The Market Herald - At The Bell

Join our daily newsletter At The Bell to receive exclusive market insights

A rare earnings miss from Australia’s largest listed company helped drag the share market to a five-week low.  

The S&P/ASX 200 declined 20.5 points or 0.28 per cent to 7331 by mid-session.

BHP accounted for much of the weakness after its first-half earnings missed analysts’ projections. That loss was partly offset by gains in rival bulk metal producers Rio Tinto and Fortescue Metals.

Johns Lyng Group, HUB24 and Ramelius Resources were among the morning’s best performers following trading updates.

What’s driving the market

Index heavyweight BHP was the biggest drag on the market, falling 1.4 per cent to $47.78 after missing profit expectations. The Big Australian reported a 32 per cent slide in underlying profit to US$6.597 billion, short of the US$6.82 billion forecast by analysts.

Revenues from continuing operations sagged 16 per cent to US$25.713 billion. Underlying earnings dropped 28 per cent to US$13.23 billion. Shareholders will receive a reduced interim dividend of 90 US cents, down from US$1.50 in 1H22.

“BHP accounts for an 11.1% weighting in the ASX200, so if BHP fails to hold support at $47.30/20, look for the ASX200 to take another leg lower towards 7200 in the coming session which would give us the 5% pullback from the Feb 6 7567 high we have been calling for since late January,” Tony Sycamore, market analyst at IG, said.

The market too in its stride news the Reserve Bank debated increasing the cash rate target by half a percentage point at this month’s meeting. The minutes from the meeting showed the board discussed raising by 25 or 50 basis points before opting for the former.

“The arguments for a 50 basis point increase stemmed from the concern that there had been a pattern of incoming prices and wages data exceeding expectations, and a risk that high inflation would be persistent,” the minutes said.

“Members acknowledged that there were arguments in favour of both options, but concluded that the case to increase the cash rate by 25 basis points at the present meeting was the stronger one… With interest rates already having been adjusted substantially, there was less need to move by 50 basis points at this meeting.”

Consumer confidence improved last week for the first time in three weeks, according to an ANZ-Roy Morgan weekly survey. The confidence index ticked up 2.3 points to 80.4 points after falling 8.7 points in the prior two weeks as the RBA hiked rates.

A US market holiday allowed domestic issues to take the spotlight. European stocks finished mixed overnight as Wall Street closed for Presidents’ Day.

Going up

A revenue and earnings upgrade catapulted Johns Lyng Group to the top of the index. Shares in the building services group jumped 16.79 per cent after a strong first half prompted an 11.2 per cent hike to the full-year revenue outlook. Full-year earnings were expected to be 5.5 per cent better than previous guidance.

Financial services provider HUB24 flew up 8.59 per cent after reporting an 87 per cent bump in first-half underlying profit. The firm increased its interim dividend by 87 per cent to a full-franked 14 cents per share.  

Tabcorp gained 2.75 per cent after beating profit expectations. The gambling company reported a first-half statutory net profit of $52 million, comfortably ahead of the $43.2 million anticipated by analysts.

Gold miner Ramelius put on 3.92 per cent after reaffirming full-year production guidance. Rising costs and lower grades knocked the miner’s first-half underlying net profit down to $32.7 million from $54.2 million in the prior corresponding period.

Judo Bank surged 7.29 per cent to an eight-month high after more than tripling its first-half profit. The lender reported a profit before tax of $53.2 million, up from $12.6 million in the prior corresponding period. Profits were boosted by an increase in net interest margin of 72 basis points to 3.56 per cent.

Among other companies reporting today, Alumina gained 0.33 per cent, Estia Health 2 per cent, Best and Less 6.87 per cent, AMA Group 4.55 per cent, Monash IVF 3.02 per cent, HT&E 1.22 per cent and Perenti 0.44 per cent.

Going down

Shareholders in Coles can look forward to a dividend increase of 9.1 per cent after the supermarket group reported a 3.9 per cent increase in first-half sales revenues. CEO Steven Cain said supplier cost inflation started to ease this quarter. The company will pay an interim dividend of 36 cents per share, up from 33 cents in 1H22. The share price dipped 1.53 per cent.

An earnings downgrade smashed seniors accommodation provider Ingenia down 15.58 per cent. The firm cut its full-year earnings outlook to growth of 0-10 per cent from previous guidance of 30 per cent. The downgrade followed an increase in the time properties took to sell.

Stockland eased 4.88 per cent after warning it expects earnings to skew to the second half due to delays in property settlements. First-half funds from operations edged up 0.7 per cent to $353 million. The company maintained its full-year guidance.

A profit miss helped drag Monadelphous down 4.73 per cent. The engineering group reported a first-half net profit after tax of $29.1 million from revenues of $953 million. Analysts anticipated a profit of closer to $31.3 million.

Viva Energy declined 3.3 per cent from near an eight-month high after warning the outlook for refining and supply was “volatile and uncertain”. First-half earnings were a record $1.1 billion.

Intellectual property services group IPH dropped 3.31 per cent after reporting a 4.3 per cent first-half decline in patent filing in Australia compared to HY22. The drop was offset by a 10 per cent jump in Asian earnings. Underlying net profit lifted 21 per cent.

Fruit and veg grower Costa Group shed 2.22 per cent after wet weather helped halve first-half net profit after tax. Net profit slumped to $30.2 million from $64 million in 1H22. The company expects a second-half recovery as the weather improves.  

Seek dropped 1.15 per cent following a trading update. ARB Corporation shed 0.95 per cent, Iluka 0.47 per cent, G8 Education 2.33 per cent and Austin Engineering 2.67 per cent.

Among companies trading ex-dividend, Challenger declined 0.92 per cent, Magellan 4.23 per cent, Endeavour Group 2.18 per cent and Computershare 1.2 per cent.

Other markets

US futures continued to fade ahead of the resumption of trade tonight. S&P 500 futures dropped 17 points or 0.42 per cent.

Asian markets ticked lower. The Asia Dow declined 0.4 per cent, China’s Shanghai Composite 0.01 per cent, Hong Kong’s Hang Seng 0.51 per cent and Japan’s Nikkei 0.21 per cent.

Oil gave back around half of its overnight gain. Brent crude reversed 52 US cents or 0.6 per cent to US$83.55 a barrel.

Gold remained in a holding pattern pending the resumption of US trade. The yellow metal eased 60 US cents or 0.03 per cent to US$1,849.60 an ounce.

The dollar moderated an overnight push above 69 US cents, reversing 0.1 per cent to 69.02 US cents.

More From The Market Herald
The Market Herald Video

TMH Market Close: First day of December down after November rally

The ASX200 finished off the first day of December down 0.2 of a percent - with all sectors,…
The Market Herald Video

TMH Market Open: Flat for Friday on the ASX200, Tesla drops on Cybertruck launch

The ASX200 may pull back a bit today – by about .13 per cent, despite the…
The Market Herald Video

TMH Market Close: Late spike sees ASX200 up 0.74 per cent as Industrials sector leads

The ASX200 has closed after a late spike, up 0.74 per cent to 7087.3 points. Industrial stocks…
The Market Herald Video

TMH Market Update: Dwelling approvals rise in October, WA leads

The ASX 200 is just .15 per cent ahead today. Dwelling approvals added 7.5 per cent…