ASX extends rally for 2nd day, Citi rates Electro Optic as a buy: Aus shares close 0.6% higher

Market Reports

by Melissa Darmawan

The Australian sharemarket extended its winning streak for the second day closing 0.6 per cent higher at 7,260. All sectors closed in the black with Consumer Discretionary as the underperformer down 1.1 per cent. Oil prices rose which fueled the Energy sector to take home the session as the best performer of the day with the likes of Oilsearch (ASX:OSH) spiked 4.1 per cent while Santos (ASX:STO) gained 3.8 per cent. A more gentle performance from the mining heavyweights with its futures pointing to a 0.2 per cent rise with Fortestcue Metals (ASX:FMG) up 0.7 per cent followed by BHP (ASX:BHP) and Rio Tinto (ASX:RIO). On the banking front, Commonwealth Bank reset fresh highs before midday closing 0.9 per cent higher while ANZ (ASX:ANZ) added 1.5 per cent leading out of its peers. Buy now, pay later stocks had a strong rally with the likes of Sezzle (ASX:SZL) leapt 22.7 per cent on news of its partnership with Target in the USA while ZipCo (ASX:Z1P) stepped up 4.4 per cent. Meanwhile Wesfarmers (ASX:WES) dropped 2 per cent following its strategy day. The company highlighted that sales growth had been volatile due to the pandemic with online sales advancing as their industrial division achieved operating milestones. At the closing bell, the S&P/ASX 200 was 0.59 per cent or 42.30 points higher at 7260.1.

Economic news

Retail sales rose 1.1 per cent in April, in line with economist forecasts while the national trade balance rose to $8.03 billion in April, slightly below expectations as released by the Australian Bureau of Statistics.

The international trade balance increased to $8.03 billion in April below expectations of $8.2 billion.

Company news

Please join us for Stocks of the Hour here.

Digital financier Humm Group (ASX:HUM) has upped its contactless payment game, following the introduction of the company’s digital card Humm TAPP as an instant and effortless gateway to buy-now-pay-later (BNPL) services.

Regenerative medicine developer Mesoblast (ASX:MSB) has reported a downturn in earnings, as revenue plunged during the three months ended 31 March this year.

Payment solutions provider Sezzle (ASX:SZL) has inked a three-year deal to host a deferred payments system for renowned retail channel Target’s in-store and e-commerce operations.

Global oil and gas explorer Karoon Energy (ASX:KAR) has given the go-ahead to the company’s Patola subsea tie-in project development.

Broker moves

Citi rates Electro Optic Systems (ASX:EOS) as a buy from a hold with a target price of $5.15. The upgrade follows the drop in the share price down 19 per cent since 29 April this year lowering its target price from $5.28 to $5.15. Citi highlights that cash collection from a key customer has resumed and revenue is progressively diversified. Their analyst have reduced the company’s FY21 earnings to $5.5 million (excluding FX losses and interest income) in line with the company’s guidance driven by higher than expected costs with earnings estimates for FY22 -23 cut by -$11 million on higher costs. Shares in Electro Optic Systems closed 1.4 per cent lower at $4.25.

Morgans rates APN Industria REIT (ASX:ADI) as a hold with a price target of $3.28. The downgrade from a buy followed the company’s recent share price strength with the price target increased to $3.28 from $3.17. Draft valuations have increased for 17 of 23 properties by 11.9 per cent and the average cap rate has tightened by 51bps to 5.83 per cent. Shares in APN Industria REIT (ASX:ADI) closed 0.94 per cent higher at $3.23.

Futures

The Dow Jones futures are pointing to a rise of 1.00 points.
The S&P 500 futures are pointing to a rise of 1.75 points.
The Nasdaq futures are pointing to a rise of 15.75 points.
The SPI futures are pointing to a rise of 48 points when the market next opens.

Best and worst performers

The best-performing sector was Energy, up 3.27 per cent. The worst-performing sector was Consumer Discretionary, down 1.10 per cent.

The best-performing stock in the S&P/ASX 200 was IOOF Holdings (ASX:IFL) closing 7.93 per cent higher at $4.22 followed by shares in Worley (ASX:WOR) and Origin Energy (ASX:ORG).

The worst-performing stock in the S&P/ASX 200 was PointsBet Holdings (ASX:PBH) closing 4.16 per cent lower at $12.43 followed by shares in Adbri (ASX:ABC) and Resolute Mining (ASX:RSG).

Asian markets

Japan's Nikkei has gained 0.35 per cent.
Hong Kong's Hang Seng has lost 0.53 per cent.
China's Shanghai Composite has gained 0.30 per cent.

Commodities and the dollar

Gold is trading at US$1899.38 an ounce.
Iron ore is 0.20 per cent higher at US$209.19 a ton.
Iron ore futures are pointing to a rise of 2.09 per cent.
Light crude is trading $0.35 higher at US$66.65 a barrel.
One Australian dollar is buying 77.29 US cents. 


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