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The Australia 200 index rose 0.60% to 8345 following a dovish 25 basis point interest rate cut by the RBA, bringing the cash rate to 3.85%. The RBA noted global uncertainties impacting economic activity and revised its inflation and GDP growth forecasts downward, while signaling potential further cuts ahead. Key upcoming data releases will influence the RBA's next decision on July 8.
UBS analyst Tom Bodor has upgraded Goodman Group from Neutral to Buy, setting a new price target of AUD 36.00, down from AUD 36.80. This decision follows an analysis of the company's development pipeline and financing strategies, particularly after a recent $4 billion equity raise.Bodor addressed concerns regarding the capital needed for Goodman Group's ambitious data center strategy, suggesting that development joint ventures could significantly reduce financing needs. Despite a slight reduction in operating earnings per share and price target, he remains optimistic about the company's potential for medium-term growth, estimating a possible upside of 44% if demand for data centers continues to rise.
Goodman Group shares rose by 2.5% to A$32.13, reaching their highest level since March 25, following UBS's upgrade to "buy" from "neutral." This upgrade reflects increased confidence in a A$100 billion data centre project after a recent A$4 billion equity raise. However, UBS has reduced the price target by 2% to A$36 due to concerns over potential further capital needs for the data centre strategy. The average rating from 10 analysts remains "buy," with a median price target of A$37.5.
The Australia 200 index surged 77 points (0.97%) to 8074, poised to close above 8000 for the first time in nearly eight weeks, driven by easing tariff concerns and strong end-of-month flows. Key sectors like energy and mining saw significant gains, with Beach Energy up 4.53% and Mineral Resources soaring 14.63%. Anticipation builds for upcoming inflation data, expected to show a rise, which may prompt the Reserve Bank of Australia to cut interest rates in the coming months.
National Australia Bank (NAB) reported a 2% decline in quarterly cash earnings to $1.74 billion, impacted by lower net interest margins and increased competition, alongside rising credit impairment charges of $267 million. Meanwhile, Goodman Group raised $4 billion to expand in logistics and data centers, achieving an 8% rise in operating profit to $1.2 billion. Mineral Resources has halted dividend payments to focus on the Oslo iron project and debt reduction, with revenue down 9% to $2.3 billion due to falling commodity prices.
In the latest episode of Sandstone Insights, investment strategist John Lockton highlights CSL and Temple & Webster as promising buy opportunities, particularly noting Temple & Webster's potential in the online home furnishings market following strong Black Friday sales. Additionally, a switch from Woolworths to Goodman Group is recommended due to Woolworths' 20% decline and margin pressures, while Goodman Group shows strong momentum with its data centre pipeline, aligning better with market gains ahead.
Citigroup Inc. secured the largest block trade in Australia in seven years by outbidding rivals for a stake in Goodman Group, offering a discount of 1.4% to 1.5% below the closing price. However, the deal fell apart, leaving the bank with unsold stock, resulting in a loss of $17 million. Other banks had proposed larger discounts of 3.5% to 4%.
Citigroup Inc. is facing potential losses of up to A$41 million ($26 million) after struggling to sell a block of shares in Australia’s Goodman Group, which it underwrote for China’s sovereign wealth fund. The bank initiated the sale of 50.4 million Goodman shares at a floor price of A$37.55, reflecting a slight discount of 1.5% from the previous close of A$38.12.
Following Donald Trump's election victory, US stocks surged, with the S&P 500 closing above 6000 points and banking stocks seeing significant gains. Trump's protectionist policies are expected to benefit small businesses and the cryptocurrency sector, with bitcoin reaching over $87,000. However, concerns over renewed US-China trade tensions arise as Trump threatens tariffs, prompting mixed expert opinions on the potential for a trade war.
The ASX 200 is down 17 points (-0.22%) at 8181 as traders assess the implications of the US election on the Australian economy. Concerns over potential US-China trade tensions have emerged, though Chinese fiscal stimulus may mitigate impacts. Big miners and energy stocks saw gains, while real estate and gold mining sectors faced declines due to rising global yields and a stronger US dollar. Sigma Healthcare's shares surged 23.4% following merger approval.
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