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ASX 200 rebound continues, analyst insights and Covid-19 stats

We examine some of the most interesting and important developments from the shortened week.

ASX 200 closes out a week of gains

The ASX 200 finished out the week higher – closing out Friday’s session at the 5,487 point level – taking the benchmark’s weekly gain to around 100 points.

On a more granular level, on Friday Stockland saw its share price rise 8.5%, Estia Health gained 8.3%, and Mayne Pharma climbed 9.09%; while Goldroad fell 3.9%, Coca-Cola Amatil plunged 6.09% and Platinum Asset Management gave up 5.46%.

Elsewhere, the Afterpay share price skyrocketed ~30% on Tuesday after the company released an evidently better-than-expected Q3 business update; oil markets continue to trade violently, up and down; Santos said it was planning to sell down its Barossa stake; Woodside reported that its Q1 sales revenue had fallen 23%; Rio Tinto saw its Q1 iron ore shipments fall 16%; Appen reaffirmed its 2020 earnings guidance; and maybe most sensationally of all, Westpac revealed that it had made a $900 million provision for a potential AUSTRAC fine.

Australia’s coronavirus cases moderate

Though the coronavirus has now topped 2 million cases across the globe; Australia, thanks in part to its geographic positioning, as well as decisive action from Prime Minister Scott Morrison, has mostly kept the virus under control.

Indeed, at the time of writing, in total – Australia had recorded just 6,526 cases of the novel coronavirus (Covid-19). Tragically, all up a total of 65 Australians have died from the virus, while 3,821 have recovered.

Although Australia’s curve has not ‘flattened’ completely, the figures compare favourably to countries such as the US (~700k total cases), Spain (~188k total cases) and Italy (~172k total cases).

Broker wrap: key thoughts in focus

  • Citibank this week downgraded its rating on Afterpay (APT) to Neutral/High Risk but raised their price target on the fast-growing buy now pay later company to $27.10 per share. The investment bank noted that although APT's latest business update was a positive one, Citi analysts still 'expect growth to slow significantly in the near term.'
  • Morgan Stanley remained bearish on a2 Milk (A2M), reiterating their Neutral rating and a NZ$12.50 price target. The broker said 'A2 trades on 33x FY21 earnings, or 29x adj. for cash and US losses, which looks rich to us, and we think the stock is pricing in an upgrade, leaving little room for error.' Bearishness aside, the a2 Milk share price has risen an impressive 26.75% over the last 12-months.
  • Finally, with QBE this week shoring up its capital position via the completion of a US$750 million equity raise, Credit Suisse (CS) has taken the chance to reiterate its Outperform rating on the insurance giant. Here, CS said ‘While not immune from a severe economic downturn, QBE’s exposure is far less than it was ten years ago, with a capital buffer beyond previous levels.’ CS has a price target of $10.15 per share on QBE.
  • Morgan Stanley argued that although real estate advertising company REA Group (REA) had a positive start to 2020 in terms of new property listings – unsurprisingly, as the coronavirus pandemic persists – these listings have begun to drop-off. Even so, the investment bank this week retained its Overweight rating on the stock as well as its 12-month $105.00 price target.

How to trade the ASX 200

What do you make of the current situation: do you see bullish or bearish opportunities? Whatever your opinion, you can trade indices, currencies and equities, including Afterpay and REA Group – both LONG or SHORT – with IG’s easy to use trading platform now.

For example, to buy (long) or sell (short) the ASX 200 index using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘ASX 200’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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