A strong week of trading helped the ASX cement a new all-time high. Having threatened to do so over a number of weeks, the index climbed above the intraday and closing highs set in July earlier this year. At the close of trade on Friday, the ASX 200 was on 6846 points, up 2%, while the All Ordinaries settled on 6948, 1.9% higher. Although soft numbers were released on the local economy, the strength of trading this week largely came in response to three broad catalysts.
First, trade talk sentiment remains somewhat optimistic between the US and China. Secondly, expectations are growing among analysts for additional interest rate cuts following RBA Governor Philip Lowe’s speech to Australian Business Economists on Tuesday night. The third source of optimism came as large merger and acquisition activity was in the news via the likes of Novartis, Charles Schwab, Louis Vuitton and Mitsubishi.
Which shares excelled?
Caltex (ASX: CTX) delivered a double-whammy for investors this week. The fuel supplier announced a bumper increase in expected second-half earnings for CY19, also proposing an IPO for a 49% stake in its service station portfolio comprising 250 retail convenience stores. The next day, Caltex announced a preliminary takeover offer from Canadian convenience retailer Alimentation Couche-Tard, priced at $34.50 per share. By the end of the week, Caltex shares were 24.1% higher.
Among the strongest performers this week was Virgin Money UK (ASX: VUK). Formerly known as Clydesdale Bank (CYBG), the stock soared 22.3% as its FY19 result came in ahead of market expectations. Another strong rise came courtesy of Bravura (ASX: BVS), with the wealth management and superannuation software firm also beating expectations by announcing an upgrade to its net profit guidance.
Blue-chip stalwart Telstra (ASX: TLS) was able to turn back the clock, putting on a robust rally this week. At its investor day, the company announced lower-than-expected operating costs, which helped shares in the telecoms giant rise 8.4%.
Finally, Collins Foods (ASX: CKF) jumped 8.1%. A trading update provided by the KFC franchisee pointed towards additional store growth through Australia and Europe, while first-half underlying profit climbed 9.1%.
Shares in fuel supplier Caltex rocketed higher on a takeover offer
Which shares dragged on the market?
With the strength of the market rally this week, the stocks which underperformed stood out like a sore thumb. Among those which did struggle, Nufarm (ASX: NUF) headlined the list, diving 17.5% on Monday amid a profit downgrade. The company has forecast that FY20 EBITDA is expected to be “significantly lower” than FY19 on account of difficult trading conditions.
Shares in Bank of Queensland (ASX: BOQ) dived on Tuesday as the company concluded a $250m placement to institutional investors. The regional lender issued 32.1 million new shares at $7.78 each, pushing the stock to a multi-year low before eventually paring some of its losses. The funds will be used to strengthen the company’s balance sheet and help it improve its capital ratio.
Dicker Data (ASX: DDR) fell sharply throughout the trading week, despite the absence of any material news from the company. While shares in the computer hardware and software wholesaler dropped 8.4%, they remain 127.2% higher across the last year.
Nufarm shares tumbled after an earnings downgrade
Other trading developments
The corporate fallout from last week’s Westpac-AUSTRAC news continued to play out, with the bank’s chief executive leaving the company, and its chairman bringing forward his retirement to early next year. The announcement appeared to be well-received by the market, with the stock even trading higher on the day the news broke.
Afterpay (ASX: APT) released news on its independent audit by AUSTRAC. The announcement indicated the financial intelligence agency viewed Afterpay’s money-laundering compliance risk as “low”, with investors breathing a sigh of relief.
Closing out the week, Carbon Revolution (ASX: CBR) completed a successful IPO listing, raising just over $90m from investors. During its first day of trading, shares in the carbon-fibre wheel producer surged 32.7%. Among other IPO developments:
- Pharmaceutical drug business Nyrada, being spun out of ASX-listed Noxopharm (ASX:NOX), announced an $8.5m IPO at $0.20 per share
- Non-bank lender Xynapse has postponed its run at the ASX until 2020
- Payments processor Tyro Payments upsized its IPO from $252.7 million to a maximum of $287.1 million
The trading week ahead
Local economic data is set to come through thick and fast, covering everything from manufacturing to job advertisements, retail sales, imports, exports, the trade balance and crucial GDP growth. In addition, the RBA will also meet on Tuesday for the final time this year to review interest rates.
With November coming to a close, many annual general meetings have now been run, but there are still a few late-season meetings. Nufarm will hold its AGM on Thursday, December 5, while Altium (ASX: ALU) and Washington H Soul Pattinson (ASX: SOL) will host their respective meetings the following day, Friday, December 6.
We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great weekend!
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