ASX overcomes early falls

Daily Market Update
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ASX overcomes early falls, silver next in line for day traders, Worley (ASX:WOR) downgrade

The ASX200 fell over 1% at the open following a weak overseas lead but managed to finish 0.8% higher for the day, bringing back memories of the 2020 daily swings.

Most sectors finished higher, with healthcare the standout after CSL Ltd (ASX:CSL) benefitted from a rotation back towards quality amid the Perth lockdowns.

The exuberant day trading which last week focused on shares in GameStop (NYSE:GME) has seemingly moved to silver, with so-called ‘influencers’ pushing the price higher and ASX-listed silver miners doing the same.

Whilst worthy of comment, these trends simply reiterate the importance of having a disciplined plan in place for both buying and selling stocks, not simply chasing momentum.

Engineering service provider Worley (ASX:WOR) a common proxy for mining stocks, fell 10.9% today announcing revenue would be 26% below 2020 levels, falling between $4.4 and $4.5 billion in the first half of the year.

Management expects deferred projects to return quickly and highlighted the company’s focus on cost cutting to offset the impact in earnings.

Contract service providers remain a difficult proposition in a highly uncertain environment.

Link (ASX:LNK) puts PEXA on the block, Coca-Cola Amatil (ASX:CCL), Amaysim (ASX:AYS) deals approved

Despite declaring recent private equity offers ‘undervalued’, management of Link Administration (ASX:LNK) have clearly put the jewel in their crown, PEXA, on the block announcing they are aggressively pursuing a trade sale of the business.

The digital settlement platform has become somewhat of a cash cow in recent months, benefitting from the inability to settle property transactions in person, with LNK seeking to capitalise on this interest.

The company has also terminated their $266 million offer for European loan servicing business Pepper, citing issues relating to the pandemic; a positive move in light of the outlook for non-performing loans; shares finished 1.7% higher.

The takeover of Coca-Cola Amatil (ASX:CCL) was approved by the Foreign Investment Review Board (FIRB), with shares moving 0.3% higher and remaining above the $12.75 bid price. It’s hard to see a better offer being received at this point given continued weak volume growth.

Amaysim (ASX:AYS) announced the successful sale of their mobile business to Optus for $250 million, clearing the way for WAM Capital (ASX:WAM) to gobble up the franking credits and cash on the balance sheet.

Nasdaq sees best day in three months, Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL) rise ahead of earnings, Robinhood raises capital

US markets started the week on a positive note, the Nasdaq delivering the strongest result in three months, jumping 2.5% and the S&P500 by 1.6%.

Both Amazon and Alphabet jumped ahead of their earnings reports with analysts expecting Amazon to report a US$100 billion quarter for the first time.

Free-trading house Robinhood remains the centre of attention after banning trading on a number of stocks whilst also raising US$3.4 billion to support its capital requirements amid the incredible surge in trading.

Brokerages are required to hold sufficient levels of capital with the regulator to support the trading of their members, with shareholders likely hoping for an IPO to come sooner rather than later.

Video game maker Nintendo (TYO:7974) continued its strong run in 2020, raising its forecast for financial year profits after reporting a US$2.2 billion profit driven by the company’s Switch platform which sold 11.6 units in the December quarter; 7% higher than 2019.

The group remains a key beneficiary of the stay-at-home orders, with software sales up 43% in the nine months to December, 40.9% of which are online sales. Management is seeking to capitalise via the launch of a new line of games in 2021.

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