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The share market bounced off a three-week low as tech and mining stocks rose and a string of household names reported earnings.
The S&P/ASX 200 rallied 48 points or 0.69 per cent to 7010. The advance was the market’s first in five sessions.
A busy morning of corporate earnings included updates from Coles, Domino’s Pizza, Tabcorp and Seven Group.
What’s driving the market
Buyers took advantage of the lowest prices of the month following four days of selling pressure. The ASX 200 slumped 1.2 per cent yesterday to its weakest close since July 29.
Wall Street continued to lose ground overnight, but falls were milder than the heavy hits across the previous two sessions. The S&P 500 dipped 0.22 per cent, raising hopes the worst of the pre-positioning for Friday’s nervously-anticipated address by Federal Reserve Chair Jerome Powell was over.
Overnight, soft readings on private-sector business activity and housing piqued hopes the central bank will not raise rates as high as previously feared to dampen inflation.
“The headline manufacturing survey declined from 52.2 to 51.3 in August, and the headline services index fell from 47.3 to 44.1, the weakest on record outside of the pandemic. New home sales fell an alarming 12.6% (consensus: -2.5%), evidence that higher rates are impacting sectors of the economy,” City Index market analyst Tony Sycamore said.
Australian investors were encouraged by bounces in iron ore, crude oil, gold and copper and by better-than-expected corporate earnings.
“Shares of Domino’s Pizza Enterprises surged over 7% in morning trade after CEO Don Meji said store earnings are higher than pre-Covid levels. The company also announced that it has expanded in Asia by acquiring 287 stores in Malaysia, Cambodia and Singapore,” Kunal Sawhney, chief executive of research group Kalkine, said.
“Logistics software company WiseTech Global was the top gainer on ASX 200 after it reported 80% jump in its profit to AU$195 million.
“Corporate earnings season in Australia has been ahead of expectation, with most companies witnessing a jump in their profit and cash flow. But what has been disappointing are buybacks and dividend payouts. This shows companies are preparing for uncertain events amid rising interest rates and wage growth.”
Going up
WiseTech jumped 10.51 per cent after hitting the top end of revenue guidance. The logistics software developer reported an 80 per cent hike in full-year net profit to $194.6 million.
Domino’s Pizza rallied 6.58 per cent after announcing its expansion into Malaysia, Singapore and Cambodia. The fast food giant will acquire 287 corporate-owned Domino’s stores in the three regions for $214 million, plus earn-out payments.
Record net inflows helped lift financial services provider Netwealth 8.7 per cent. The company increased funds under management by 32.4 per cent.
Tabcorp gained 4.62 per cent on growth expectations after CEO and Managing Director Adam Rytenskild said the latest result marked “a line in the sand and the end of old Tabcorp”. Full-year group revenue declined 4.3 per cent in FY22. Rytenskild said the result reflected “a disrupted period” as the gaming group spun out its lotteries business, introduced cost efficiencies and worked on new digital offerings.
Covid-fuelled record revenues and earnings lifted diagnostics business Sonic Healthcare 5.27 per cent. Full-year revenue increased 7 per cent to $9.34 billion. Earnings increased 11 per cent to $2.83 billion.
A 13.3 per cent increase in full-year underlying net profit lifted AUB Group 5.4 per cent. The insurance broker said it saw strong organic growth in Australian Broking and Agencies.
Improved prices for mineral sands supercharged Iluka Resources’ revenues by 30 per cent. The miner’s shares climbed 7.83 per cent on news half-year profit jumped 186 per cent to $369 million.
Media and industrial conglomerate Seven Group firmed 1.86 per cent as full-year earnings growth of 12.8 per cent helped offset a 4.3 per cent dip in statutory net profit. Underlying profit grew 14.4 per cent to $577.3 million.
Among other companies reporting, HomeCo gained 7.45 per cent, G8 Education 1.55 per cent, Worley 4.76 per cent and Elmo Software 3.87 per cent. Kelsian fell 1.38 per cent. Hansen Technologies slid 8.67 per cent.
Going down
Payments platform EML plunged 15.08 per cent after uncovering fraudulent activity at its Sentenial business. The scam involved fake merchants using Sentenial’s direct debit processing facility. The firm was confident losses would not exceed $7.9 million.
Coles declined 3.37 per cent on news costs will increase this fiscal year. Capital expenditure is expected to rise to $1.2-$1.4 billion from $1.14 billion this year. The supermarket reported a 0.2 per cent improvement in earnings in FY22 and a 4.3 per cent lift in net profit.
APA Group eased 1.6 per cent after forecasting a 3.8 per cent lift in distributions in FY23 to 55 cents per security. The energy infrastructure group reported a 3.9 per cent improvement in underlying earnings to $1.692 billion in FY22.
Telstra dropped 2.3 per cent as its shares traded ex-dividend.
Other markets
US futures fell for a fourth day. S&P 500 futures were recently down 12 points or 0.28 per cent.
The Asia Dow sagged 0.61 per cent. China’s Shanghai Composite lost 0.69 per cent, Hong Kong’s Hang Seng 0.85 per cent and Japan’s Nikkei 0.35 per cent.
Oil lost its fleeting hold on US$100 a barrel. Brent crude declined 40 US cents or 0.4 per cent to US$99.82.
Gold gave back around a quarter of last night’s rebound, falling US$3.10 or 0.2 per cent to US$1,758.10 an ounce.
The dollar trimmed its overnight push back above 69 US cents, easing 0.28 per cent to 69.01 US cents.
