ASX Close: NAB, Block spearhead third day of gains

The share market eked out a third day of gains but finished well off its high as US equity futures retreated ahead of inflation data.

The S&P/ASX 200 closed 20 points or 0.28 per cent ahead after earlier rising 68 points to a two-and-a-half week high.

Well-received trading updates from NAB and AMP, plus strength in tech and mining helped offset declines in bond proxies. AGL Energy, CIMIC, ASX Ltd and Downer EDI fell after releasing earnings.

What moved the market

Strong overnight gains in the US and Europe propelled the market to an early peak before caution set in. The February market recovery rolled on overnight, lifting the Nasdaq Composite 2.08 per cent and the S&P 500 1.45 per cent. Europe’s benchmark had its best night in two months.

US futures faltered this afternoon ahead of a potentially explosive inflation report. The January consumer price index is expected to show prices rising at the fastest rate since 1982. S&P 500 futures declined eight points or 0.2 per cent.

Benchmarks on both sides of the Pacific have regained more than half of their January losses. At today’s high, the ASX 200 had put on more than 570 points in ten sessions since the January 27 low.

Last month’s 6.4 per cent decline on the ASX 200 was the worst start to a year since 2008. AMP’s chief economist Shane Oliver remains cautious about the near-term outlook, but does not believe the January plunge signalled the start of a bear market.

“While shares have had a nice rebound from their January lows helped in part by some good earnings news – reversing around half of their 10% or so fall – concerns remain high around inflation, monetary tightening and the high risk of a Russian invasion of Ukraine,” he said.

“Our assessment remains that it’s too early to say we have seen the lows, but we remain of the view that January’s falls are not the start of major bear market.”

The domestic reporting season is well under way and delivered the usual mix of winners and losers. NAB and AMP attracted a bid. AGL Energy, ASX Ltd, Downer EDI, Mirvac, Northern Star and CIMIC went backwards (more on all below).

Gains in tech stocks, miners and banks outweighed declines in the broader market. Overnight relief in rates pressure encouraged investors to pick up growth names that led last month’s retreat. The Australian tech sector firmed 2.6 per cent as Afterpay parent company Block bounced 9.71 per cent, Megaport 7.64 per cent and Appen 3.81 per cent.

Winners’ circle

Market share gains in lending and deposits helped NAB boost cash earnings by 9.1 per cent over the first three months of the year. Home lending grew 2.6 per cent and small/medium business lending by 3.4 per cent.

“We gained market share across our core lending and deposit products,” CEO Ross McEwan said.

The bank declared an unaudited net profit of $1.8 billion. Revenue increased 8 per cent from the previous quarter. Net interest margin tightened by five basis points. The share price jumped 4.51 per cent.  

CBA added 1.23 per cent, Westpac 1.07 per cent and ANZ 1.06 per cent. Macquarie Group shed 2.16 per cent.

Miners rose on advances in uranium, lithium, aluminium and other industrial metals. Paladin Energy jumped 6.76 per cent, Liontown Resources 4.64 per cent and Chalice Mining 3.34 per cent. Mineral Resources gained 3.6 per cent, Fortescue Metals 3.97 per cent and Allkem 4.32 per cent.

AMP rose 5.94 per cent amid signs of a turnaround within its bank and wealth management businesses. The investment manager reported a full-year loss of $252 million, primarily due to previously-announced impairment charges. Assets under management increased by 8 per cent as net outflows slowed. Bank profits increased 38 per cent.

Doghouse

AGL Energy fell 3.45 per cent after reporting a 41 per cent decline in half-year underlying profit. The energy provider narrowed its underlying profit outlook to $260-$340 million from previous guidance of $220-$340 million. The company slashed its interim dividend to 16 cents per share from 41 cents last year.

The exchange operator, ASX Ltd, eased 3.81 per cent on news CEO and Managing Director Dominic Stevens will retire. Stevens spent nine years with the company, including six as CEO.

The news overshadowed a record half year. The company increased earnings by 6 per cent to $338.4 million. First-half highlights included a record number of capital raisings and the most listings since 2008.

Downer EDI fell 2.5 per cent after Omicron issues threw the firm’s full-year outlook into doubt. Underlying net profit dropped 18.1 per cent to $97.6 million over the first half as the integrated services provider battled supply chain issues and volatile workflow.

“With the arrival of Omicron it has been a tough six months to navigate,” CEO Grant Fenn said.

Mirvac dipped 2.3 per cent after the Omicron wave impacted supply chains, labour and rent collection last half. Despite the headwinds, the property group increased operating profit by 9 per cent to $297 million. Strength in the residential and industrial portfolio helped offset pressure on retail.

CIMIC declined 7.13 per cent on news profits deteriorated last year even as revenues increased. Full-year profit slumped 35.2 per cent to $402.1 million. Revenue increased by 39.1 per cent. The construction giant expects to increase profit this year to $425-$460 million.

Northern Star dipped 0.46 per cent after reaffirming full-year guidance. The gold miner reported a 43 per cent increase in half-year profit to $261 million. Revenues increased 63 per cent from the prior corresponding period, thanks to increased production following a merger with Saracen Mineral.

Other markets

A subdued session on Asian markets saw the Asia Dow ahead 0.11 per cent and Japan’s Nikkei up 0.38 per cent. Hong Kong’s Hang Seng retreated 0.48 per cent. China’s Shanghai Composite dipped 0.1 per cent.

Gold trimmed a four-day rally. The yellow metal reversed US$1.60 or 0.1 per cent to US$1,835 an ounce.

Oil was steady at US$91.55  a barrel.

The dollar eased 0.05 per cent to 71.73 US cents.