Morgans & UBS upgrade Adairs (ASX:ADH): Aus shares close 1.2% higher

Market Reports

by Katrina Bullock

The ASX200 made gains today and managed to unwind some of the losses we’ve seen over the last 2 days. All of the sectors managed to cap some gains today, with Energy and Consumer Staples leading the charge. Meanwhile, the ABS released figures on retail trade and the international trade in goods and services for the month of October.

The S&P/ASX200 index

At the closing bell the S&P/ASX 200 index closed 77 points or 1.2 per cent higher to finish at 6,683.

Futures market

Dow futures are suggesting a lift of 9 points.
S&P 500 futures are eyeing a fall of 0.3 points.
The Nasdaq futures are eyeing a fall of 1 point.
And the ASX200 futures are eyeing a lift of 71 points tomorrow morning.

Local economic news

The Australian Bureau of Statistics released the latest Retail Trade figures for October which show that a handbrake has been pulled on growth in the retail sector. Overall Australian retail turnover was unchanged (0.0 per cent) in seasonally adjusted terms. This surprised the market which was anticipating a lift for the month, off the back of the 0.2 per cent rise we saw in September.
The Northern Territory saw the strongest retail gains, rising 2.3 per cent while South Australia saw the biggest decline moving 0.5 per cent in the other direction.

The Australian Bureau of Statistics also published figures on the International Trade in Goods and Services for October 2019. In trend terms, the balance on goods and services was a surplus of $6,341 million in October – that’s a decrease of $229 million on the surplus in September 2019.

Broker moves

Morgans and UBS have both upgraded Adairs (ASX:ADH). Morgans notes that the company will acquire Mocka, a vertical online retailer of affordable homewares and furniture. While the multiple is not cheap, Morgans notes it is rare to acquire an online business that is profitable and light on capital expenditure. UBS estimates that the Mocka acquisition will be 10 per cent earnings accretive as Mocka is cash generative, capital-light and profitable.

Company news

Online lottery operator, Jumbo Interactive (ASX:JIN) has entered in to a new software as a service, 5 year licence agreement with Australian charity lottery operator Deaf Services. Under the agreement Deaf Services will utilise a personalised version of the configurable Jumbo Lottery Platform to manage its entire lottery sales. Founder and CEO of Jumbo, Mike Veverka, says “the Powered By Jumbo business is going from strength to strength with a third leading charity lottery operator choosing Jumbo and demonstrating the scalability of the business”. Shares in Jumbo Interactive (ASX:JIN) closed 2.5 per cent higher at $19.45.

iSignthis (ASX:ISX) has commenced legal proceedings against the Australian Securities Exchange in the Federal Court of Australia. The tech giant is challenging the decisions made by the ASX to suspend, and not reinstate, the company’s shares for quotation on the exchange.

Auswide Bank (ASX:ABA) has partnered with National Seniors Australia to provide their members with access to a range of fixed interest term deposits.

Tilt Renewables (ASX:TLT) has sold its Snowtown 2 wind farm for an enterprise value of almost $1.1 billion.

Best and worst performers of the day

The best performing sector was Energy adding 1.6 per cent while the worst performing sector was Healthcare, adding 0.4 per cent.

The best performing stock in the S&P/ASX 200 was Resolute Mining (ASX:RSG), rising 9.6 per cent to close at $1.26. Shares in Parenti Global (ASX:PRN) and Adelaide Brighton (ASX:ABC) followed higher.

The worst performing stock in the S&P/ASX 200 was Whitehaven Coal (ASX:WHC), dropping 10.3 per cent to close at $2.69. Shares in Speedcast International (ASX:SDA) and Collins Foods (ASX:CKF) followed lower.

Asian markets

Higher: Japan’s Nikkei has added 0.8 per cent, Hong Kong’s Hang Seng has gained 0.4 per cent and the Shanghai Composite is up 0.4 per cent.

Commodities and the dollar

Gold is trading at US$1,477 an ounce.
Iron ore price is higher at US$89.06.
Iron ore futures are pointing to a lift of 0.5 per cent.
Light crude is 8 cents lower at US$58.35 a barrel.
One Australian dollar is buying 68.40 US cents.