Lendlease sinks 3% on FY21 profit downgrade, Why Telstra is a buy: ASX trading 0.4% lower at noon

Market Reports

by Melissa Darmawan

The Australian sharemarket has sunk in morning trade and remained in the red trading 0.4 per cent lower or 27.6 points at 7,285. The SPI futures are pointing to a fall of 25 points. The index did drop as low as 0.5 per cent earlier today.

The decline is mainly across the board with Utilities, Technology and Materials advancing. Consumer discretionary is the laggard, down 1 per cent.

A rather big day on the company news front with players in the market announcing acquisitions and completion of mergers amid mixed local economic data.

To name out some big movers of the session, big tech name Afterpay (ASX:APT) are up 2.6 per cent to $7.70 while Sezzle (ASX:SZL) soared 4.8 per cent.

Fortescue Metals (ASX:FMG) are trading 1.4 per cent higher at $23.67 with iron ore futures pointing to a rise of 2.42 per cent. In the precious metals space, Northern Star (ASX:NST) are trading 3.5 per cent higher at $10.12 while Regis Resources (ASX:RRL) jumped 7 per cent to $2.52.

On a not so positive note, major banks are in the red as Commonwealth Bank (ASX:CBA) down 0.9 per cent. Worley (ASX:WOR) are down 4.9 per cent to $11.38 on news on inking a 10-year deal from Energy Pacific. Lendlease (ASX:LLC) are down 2.9 per cent after they downgraded their FY21 earnings due to pandemic blues.

Local economic news

Australian Bureau of Statistics (ABS) have released international trade data for May. Australia’s seasonally adjusted balance on goods and services surplus increased by $1.52 billion to $9.68 billion in May. Exports rose by $2.44 billion to $42.2 billion while imports rose by $919 million to $32.55 billion.

The ABS also released job vacancies figures. In May, job vacancies were 57 per cent higher than February 2020, prior to the start of the pandemic, according to new seasonally adjusted.

The CoreLogic Home Value index rose 1.9 per cent in June, it’s 13.5 per cent annually.

The seasonally adjusted IHS Markit Manufacturing Purchasing Managers’ Index dropped from May’s record high of 60.4 down to 58.6 in June.

Company news

Aussie REIT’s manager Charter Hall Long WALE REIT (ASX:CLW) is set to acquire three and upgrades its 2022 financial year earnings forecast.

Global online real estate advertising company REA Group (ASX:REA) has completed their acquisition of Mortgage Choice Limited REA Group.

Property manager Abacus (ASX:ABP) has exchanged contracts to acquire a one third interest in “Myer Melbourne” in Victoria for $135.2 million while Charter Hall and Vicinity keep their piece of the pie.

Intellectual property services provider IPH Limited (ASX:IPH) adds online automated trademark platform Applied Marks for $5 million, with a further $2.1 million subject performance benchmarks.

Adelaide based cementer Adbri Limited (ASX:ABC) has inked a deal to purchase the Milbrae concrete and aggregate business under their Mawsons joint venture name, though kept its purchase price private.

Australia’s oldest bank Westpac (ASX:WBC) have completed their $725 million sale of its general Insurance business to Allianz and entered into an exclusive 20-year agreement for the distribution of general insurance products to Westpac’s customers.

Employment marketplace provider SEEK (ASX:SEK) appoints Ian Narev as chief executive officer.

Global infrastructure company Lendlease (ASX:LLC) has issued a lowered profit update for financial year 2021 of $375 million to $410 million due to the looming effects of the Covid-19 pandemic.

New Zealand’s largest and busiest airline hub Auckland Airport (ASX:AIA) is maintaining its prudent approach to financial management while it prepares for international passenger recovery.

Magellan has announced its intention to transition its Magellan High Conviction Trust (ASX:MHH) listed investment company into an active ETF.

Broker moves

Morgans upgrades Telstra (ASX:TLS) to a buy with a price target of $4.19 following the telecommunication provider giving the broker a surprise with its early divestment of their 49 per cent stake in its InfraCo towers business.

Morgans considers it a good deal for shareholders as Telstra would keep some control along with a high price attained. Also, the deal shows that management are serious about taking steps to continue releasing value.

The company will use around 50 per cent of the proceeds to pay down debt with the balance to be returned to shareholders. The broker says the shares are worth around $4.50 per share if the sum of the parts can be realised. Due to this, the rating is upgraded to buy from hold and the target price rises to $4.19 from $3.33.

Shares in Telstra (ASX:TLS) are trading 0.4 per cent lower at $3.745.

Best and worst performers

The best-performing sector is Utilities, up 0.51 per cent. The worst-performing sector is Consumer Discretionary, down 0.96 per cent.

The best-performing stock in the S&P/ASX 200 is Regis Resources (ASX:RRL), trading 5.51 per cent higher at $2.49. It is followed by shares in St Barbara (ASX:SBM) and Silver Lake Resources (ASX:SLR).

The worst-performing stock in the S&P/ASX 200 is Chalice Mining (ASX:CHN), trading 4.72 per cent lower at $7.07. It is followed by shares in Metcash (ASX:MTS) and Worley (ASX:WOR).

Commodities and the dollar

Gold is trading at US$1771.10 an ounce.
Iron ore is 0.80 per cent higher at US$214.08 a ton.
Iron ore futures are pointing to a rise of 2.42 per cent.
One Australian dollar is buying 74.88 US cents. 

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