Australian earnings preview – ASX

Australia

Full Year:

The Australian Securities Exchange (ASX) is the primary Australian listings venue and one of the world’s top 10 listed exchange groups by market capitalization. ASX Ltd. operates the Australian Stock Exchange and the Sydney Futures Exchange, offering a full suite of services including listings, trading, clearing, and settlement. It reports its full-year numbers on the 20th of August.

ASX Ltd shares are defensive in uncertain economic times and have benefited during the pandemic from the “working from home” environment. During the peak coronavirus period, trading volumes rose to levels exceeding the daily processing capacity forcing the regulator ASIC to limit the number of daily trades big brokers can execute. Growth in trading volumes drives ASX Ltd.’s earnings higher.

In the ten-months ending in April 2020, ASX Ltd reporting a 34% increase in trades and the total value of trades increased by 29% as market volatility rose to near all times highs. Futures volumes also rose by 6% as the RBA cut interest rates. The consensus statutory EPS estimate is around 250 cents per share.

Technically, the decline from the all-time $89.92 high of early June appears to be a correction after an impulsive rally from the March $63.02 low. Once the correction is complete, the uptrend would be expected to resume.

As such, we would consider buying a dip into the support offered by the trend channel and the May 2020 low, $70.00 area. Keeping in mind, a more aggressive entry may be required if the share price makes a sustained break above trend channel and horizontal resistance $86.00 area, confirmation the uptrend has resumed.

Australian earnings preview – ASX

Source Tradingview. The figures stated areas of the 12th of August 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.