Join our daily newsletter At The Bell to receive exclusive market insights
The ASX reversed most of yesterday’s gains as advances in cyclical sectors were outweighed by dives in tech stocks and bond proxies.
The S&P/ASX 200 fell 45 points or 0.65 per cent by mid-session.
On one of the busiest days of the interim reporting season, a profit rebound at Westpac was overshadowed by a cautious outlook from Coles, disappointing results from resource companies and a collapse in the high-flying BNPL sub-sector.
What’s driving the market
The S&P/ASX 200 touched a 50-week high in the opening minutes, but it was downhill from there. Ructions on Wall Street triggered by inflation worries and rising interest rates infected local action. Traditional bond proxies tumbled as Australian government yields surged to levels last seen in December 2019.
“The Australian share market seems to be a in shaky mood amid a mixed bag of earnings releases across financial, real estate, consumer and mining sectors particularly,” Kalkine Group CEO Kunal Sawhney said. “Nine of eleven sectors traded in the red during early trade. Notably, almost half of ASX 20 companies are set to release their earnings results this week. “
Supermarkets have been big winners from the eat-at-home economy during the pandemic, but a warning the best may be behind dragged Coles down 5.6 per cent. The company said sales might “moderate significantly or even decline” in the second half of this financial year and the next.
Gains in the big three iron ore miners masked poorly-received profit reports from Evolution Mining, Resolute, St Barbara and Whitehaven Coal. Z1P Co led a sharp retreat in the BNPL sector, tumbling 14.5 per cent.
A decline in US futures added to headwinds. S&P 500 futures dropped 12 points or 0.3 per cent following a mixed session overnight.
Last night, the S&P 500 faded to a skinny loss of 0.06 per cent. The Nasdaq shed 0.34 per cent. The Dow outperformed with a rise of 0.2 per cent as traders rotated into value stocks with more upside from an economic recovery.
Going up
A strong rebound in quarterly profit lifted Westpac 4.4 per cent. The banking giant reported an unaudited statutory net profit of $1.7 billion, more than three times the average over the second half of FY20. A mixed morning across the rest of the sector saw ANZ rise 0.8 per cent, NAB trade unchanged and CBA fall 1.8 per cent.
An upgraded sales outlook lifted transport logistics heavyweight Brambles 3.9 per cent. The company now expects to increase revenue by 4 – 6 per cent this financial year and underlying profit by 5 – 7 per cent.
Rio Tinto advanced 2.4 per cent ahead of today’s interim earnings report. Fortescue Metals gained 2.5 per cent and BHP 2.6 per cent.
Webjet shrugged off a 90 per cent collapse in bookings, rising 2.3 per cent as traders bet the worst was over. The travel agent swung to a $132 million loss last half.
The promise of a return to profitability in the second half helped lift Corporate Travel Management 3.6 per cent. The corporate travel service said it was close to break-even, and leveraged to markets where vaccination programmes were most advanced.
The stay-at-home economy helped Domino’s Pizza increase online sales by 25.4 per cent last half to $1.42 billion. Shares in the company rallied 7.1 per cent to a record as underlying net profit increased 32.8 per cent to $96.2 million.
Treasury Wine Estates gained 0.7 per cent despite a 23 per cent slump in half-year earnings. Sales were impacted by heavy Chinese tariffs and Covid disruptions to sales channels.
Retail property manager Vicinity Centres edged up 0.2 per cent after reporting a Covid-affected half-year net loss of $394.1 million.
Going down
A downbeat outlook from Coles helped send Woolworths down 5.1 per cent and IGA supplier Metcash down 2.1 per cent.
Bond proxies took heavy hits from a surge in Australian and US yields. Transurban slumped 3.2 per cent, Goodman Group 3.6 per cent, Wesfarmers 2 per cent and CSL 1.8 per cent.
The soaring BNPL sector suffered a heavy setback after days of record highs. Z1P Co skidded 14.5 per cent, Sezzle 12.6 per cent and Afterpay 3.9 per cent.
A 7 per cent decline in half-year net profit weighed on Tabcorp. Stock in the betting giant eased 1.2 per cent.
Carsales.com faded 0.5 per cent after reporting a 7 per cent drop in half-year revenue and a 14 per cent decline in net profit. Super Retail Group slid 0.4 per cent despite hitting the top end of earnings guidance and tripling net profit to $178.1 million.
Weak coal prices dragged Whitehaven‘s half-year earnings down 79 per cent. Shares in the miner skidded 4.7 per cent.
Among other companies reporting this morning, Evolution Mining fell 8.6 per cent, St Barbara 2.8 per cent, Resolute 4.6 per cent, Charter Hall Group 6 per cent and Netwealth 5.7 per cent.
Other markets
Asian markets struggled during a “risk off’ morning. Hong Kong’s Hang Seng lost 0.55 per cent and Japan’s Nikkei 0.8 per cent. Chinese markets were closed for the last day of the Lunar New Year holiday.
Gold fell further below the psychologically-significant US$1,800 an ounce level. The yellow metal slid $9.30 or 0.5 per cent to $US1,789.70 an ounce.
Brent crude retreated 40 cents or 0.6 per cent to $US62.95 a barrel.
The dollar edged up 0.12 per cent to 77.45 US cents.
