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The share market retreated as negative US futures and disappointing trading updates from ANZ and fund manager Magellan weighed.
The S&P/ASX 200 dropped 18 points or 0.26 per cent by mid-session.
Gains in energy and tech stocks were outweighed by declines in banks, REITS and healthcare companies.
What’s driving the market
A new trading week got off to a downbeat start as mixed leads and a dip in US equity futures crimped risk appetite. ANZ was the biggest drag after warning of increased pressure on margins (more below).
A decline in Wall Street indicators overshadowed broadly positive leads. S&P 500 futures reversed seven points or 0.15 per cent. Nasdaq futures fell 38 points or 0.25 per cent.
The retreats suggested second thoughts after a broadly positive initial response to strong US jobs data on Friday that cemented the case for rate increases. US borrowing rates jumped after the economy added three times as many jobs last month as economists anticipated.
“In the words of Shaggy, the January US nonfarm payrolls report was nothing but Boombastic!” NAB currency strategist Rodrigo Catril said. “In addition to the much better than expected January print of 467K new jobs vs a consensus of 125k and a very wide range of estimates from -400k to +250k, the release also revealed net revision to the previous three months of an additional 709K new jobs, amazing!”
Aided by positive earnings updates from Amazon, Snap and Pinterest, the S&P 500 put on 0.52 per cent and the Nasdaq Composite 1.58 per cent. The Dow faded to a loss of less than 0.1 per cent.
The Australian ten-year yield punched above 2 per cent this morning, rising more than five basis points. The advance weighed on REITs and other sectors that benefit from lower bond yields, but did little for lenders as ANZ’s update weighed.
Going up
GrainCorp surged 12.97 per cent on news a bumper crop and strong global demand for gains and oilseeds will help super-charge full-year earnings. The company expects underlying earnings of $480-$540 million, up from $331 million last financial year. Fellow agribusiness Elders rallied 5.21 per cent.
Targetting homeowners paid off for fiber cement manufacturer James Hardie. Global net sales jumped 26 per cent over the last nine month of 2021as the company’s new direct-marketing strategy gained traction. Net profit jumped 147 per cent. The share price responded with a rise of 2.06 per cent.
Argo Investments almost doubled its interim profit last half as most of the companies in its portfolio resumed paying dividends. First-half profit increased 91.5 per cent to $129 million. The company beat the wider market with return of 7.3 per cent after costs and tax, compared to 3.8 per cent for the S&P/ASX 200 Accumulation Index. The share price edged up 0.2 per cent.
Silver Lake Resources firmed 1.82 per cent on news of a share buyback. The gold and copper miner will buy back up to 10 per cent of its shares on-market over the next 12 months.
Lockdown closures are expected to drive Star Entertainment to a half-year loss of $73-$75 million. The casino group said revenues rebounded upon reopening, but were impacted again by the spread of the Omicron Covid variant since December. The share price rose 0.14 per cent.
On-going strength in commodity prices lifted Woodside Petroleum 1.75 per cent, BHP 0.95 per cent and Fortescue Metals 0.56 per cent.
Tech stocks chased the Nasdaq higher. Afterpay parent Block firmed 3.13 per cent, EML Payments 3.06 per cent and Novonix 2.73 per cent.
Syrah Resources entered a trading halt to raise funding after approving an expansion at its Vidalia graphite mine.
At the junior end of the market, Cooper Metals jumped 18.48 per cent to an all-time high as rock sampling firmed up the miner’s copper and gold hopes for its Mount Isa East project. Video game developer Playside Studios surged 33 per cent.
Going down
Pressure on margins helped drive ANZ down 2.25 per cent to an 11-month low. The bank reported group net interest margin contracted eight basis points last quarter. Underlying margins fell five basis points. The bank expected these headwinds to diminish as market rates improved this year.
The bank had to play catch-up with rivals last year after initially taking longer to process loan applications. Application times were now “in line with other major lenders”.
NAB retreated 1.65 per cent and CBA 0.44 per cent. Westpac added 0.09 per cent.
Investment manager Magellan slumped 9.62 per cent to its lowest since 2015 on news Chair and Chief Investment Officer Hamish Douglass will take a leave of absence. The star stock picker will take leave to “prioritise his health” after a high-profile separation and the loss of the firm’s biggest client. Funds under management declined by almost $2 billion last month to $93.5 billion.
Imdex wilted 2.36 per cent despite a record half and an increased dividend. The drilling services provider lifted half-year revenue 34.9 per cent to $167.8 million. Net profit was a record $24.4 million, a rise of 80.8 per cent. The company will pay an interim dividend of 1.5 cents per share.
CIMIC‘s UGL subsidiary has been chosen to build a power plant for Snowy Hydro in the NSW Hunter Valley. The contract will generate revenue of $185 million over two years. The builder’s share price eased 1.79 per cent .
Champion Iron shed 2.96 per cent as its shares went ex-dividend.
Other markets
A mushy morning on Asian markets saw the Asia Dow lose 0.52 per cent, Japan’s Nikkei 0.78 per cent and Hong Kong’s Hang Seng 0.37 per cent. China’s Shanghai Composite resumed trade after Golden Week with a jump of 1.88 per cent.
Brent crude overcame early weakness to advance 41 US cents or 0.45 per cent to US$93.69 a barrel.
Gold built on its best week since November, rising US$1.90 or 0.1 per cent to US$1,809.70 an ounce.
The dollar inched up 0.03 per cent to 70.82 US cents.
