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The share market edged to a fresh eight-week high as investors weighed a soft trading update from NAB and conflicting signals from business and consumer confidence surveys.
The S&P/ASX 200 overcame a mid-morning wobble to climb to a mid-session gain of 10 points or 0.14 per cent.
Battery metal miners and tech stocks spearheaded gains, with support from REITs. A poorly-received trading update from National Australia Bank weighed on the financial sector.
What’s driving the market
The market traded both sides of break-even as NAB’s third-quarter trading update pulled on the heavily-weighted banks.
NAB shares fell 3.19 per cent after the bank reporting rising expenses largely offset the tailwind from higher rates last quarter. Both cash earnings and expenses increased 3 per cent. Net interest margin was “slightly lower”.
The bank reported a $1.85 billion unaudited statutory net profit. The report helped drag CBA down 1.17 per cent, Westpac 1.04 per cent and ANZ 0.61 per cent.
Also affecting the market mood were mixed messages from separate reports on consumer and business confidence. Consumers are almost as pessimistic as during the GFC or at the height of the pandemic, according to Westpac’s sentiment index.
The gauge declined 3 per cent last month to 81.2. The index has fallen every month since November 2021 for a total decline of 22.9 per cent.
“The fall in consumer confidence will have the Reserve Bank of Australia watching over its shoulder. The monthly Westpac estimate came in at 81.2 compared to market estimates of 85. It’s a big miss,” Peter Esho co-founder of property investment platform Wealthi, said.
Westpac’s chief economist Bill Evans expects the central bank to hike again by 50 basis points next month, then pare the size of further increases.
“The Reserve Bank Board next meets on September 6. We expect the Board will decide to raise the cash rate by a further 50 basis points to 2.35%. That move would leave the cash rate in the “neutral range” as defined by both the Governor and the Deputy Governor in recent speeches,” Evans said.
“Once in that neutral range it would be prudent to scale back the increases to 25 basis points per meeting as policy settings move further into the contractionary zone,” he added.
A separate weekly gauge by ANZ and Roy Morgan dropped 4.5 per cent last week, erasing three weeks of improvement. The decline came after the RBA raised the cash rate by 50 basis points.
The growing gap between the views from the boardroom and main street was highlighted by a sharp improvement in business confidence. NAB’s business confidence index lifted seven points to +7, back above the long-term average. Business conditions improved six points to +20.
“Overall, the survey suggests demand is continuing to hold up, supporting business profits and employment growth,” NAB Chief Economist Alan Oster said.
Overnight, the S&P 500 ticked lower for a third session as investors held fire ahead of tomorrow’s July inflation report. The US benchmark ticked down 0.12 per cent.
Going up
This week’s spectacular rally in battery metal miners continued in the wake of progress with the US’s climate bill through Congress. Lake Resources surged 16.74 per cent to a seven-week high. Liontown rallied 9.32 per cent, Nickel Industries 6.71 per cent and Core Lithium 7.35 per cent.
A record year lifted News Corp 4.49 per cent. The media giant reported an 11 per cent increase in full-year revenues to US$10.39 billion, aided by a surge in profitability at its Dow Jones business. Net income jumped 95 per cent to US$760 million.
News Corp’s majority-owned property listings group REA gained 4.04 per cent after growing full-year net profit by 25 per cent and increasing its dividend by the same percentage. The group expects positive operating jaws for Australia this fiscal year even as property prices moderate.
Coronado climbed 5.45 per cent as strong coal prices helped the miner deliver record half-year revenue, income and adjusted earnings. The average realised metallurgical coal price of $292.80 a tonne was 193 per cent higher than the prior corresponding period.
“These strong results are due to the higher price environment, which has resulted in record price realisations for our high-quality metallurgical coal products, but also from the structural changes made to our business over the past 12–18 months that have allowed us to take advantage of the improved markets,” chief executive and managing director Gerry Spindler said.
Megaport surged 9.29 per cent as advances in revenues and earnings helped reduce its full-year loss. The tech platform provider’s revenue jumped 40 per cent to $109.7 million. Normalised earnings improved 23 per cent. The net loss for the year was $48.5 million, 12 per cent less than FY21.
Going down
While financials were the biggest weight, utilities and consumer staples also declined. APA Group shed 1.96 per cent, AGL Energy 0.82 per cent, Coles 0.53 per cent and Woolworths 0.2 per cent.
Afterpay parent company Block eased 3.1 per cent, ResMed 1.97 per cent and Bega Cheese 1.33 per cent.
Other markets
US futures shrugged off a generally negative session in Asia. S&P 500 futures firmed four points or 0.1 per cent.
The Asia Dow lost 0.92 per cent, Hong Kong’s Hang Seng 0.44 per cent and Japan’s Nikkei 0.87 per cent. China’s Shanghai Composite bucked the trend with a rise of 0.19 per cent.
Gold gave back almost a third of last night’s advance, retracing US$4.10 or 0.2 per cent to US$1,801.10 an ounce.
Brent crude declined 48 US cents or 0.5 per cent to US$96.17 a barrel.
The dollar eased 0.12 per cent to 69.8 US cents.
