division of the CFMEU from the ACTU until they are in a position to demonstrate to us that they are a well functioning, clean union, free of any criminal elements.’
The decision came from a three-hour meeting of ACTU heads, which also decided that an independent administrator would be appointed to overhaul the CFMEU.
The ASX 200 is up by +1% this afternoon, trading at 8,079.4 as interest rate-sensitive sectors of Tech and Real Estate push the Aussie benchmark higher.
After another night of Wall St setting records on the S&P 500 and Dow Jones Index, the ASX is seeing a strong day, with all sectors in the green in the early afternoon.
Top gainer on the wider benchmark so far today is underwear online retailer Step One Clothing [ASX:STP] up +16.4% after its trading update.
Meanwhile, still feeling the fallout from a negative article on Capital Brief yesterday, Droneshield has fallen by -19.80% as short sellers express their glee at the quick-to-rise counter-drone company’s fall.
Despite the rising equity markets Bank of America has voiced a word of caution, noting that bonds yields are lagging behind the S&P 500.
Here is what BoA analyst said to AFR today:
‘High-yield bonds have been closely correlated to the S&P 500 since early 2022. But in the past six months, high yield has started to lag the index. Even more notable, Woodard says, are the moves in credit spreads. Credit spreads on “B” rated bonds have continued to grind lower, but spreads on the lowest quality CCC bonds are rising. The difference between the spreads is now the widest since 1999.’
“In 1999, the ratio of CCC to B spreads rose above three times almost exactly one year before the dotcom market peaked,” Woodard says.
The S&P 500 might look bulletproof, but Bank of America is urging caution.
“Long-term investors may fare better in assets that look reliably underpriced versus the S&P 500, like small cap value, utilities, energy, and banks; and in regions like India and Latin America.”
Buy now, pay later company Zip Co [ASX:ZIP] has entered a trading halt this morning after releasing its latest quarterly activity report and announcing a capital raise.
The company has a market cap of $1.81 billion and has seen its shares rise +273% in the past 12 months as it sees its transaction numbers climb as the number two buy now, pay later operator.
Here are the highlights from their last quarter trading:
Source: Zip
The trading halt is expected to end tomorrow after the company expects to announce the results of its raise. The company will offer $217 million in fully underwritten shares and a further $50 million in non-underwritten shares.
The goal of the $267 million raise is to pay down debt as it sees success in restructuring its balance sheet and is now pulling returns from its push into the US.
The new shares will be issued at $1.52 per share, a 5.3% discount on the last traded price.
For full details of the raise, click here.
The Northern Territories Government has given the tick to SunCable’s gargantuan solar project.
Spearheaded by Billionaire Mike Cannon-Brookes of Atlassian [NASDAQ:TEAM] fame, the solar company SunCable has been run by him after a falling out with former partner Andrew Forrest.
SunCable is planning to build ‘the world’s largest renewable energy precinct‘ in NT with a huge 12,400-hectare solar grid to power Darwin and potentially send power to Singapore via a potential undersea cable.
Source: SunCable
In total, SunCable plans to provide up to 15% of Singapore’s power needs.
The project still has many hurdles to cross before spades hit the dirt, including negotiations with traditional owners and financing.
The project has yet to receive finance, with a final investment decision not due until around 2027.
BHP [ASX:BHP] released its latest operational review for the past year, showing a strong lift in production across many of its commoditites.
The mining giant sold record volumes of Australian Iron ore over the year, while copper production was the highest in 15 years.
The full details of the review can be found here, but here is the takeaway chart of production:
Source: BHP
Overall, BHP reached all of its production guidance for FY24, while metallurgical coal reached the upper end of its revised guidance.
CEO Mike Henry summarised the performance and hinted at their next direction, saying:
‘We finished the year with a strong fourth quarter, achieving several production records and we are meeting current production and unit cost guidance for all commodities.’
‘We continued to execute against our strategy, progressing growth options in the commodities the world needs to meet the demands of the energy transition and population growth. This includes our Jansen potash mine in Canada, where construction of Stage 1 is now more than 50% complete and Stage 2 is underway. We will see first production in 2026 and will be a major global producer of potash by the end of the decade.’
The comments hint at another possible movement towards copper assets around the world after the failed Anglo American takeover bid.
Lundin Mining has approached BHP about making a joint bid for copper minier Filo Corp, although talks are still far from official.
Good morning. Charlie here,
The ASX 200 is set to open near record levels as US markets fully anticipate interest rate cuts in September after J Powell said the latest US data has given the Fed some confidence to cut, stating yesterday:
‘We didn’t gain any additional confidence in the first quarter but the three readings in the second quarter, including the one from last week, do add somewhat to confidence.’
US benchmarks finished higher at near-best levels, with the Dow Jones and S&P 500 again at fresh all-time highs.
Breadth was also positive overnight, with the equal-weight S&P 500 outperforming the official index by over 100 basis points.
The small-cap Rusell 2000 rallied for a fifth straight session, now up +11.05% since the 8th of July.
Gold also hit a new record high amidst the bullish bets on Fed cuts, while safe-haven demand has pushed up under the ‘Trump Trade’, favouring protectionist assets.
On the local market, BHP says its FY24 production will reach several records as all commodities achieve guidance levels.
Buy now, pay later operator Zip has entered a trading halt pending a $267 million raise to pay down debt.
Name | Value | % Chg | |
---|---|---|---|
Major Indices | |||
S&P 500 | 5,667 | +0.64% | |
Dow Jones | 40,954 | +1.85% | |
NASDAQ Comp | 18,509 | +0.20% | |
Russell 2000 | 2,259 | +3.50% | |
Country Indices | |||
UK | 8,164 | -0.22% | |
Germany | 18,518 | -0.39% | |
Japan | 41,274 | +0.20% | |
Hong Kong | 17,727 | -1.60% | |
Euro | 4,947 | -0.71% |
Name | Value | % Chg | |
---|---|---|---|
Commodities (USD) | |||
Gold | 2,468 | +1.9% | |
Silver | 31.24 | +2.00% | |
Iron Ore | 107.15 | -1.70% | |
Copper | 4.4451 | -1.80% | |
WTI Oil | 80.76 | -1.45% | |
Currency | |||
AUD/USD | 67.33¢ | -0.38% | |
Cryptocurrency | |||
Bitcoin (USD) | 65,199 | +0.65% | |
Ethereum (USD) | 3,449 | -1.19% |
4:57 pm — July 17, 2024
3:58 pm — July 17, 2024
2:27 pm — July 17, 2024
11:54 am — July 17, 2024
11:26 am — July 17, 2024
11:08 am — July 17, 2024
10:00 am — July 17, 2024
Investment ideas from the edge of the bell curve.
Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.
All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.
The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.
Fat Tail Daily is brought to you by the team at Fat Tail Investment Research
Copyright © 2024 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988