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Good Afternoon and welcome to The ASX Today for Thursday of Week 8, I’m Jon Davidson. It was a fairly solid day, with the ASX200 up over 1% intraday as earnings season greatly encouraged some and severely punished others.
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Notably, we’re travelling along on Thursday better than what Wall Street did overnight, though heading into the afternoon, the XJO was paring back gains a tad.
Unemployment data for Oz came out today, and the rate stays fixed at 4.1% – we’re still waiting to see a rise in the labour market shine through, meaning COVID-era assumptions once seen as reliable now stand to be questioned.
One tidbit in the ABS labour market data I found interesting, if somewhat alarming: Youth underemployment in Australia is more or less at 15%. Although it was actually higher back in CY17, so maybe that’s where we’re starting to see some normalisation. Again, you need a job just to grab a nice lunch these days.
As at 2pm Sydney time, U.S. futures were flat. With Trump not doing anything bodacious for about 72 hours and gold nested just below $5,000USD, the ASX is largely reacting to Aussie catalysts this week, which is nice to see. (Hopefully I haven’t jinxed it.)
Looking around the traps, Zip Co (ASX:ZIP) was slaughtered as its report came in strong but clearly not strong enough. Even though the report missed estimates, Zip’s price slumped -40%. This has been a vicious earnings season, but still, the drop is noteworthy. Here’s what I think is going on: ZIP’s growth in Australia appears to have peaked, and the company’s momentum is really in the U.S. right now.
But Australia exported buy now pay later to the states years ago, and with Klarna’s IPO last year being a landmark event, if Zip wants to become an American BNPL company, it’s facing a LOT of competition. Add in that there’s some hit stop losses, algo trading, and good old panic, and it starts to make sense.
Elsewhere, BHP (ASX:BHP) was up as money continues to flow into the Aussie Giant; meanwhile, Hub24 (ASX:H24) jumped over +11% intraday as its earnings were well received. The company, in a sentence, makes software for finance advisers. Finally, healthcare services provider Sonic Healthcare had a good day up over +12% intraday on the back of an earnings report that helped convince some investors to jump on board; still, one-year returns are down nearly -20%.
That’s The ASX Today for Thursday, I’m Jon Davidson, have a great afternoon.
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