The first major week of the full-year profit season ended with shares at a fresh high as most of the heavyweights scheduled to report next week advanced.
The S&P/ASX 200 rallied 41 points or 0.54 per cent this session. The index put on 91 points or 1.2 per cent across a week that delivered one record after another. The index set intraday highs every session bar Thursday, and all-time closing highs each day from Tuesday.
CSL, Aristocrat Leisure and NAB were the pick of the market heavyweights today. CBA, Telstra and most of the miners declined.
What moved the market
Defensive sectors kept the party going this session as the financial and materials sectors ended mixed and little changed. Healthcare and utilities were the pick of the sectors, with support from I.T. and consumer stocks.
The market has built steadily this week, supported by broadly positive corporate earnings. Of the 27 ASX 200 companies to report so far, 55.6 per cent have ended higher on the day of the announcement with an average daily gain of 0.6 per cent, according to CommSec.
“The earnings season has so far continued to meet the share market’s lofty expectations with several companies rewarding shareholders with share buybacks as well as dividend hikes,” Kalkine Group CEO Kunal Sawhney said.
“A remarkable feature of the ongoing earnings season has been a rush of share buybacks announced by blue-chip companies, like Telstra, Suncorp, and Commonwealth Bank. The remarkable earnings growth and broader clarity on the growth trajectory of the Australian economy appear to have made firms more comfortable with spending excess cash via buybacks.”
The full-year season paused today before picking again on Monday. More than 50 companies were scheduled to report next week.
“Some of the big names are slated to release their earnings next week, including Newcrest Mining, Treasury Wine Estates, CSL, Coles, Woodside Petroleum and Beach Energy,” Mr Sawhney said.
“It will be interesting to see if the wave of dividend hikes and share buybacks will continue in the third-busiest week of the earnings season. Meanwhile, the market will receive a further clarity on how booming commodity prices have impacted miners’ profits and dividend payouts for the last financial year.”
Among companies due to report on Monday, BlueScope Steel climbed 2.66 per cent, JB Hi-Fi 1.21 per cent, Bendigo Bank 0.82 per cent and Lendlease 0.24 per cent. Among companies reporting later in the week, CSL gained 2.37 per cent, Treasury Wine Estates 3.38 per cent and Woodside 0.77 per cent.
Fresh highs for the S&P 500 and Dow provided solid leads. The S&P 500 climbed 0.35 per cent overnight. The Dow edged up 0.04 per cent and the Nasdaq 0.35 per cent amid a gentle rotation from cyclical sectors into growth stocks.
Healthcare had been largely overlooked this week as investors favoured sectors with better exposure to the economic cycle. Today’s rally reversed three days of declines. Sector giant CSL climbed 2.37 per cent, Sonic Healthcare 1.25 per cent and Fisher & Paykel Healthcare 2.24 per cent.
The utilities sector was lifted by a 4.04 per cent rebound in AGL Energy following yesterday’s bleak full-year forecast. The energy giant predicted a further decline in earnings this financial year as the rise of renewables crimps profit opportunities. APA Group gained 0.31 per cent, AusNet 0.79 per cent and Spark Infrastructure 1.48 per cent.
Other defensive heavyweights to rise included Coles +1.04 per cent, Charter Hall Group +1.08 per cent and Goodman +0.49 per cent
An overnight rise in the greenback lifted companies with significant US earnings. Aristocrat Leisure firmed 1.73 per cent, Brambles 1.11 per cent and Macquarie Group 0.83 per cent.
The rest of the financial heavyweights were mixed. Westpac rose 1.55 per cent, NAB 1.58 per cent and ANZ 0.61 per cent. CBA succumbed to a second day of profit-taking since reporting on Wednesday, falling 1.75 per cent.
Kathmandu advanced 1.53 per cent on news Brooke Farris will take over as CEO of Rip Curl. Ms Farris will replace Michael Daly, who moves up to Group CEO and Managing Director of Kathmandu Holdings.
The session’s best performers were Downer EDI +5.2 per cent, Premier Investments +4.94 per cent and Star Entertainment +4.78 per cent.
The big three ore producers largely weathered an initial decline in ore, but have slowly succumbed as prices test four-month lows. The spot price for ore landed at Tianjin fell 2.9 per cent yesterday after China announced fresh curbs on steel production to reduce emissions ahead of the Winter Olympics.
BHP retreated 0.34 per cent and Fortescue Metals 0.98 per cent. Rio Tinto inched up 0.08 per cent In the wider mining space, Orocobre dropped 4.52 per cent, Chalice Mining 5.65 per cent and Pilbara Minerals 2.1 per cent.
Suncorp fell 3.21 per cent and Scentre Group 2.29 per cent as they went ex-dividend.
Telstra touched its strongest level in four years before rolling over to a loss of 0.25 per cent. CEO Andy Penn yesterday heralded the telco had reached a turning point. Buyers were encouraged by a $1.35 billion share buyback and the promise of solid growth.
Baby Bunting dropped 4.52 per cent after declining to offer earnings guidance as pandemic lockdowns clouded the outlook. The baby goods retailer increased its full-year statutory net profit 76 per cent to $17.5 million and increased sales 15.6 per cent.
The company said: “The COVID-19 pandemic continues to create significant disruption, with the risk that trading conditions will fluctuate greatly throughout the year. Accordingly, no guidance about FY22 earnings can be given at this time.”
The mood up in Asia deteriorated as the session advanced. China’s Shanghai Composite dropped 0.62 per cent, Hong Kong’s Hang Seng 1.08 per cent and Japan’s Nikkei 0.07 per cent. The Asia Dow held on to a gain of 0.11 per cent.
US futures were flat. S&P 500 futures dipped a point or 0.02 per cent.
Oil added to overnight losses. Brent crude retreated 75 US cents or 1.05 per cent to US$70.57 a barrel.
Gold rallied US$5.20 or 0.3 per cent to US$1,757 an ounce.
The dollar eased 0.06 per cent to 73.36 US cents.