Join our daily newsletter At The Bell to receive exclusive market insights
A “risk-off” session saw the ASX erase its gains for the week as dives in oil and US futures pushed traders to the sidelines.
A week that began with back-to-back advances and a mid-week 11-month high ended in messy retreat. The S&P/ASX 200 slumped 92 points or 1.34 per cent.
The loss drove the index 13 points or 0.2 per cent lower for the week. This afternoon’s close was the weakest since February 4.
What moved the market
Investors took their cues from a typical “flight from risk” on global financial markets after a wobbly week on Wall Street. Asian markets, US futures and crude all moved lower this afternoon. The US dollar rose.
S&P 500 futures skidded 12 points or 0.3 per cent. The Asia Dow fell 1.03 per cent. The US dollar index climbed 0.1 per cent.
The sell-off may have originated with volatility in energy markets, where Brent crude fell more than 2 per cent before trimming its loss to 90 cents or 1.4 per cent at $US63.03 a barrel. Rising energy prices have sharpened concerns about inflation. Analysts also expressed concern that 13-month highs in crude threatened to become a headwind to global growth.
“While monetary authorities are struggling with keeping interest rates low to boost the economic revival and achieve inflation targets, fresh oil dynamics definitely deserve closer attention given the prospects of oil pass-through into inflation,” Kalkine Group CEO Kunal Sawhney said. “It is also to be seen how the pressure building on OPEC+ to ease production cuts unfolds as high crude prices are impacting growth in developing countries.”
The deteriorating mood overshadowed a round of broadly positive domestic earnings updates. Goodman Group, Cochlear, QBE and Inghams were among companies to see share gains after reporting (more below).
The speculative end of the market – a barometer for risk – declined for a fourth session, its longest losing run since October. The S&P/ASX Emerging Companies Index dropped 0.55 per cent
Winners’ circle
A profit upgrade lifted Goodman 1.4 per cent. The largest of the ASX’s property giants increased its half-year operating profit by 16 per cent to $614.9 million. The strong quarter encouraged the company to increase its full-year operating profit outlook by 12 per cent to $1.2 billion.
Cochlear revived its dividend as a post-Covid surge in surgeries triggered a profit rebound. The hearing implant manufacturer will pay an interim dividend of $1.15 per share after declaring a 50 per cent bounce in statutory net profit to $236.2 million. The share price soared 8.4 per cent to a two-month high.
Jeweller Lovisa surged 19.3 per cent to a 15-month peak as a dividend increase sweetened news revenues and profits declined last half. A 34.7 per cent increase in half-year statutory net profit helped lift poultry specialist Inghams 3.6 per cent to a level last seen in August 2019.
An improvement in underlying profitability encouraged investors in insurer QBE to look beyond a statutory net loss of $1.517 billion. The insurer said it expected margins to expand further this year. The share price edged up 3.1 per cent.
Transurban inched up 1.2 per cent after its joint bid with Macquarie was selected for a toll lane project in the US. Crown Resorts jumped 5.3 per cent amid broker upgrades after the company reshuffled the boardroom and senior ranks in an attempt to regain its casino licence in NSW.
The BNPL sub-sector fired up after a mid-week wobble. Afterpay bounced 1.3 per cent back toward record levels. Z1P Co gained 5.6 per cent and Sezzle 3.8 per cent.
Supermarkets Woolworths and Coles added 0.8 and 1.1 per cent, respectively. ANZ was the best of the banks, rising 0.2 per cent. CBA dropped 1.3 per cent, NAB 1.7 per cent and Westpac 1.2 per cent.
Doghouse
Iron ore producers at record levels succumbed to profit-taking even as ore surged to its highest level since December. Rio Tinto shed 3.3 per cent, Fortescue Metals 3.7 per cent and BHP 2.5 per cent.
Waste manager Cleanaway eased 3.4 per cent despite a record profit and a dividend increase. Half-year statutory net profit jumped 75.3 per cent to $79.4 million. The board raised the dividend by 12.5 per cent to 2.25 cents per share.
Woodside Petroleum sank 5.3 per cent after announcing a deal to supply LNG to German multinational RWE. The Australian company yesterday reported a US$4 billion full-year loss.
CSL fell 5 per cent following several broker downgrades. Brambles eased 2.9 per cent, Aristocrat Leisure 1.9 per cent and Wesfarmers 0.9 per cent.
Tepid January sales data weighed on retailers. Retail sales increased 0.6 per cent last month, less than a third of the growth anticipated by economists. The result was affected by a snap lockdown in Brisbane. JB Hi-Fi fell 1.5 per cent, Harvey Norman 2.8 per cent and Premier Investments 2.3 per cent.
Treasury Wine Estates slid 6.1 per cent from yesterday’s six-month high. Domino’s Pizza eased 2.9 per cent from record levels.
Other markets
A downbeat session on Asian markets saw China’s Shanghai Composite fall 0.32 per cent, Hong Kong’s Hang Seng 0.85 per cent and Japan’s Nikkei 0.79 per cent.
Gold also came under pressure, skidding $9.80 or 0.6 per cent to $US1,765.20 an ounce.
The dollar was broadly steady at 77.65 US cents.
