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The share market logged its weakest close in more than five weeks as some high-profile earnings misses added to down-pressure from the US.

The S&P/ASX 200 fell 29 points or 0.4 per cent to 7285. Today’s close was the first below 7300 since the second week of January.

Qantas, Nine Entertainment, Bega Cheese and Blackmores were among the session’s biggest drags after disappointing trading updates. Rio Tinto fell as investors reacted to a profit slump reported last night.

Winners from the biggest day yet of interim earnings included Eagers Automotive, Qube, Smartgroup and The Lottery Corporation.

What moved the market

A huge day of corporate earnings ended in what is rapidly becoming familiar fashion. Since the current season got into gear, companies have had to battle overseas and domestic headwinds as global interest rate worries cloud the outlook for the year ahead.

Of the 115 ASX 200 companies that had reported by yesterday’s close, 56 per cent finished lower on the day, according to CommSec. How much of that weakness is down to earnings and how much to a rapidly deteriorating market climate is open to debate. Companies reporting today had to release into a market firmly on track for a third straight losing week.

Wall Street set the tone as the threat of more rate hikes lowered two of the three main indices. The S&P 500 shed 0.16 per cent after the Federal Reserve said it needed “substantially more evidence” that inflation was falling. The Dow gave up  0.26 per cent. The Nasdaq eked out a gain of 0.13 per cent.

“The ASX200 has fallen for a third straight session, taking its lead from Wall Street after the minutes from the last FOMC meeting failed to detail the criteria for a Fed pause and noted that a ‘few’ members called for a 50bp rate rise to slow inflation,” IG market analyst Tony Sycamore said.

“Another round of disappointing earnings reports also buffeted the local market.”

Domestic data this morning showed little evidence Australian businesses are concerned about consumer demand as rates rise. Private capital expenditure jumped 2.2 per cent in the December quarter, twice the increase anticipated by economists.

The dollar bounced 0.33 per cent to 68.34 US cents, repairing some of the damage after a rally in the greenback drove the Aussie under 68 cents overnight.

Winners’ circle

Logistics and infrastructure provider Qube jumped 8.7 per cent after almost doubling its first-half profit from the prior corresponding period. Net profit after tax popped 97.7 per cent to $124.9 million as the company reported “high volumes” through its core businesses.

A post-Covid rebound in surgeries helped private hospital operator Ramsay Health Care increase half-year revenues by 13.6 per cent. The firm’s statutory net profit rose 22.3 per cent. The share price gained 3.03 per cent.  

A special dividend was the winning ticket for investors in The Lottery Corporation as it reported double-digit first-half earnings growth. The firm will pay a fully-franked special dividend of 1 cent per share in addition to a maiden interim dividend of eight cps. The share price jumped 4.73 per cent.

Medibank rallied 6.49 per cent after reporting a modest increase in policyholders while the health insurer managed the fallout from a damaging cyber hack. First-half net profit increased by 5.9 per cent to $233.3 million. The insurer gained 1,700 new policyholders over the last half despite the loss of 13,000 clients in the second quarter.

Automotive retail group Eagers will pay a record dividend after its most profitable half ever in underlying terms. The firm reported an underlying operating pre-tax profit of $405.2 million amid strong demand for new and second-hand cars. Shareholders will receive an interim dividend of 49 cents. The share price climbed 8.97 per cent.

Fleet manager and salary packager Smartgroup also benefitted from demand for new vehicles. The share price rose 7.38 per cent after CEO Tim Looi flagged a backlog of $15 million in unfilled new orders as supply chain issues persist. The company reported a full-year net profit of $61.2 million.

A return to profitability lifted Auckland International Airport 3.21 per cent. Underlying profit rose to NZ$68 million.

Toll road operator Atlas Arteria firmed 1.81 per cent after reaffirming full-year distribution guidance. APA also reaffirmed guidance. The share price gained 1.41 per cent.

A record first-half profit of $20.1 million lifted Tasmanian lender MyState 5.3 per cent.

Among other companies reporting today, PolyNovo gained 2.7 per cent, Nanosonics 0.21 per cent, EQT 1.7 per cent, The Reject Shop 6.33 per cent, Gold Road Resources 1.4 per cent, Australian Clinical Labs 1.47 per cent, Pepper Money 1.32 per cent and Maggie Beer 5 per cent.

Cleanaway Waste finished flat. Star Entertainment entered a trading halt pending an announcement about raising capital.

Doghouse

Qantas sank 6.8 per cent after indicating fares may decline as the airline adds more capacity. The airline swung to a record statutory half-year profit of $1 billion, ending a three-year run of losses. The group made 49 per cent more profit last half than it did when it last reported a record profit in 2018.

“Fares have risen because of higher fuel costs, but also because supply chain and resourcing issues meant capacity hasn’t kept up with demand. Now those challenges are starting to unwind, we can add more capacity and that will put downward pressure on fares,” CEO Alan Joyce said.

A cautious outlook helped drive Blackmores down 6.61 per cent. The vitamin manufacturer said cost inflation and rising interest rates were impacting shopper behaviour. The firm reported a 19.6 per cent lift in first-half net profit.

A 74 per cent collapse in first-half profit knocked Bega Cheese down 7.78 per cent to a three-month low. Revenues increased 11 per cent. Profits slumped as price increases lagged milk prices and other cost inflation.

Nine Entertainment retreated 2.91 per cent after a 16 per cent decline in first-half profit. Earnings slid 9 per cent as costs increased.

Property exchange platform Pexa Group sagged 5.36 per cent after a 9 per cent decline in transaction volumes helped slash group profit by 59 per cent.

Other companies reporting today included Humm -9.68 per cent, Insignia Financial -2.88 per cent, Zip Co -6.19 per cent, Maas Group -5.46 per cent, Perpetual -2.81 per cent, Regis Resources -3.51 per cent, IDP Education -3.62 per cent, Platinum Asset Management -16.89 per cent and Shine Justice -18.03 per cent.

Other markets

Asian markets firmed in afternoon trade. China’s Shanghai Composite gained 0.07 per cent, the Asia Dow 0.18 per cent and Hong Kong’s Hang Seng 0.54 per cent. Trade in Japan was suspended for a public holiday.

A positive outlook from tech giant Nvidia helped lift US futures. S&P 500 futures rallied 19 points or 0.47 per cent. Futures for the tech-heavy Nasdaq jumped 0.87 per cent.

Oil trimmed six days of losses. Brent crude firmed 35 US cents or 0.44 per cent to US$80.80 a barrel.

Gold succumbed to selling pressure in the wake of this morning’s Fed minutes. The yellow metal sagged US$4.50 or 0.24 per cent to US$1,837 an ounce.

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