Aussie shares scaled new heights as winners from the corporate earnings season outweighed losers, and an uptick in the jobless rate resurrected hopes of rate cuts.
The ASX 200 rallied 44 points or 0.6 per cent to 7188 as the dollar dipped to its weakest level in a decade. The Aussie dropped 0.34 per cent to 66.52 US cents after the monthly jobs report showed the unemployment rate jumped to 5.3 per cent last month from 5.1 per cent in December. The unexpectedly large rise came as a pick-up in the number of people actively seeking work outweighed jobs growth of 13,500 new positions.
The market extended solid initial gains following the report’s release in the expectation that rising unemployment may force the Reserve Bank to cut its key rate again. The odds on a cut by April rose to more than 20 per cent from 15 per cent this morning. The central bank had previously said it expected unemployment to decline to 4.5 per cent over the next few years, spurring rises in wages and inflation.
Winners from the current earnings season made the early running. Fleet manager Smartgroup was the pick of the index, rising 13 per cent after unveiling a 4 per cent increase in calendar-year profits and raising its final dividend to 21.5 cents. TV and radio group Southern Cross Media was close behind, bouncing 12.9 per cent from a decade low despite a 31.1 per cent dive in underlying half-year net profit to $28.6 million.
Mineral sands miner Iluka neared a seven-month high, gaining 9.9 per cent as an underlying net profit of $279 million offset a reported net loss after tax of $300 million after the company took a $414 million write-down on the carrying value of its Sierra Rutile assets. Portfolio manager Perpetual regained a level last seen in March 2018 as the company continued to reposition the business after the fallout from the Royal Commission. Shares in the company jumped 10 per cent on news that half-year net profit after tax fell 14 per cent to $51.6 million.
Other companies to see strong gains on the back of profit reports included: Bravura Solutions, up 8.5 per cent; Austal, up 8.4 per cent; Lendlease, up 8.3 per cent; Coca-Cola Amatil, up 6.8 per cent; Qantas, up 5.9 per cent; and Star Entertainment Group, up 4.1 per cent. Companies sent to the doghouse included: Iress, down 8.1 per cent; Whitehaven Coal, down 6.4 per cent, Bingo Industries, down 5.8 per cent; and Domain Holdings, down 5.5 per cent.
At sector level, consumer stocks outperformed with rises of 1 per cent and 0.9 per cent, respectively, for the discretionary and staples sectors. Tech and health stocks trailled with respective declines of 0.6 and 0.1 per cent. Wisetech shares plumbed 11-month lows, falling another 10.9 per cent following yesterday’s ill-received earnings update.
The big four banks gained between 0.2 and 0.8 per cent. BHP put on 0.9 per cent and Rio Tinto 0.4 per cent.
Asian
markets rose after China’s central bank cut its key rate by 10
basis points. China’s Shanghai Composite gained 0.3 per cent, Hong Kong’s Hang
Seng 0.1 per cent and Japan’s Nikkei 1.37 per cent. S&P 500 index futures advanced
seven points or 0.2 per cent.
Brent crude climbed 57 cents or 1 per
cent this morning to $US59.69 a barrel. Gold
drifted 90 cents or 0.1 per cent lower to $US1,610.90 an ounce.
What’s hot today and what’s not:
Hot today: The ill-wind from the coronavirus has blown nothing but good for investors in Zoono Group (ASX:ZNO). The share price has more than quadrupled since holders realised antimicrobial sprays and wipes were flying off shelves in China. Shares rallied another 8.4 per cent this morning after the company announced a new retail distribution deal with Eagle Health Holdings (ASX:EHH), which has more than 300 stores in China and access to another 30,000 outlets. EHH shares fared even better, surging 36 per cent to a six-month peak.
Not today: Improvements in the home loan market were not substantial enough to shield broker Mortgage Choice (ASX:MOC) from a 38 per cent decline in half-year net profit after tax to $4 million. While the company said the result was in line with expectations, shareholders sold the share price down 10.3 per cent. Investors looking for signs for optimism heard the company’s broker network was seeing improved growth and productivity. CEO Susan Mitchell said, “The turnaround in the housing market… has continued into 2020 and I believe we are well positioned to take advantage of this new environment.”