Don’t get too excited that our market is expected to open higher this morning on the back of a big rally by US and European equities and firmer commodity prices.
The futures market is pricing in a 0.36% rise in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), but the big question is whether the market can sustain the gains throughout the day.
Australian equities have been abruptly making an intra-day turnaround recently and the uncertainty is probably the reason why the futures market is not expecting a much stronger start for our market today even though European stock indices surged well over 2% and Wall Street jumped over 1% on Friday.
But I suspect resource stocks will be leading the gainers today. A 0.6% gain by the gold price to $US1,189 an ounce should lend support to gold miners Newcrest Mining Limited (ASX: NCM), while a 0.8% rise in the West Texas Intermediate (WTI) oil price should help Woodside Petroleum Limited (ASX: WPL) and Oil Search Limited (ASX: OSH) recoup some of the 3% plus losses they suffered at the close on Friday.
On the other hand, capital raising expectations are likely to drag on the bank sector. Bank of Queensland Limited (ASX: BOQ) is reported by the Australian Financial Review to be raising $200 million via a hybrid issue in the wake of the largest equity raising in the ASX’s history by National Australia Bank Ltd. (ASX: NAB).
I believe more banks will be going to shareholders with cap in hand, and until they do that their share prices are likely to underperform.
On the earnings news front, fertiliser and industrial chemical supplier Incitec Pivot Ltd (ASX: IPL) posted a 27% uplift in first half profit to $146.4 million today, while Corporate Travel Management Ltd (ASX: CTD) said its earnings before interest, tax, depreciation and amortisation (EBITDA) will be slightly ahead of its previous forecast.
Outdoor and auto accessories retailer Super Retail Group Ltd (ASX: SUL) could lose ground today as it was downgraded to “underweight” from “neutral” by the Commonwealth Bank of Australia (ASX: CBA) following its quarterly trading update.
There’s plenty happening on the corporate action front to keep investors busy as well. The board of copper and gold miner PanAust Limited (ASX: PNA) is recommending investors accept the $1.85 a share takeover offer by Guangdong Rising Assets Management and its shares are likely to jump to just under the offer price. PanAust last traded at $1.73.
Fellow miner Independence Group NL (ASX: IGO) is looking to capitalise on its strong share price by looking at using its scrip to make opportunistic takeovers, according to the AFR. Independence Group has rallied 35% this calendar year and possible targets include Sandfire Resources NL (ASX: SFR) and EVOLUTION FPO (ASX: EVN).
Advertising and marketing group STW Communications Group Ltd. (ASX: SGN) is also reported to be considering a restructure of its business following its woeful performance that has seen its share price plunge by a third since January. I have touted STW as a likely takeover target before.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Brendon Lau owns shares of National Australia Bank Limited, Oil Search Limited, PanAust Limited, STW Communications Group Ltd., and Woodside Petroleum Ltd.. Follow me on Twitter - https://twitter.com/brenlau
The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
- Elixinol (ASX:EXL) share price tumbles on capital raising update – December 4, 2020 2:54pm
- Are ASX stocks about to get an earnings upgrade boost in the new year? – December 4, 2020 2:11pm
- Goldman says buy the Metcash (ASX:MTS) share price ahead of next week’s results – December 4, 2020 12:13pm