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Takeover action helped keep the ASX above water despite a plunge in US futures as coronavirus infections surged in America ahead of Election Day.
The S&P/ASX 200 briefly regained the 6200 level before paring its gain to nine points or 0.15 per cent at 6176 mid-session
What’s driving the market
Consumer stocks marched higher after Coca-Cola’s European operation swooped on Australian bottler and distributor, Coca-Cola Amatil. Coca-Cola European Partners offered $12.75 per share, valuing the Australian operation at $9.3 billion. Amatil’s share price spiked 15.4 per cent to $12.40. Amatil Chair Ilana Atas advised shareholders to take no action while due diligence was carried out.
Nine of the top ten consumer staples heavyweights rallied in the wake of the bid. Blackmores put on 2.4 per cent, Treasury Wine Estates 0.7 per cent and Elders 1.1 per cent. Supermarkets Woolworths and Coles both rose 0.5 per cent.
Investors ignored a slump in US index futures following news of record coronavirus cases over the weekend. The US surpassed the old July pandemic high of 77,300 cases in a single day, recording tallies above 83,000 on both Friday and Saturday. S&P 500 futures sagged 12 points or 0.33 per cent. Dow futures slid 87 points or 0.3 per cent.
The week ahead is likely to be dominated by the build-up to the US presidential election and the UK’s divorce settlement from the European Union, according to NAB Head of FX Strategy Ray Attrill.
“US polls in the countdown to next Tuesday’s elections will be one key focus, as too the state of play on US fiscal support negotiations and whether or not a deal can be struck before next Tuesday (pretty unlikely, you’d have to say),” he said. “Any developments in EU-UK trade talks well also be of interest globally from a risk sentiment perspective.”
Going up
A 12-month high in WiseTech helped put the technology sector on top of the heap. Shares in the logistics software specialist climbed 1.6 per cent. Afterpay put on 1.2 per cent, Xero 0.3 per cent and Altium 0.2 per cent. Link Administration Holdings gained 1.4 per cent after a consortium of private equity companies revised their takeover offer for the company.
CSR surged 2.5 per cent to its strongest level since February following a rating upgrade from Credit Suisse. Other standouts this morning included IDP Education +4.7 per cent, Iuka Resources +4.1 per cent and Virgin Money UK +3.7 per cent.
At the heavyweight end of the market, IAG tacked on 1.7 per cent, Goodman Group 1.1 per cent, Telstra 0.9 per cent and CSL 0.7 per cent.
Going down
While nine out of eleven sectors rallied, the two that drive the index – materials and financials – both declined. Iron ore miners were hampered by a sharp retreat in the price of ore at the end of last week. Fortescue Metals fell 0.8 per cent, BHP 0.3 per cent and Rio Tinto 0.2 per cent.
Three of the big four banks retreated after Westpac warned of a $1.22 billion hit to earnings from write-downs, remediation and legal costs. Westpac dipped 0.2 per cent, NAB 1 per cent and CBA 0.1 per cent. ANZ gained less than 0.1 per cent. Macquarie Group and Transurban were other weights on the index, falling 0.5 and 0.4 per cent, respectively.
Z1P retreated 1.8 per cent after announcing it had acquired tech company Urge Holdings for an upfront fee of $3 million and a deferred consideration of $5.5 million if performance milestones are met over the next three and a half years. Adairs fell 7.5 per cent after the retailer unveiled a 22 per cent increase in total sales over the first 17 weeks of the financial year but cautioned against projecting the rise across the rest of the year.
Other markets
A mixed morning on Asian markets saw a 0.6 per cent drop on China’s Shanghai Composite and a rise of 0.1 per cent on Japan’s Nikkei.
Oil remained under pressure following Friday’s retreat as Libya resumed production. Brent crude fell 63 cents or 1.5 per cent to $US41.14 a barrel. Gold slipped $5.10 or 0.3 per cent to $US1,900.10 an ounce.
The dollar deteriorated 0.16 per cent to 71.19 US cents.
What’s hot today and what’s not:
Hot today: Funtastic (ASX:FUN) soared to a two-year peak on news the toy distributor will acquire the Australian websites of Toys “R” Us, Babies “R” Us, Hobby Warehouse and Mittoni. The company will fund the acquisitions, if approved by shareholders, through a placement. A $6 million debt will be converted into shares at the placement price, with the $3 million remainder to be paid out of the proceeds from the raising. The share price jumped 123.1 per cent to a level last seen in May 2018.
Not today: Subscription meal service Marley Spoon (ASX:MMM) lost almost a quarter of its market capitalisation following a discounted share placement and a poorly-received quarterly earnings report. The company raised $56 million from institutional investors at $3.22, but those who took part were sitting on sharp paper losses this morning after the share price fell as low as $2.58. Revenues were up 109 per cent last quarter on the same period last year as active customers increased by 86 per cent. Shares were last down 24.4 per cent at $2.64.
