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A record dividend payout from BHP and a cautious rates outlook from the Reserve Bank helped lift the share market to a fresh nine-week high.
The S&P/ASX 200 rallied 39 points or 0.55 per cent by mid-session. The index crossed 7100 for the first time since June 9.
Index heavyweight BHP provided much of the momentum after announcing the second-largest full-year profit in the company’s history. Seafood farmer Tassal Group agreed to a takeover offer from a Canadian rival. Energy stocks dragged after a sharp fall in crude prices overnight.
What’s driving the market
Stocks rose for a second day after the ASX 200’s largest component by market weighting defied expectations that recent declines in commodity prices would undermine earnings. BHP shareholders will receive a record dividend after the miner increased full-year profit by 34 per cent.
The Big Australian will pay a final dividend of US$1.75 per share on record underlying earnings of US$40.6 billion at a record margin of 65 per cent.
“BHP remains the lowest cost iron ore producer globally and we delivered record annual sales from Western Australia Iron Ore,” CEO Mike Henry said.
“BHP enters the 2023 financial year in great shape strategically, operationally and financially, and well prepared to manage an uncertain near-term environment,” he added.
The miner’s share price rose 4.59 per cent to a six-week high. The company accounts for roughly a tenth of the ASX 200 by weighting.
Also helping sentiment was a rebound in consumer confidence and signs the RBA may slow the pace of rate hikes. The weekly ANZ-Roy Morgan confidence index bounced 4.9 per cent to 84.2 points last week
The minutes from this month’s RBA meeting indicated the bank expects to raise its benchmark rate in the months ahead, but will be guided by data. The bank said it was “not on a pre-set path”.
“The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market, including the risks to the outlook. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to the 2 to 3 per cent target range over time,” the minutes said.
The board raised the cash rate target at the conclusion of the meeting by 50 basis points to 1.85 per cent.
Wall Street rose overnight as traders bet weak economic data from the US and China might slow the pace of rate hikes this year. The S&P 500 overcame early weakness to advance 0.4 per cent. The Dow closed above its closely-watched 200-day moving average for the first time since April.
Going up
Seafood farmer Tassal Group climbed 5.32 per cent after accepting an improved takeover offer from Canada’s Cooke Inc valuing the business at $1.1 billion. The firm entered a Scheme Implementation Deed under which shareholders will receive $5.23 per share, up from a previous offer of $4.67.
Temple & Webster soared 23.18 per cent after beating profit expectations. The online furniture retailer reported an $11.97 million full-year net profit, down 14.2 per cent on last year but more than twice what the market expected. Revenues grew 31 per cent.
Industrial property giant Goodman Group increased its full-year operating profit by 25 per cent to $1.528 billion. The company expects to lift operating earnings per share by 11 per cent this fiscal year to 90.3 cents. The share price inched up 0.05 per cent.
Office landlord Growthpoint Properties firmed 0.53 per cent after forecasting a stronger distribution this financial year despite rates and inflationary headwinds. Full-year profit declined to $459.2 million in FY22 from $553.2 million the previous year.
Aside from BHP, the best of the heavyweights were Fortescue Metals +1.93 per cent, Telstra +1.36 per cent and Woolworths +1.09 per cent. CBA was the pick of the banks, rising 0.53 per cent.
Life360 gained 3.82 per cent after more than doubling full-year revenues to $99.8 million.
Hotel and bottlo business Endeavour climbed 3.32 per cent to an all-time high.
Going down
Volatility in investment markets knocked fund manager Challenger’s full-year net profit down 57 per cent to $254 million. Assets under management contracted 10 per cent to $99 billion. The share price slumped 13.48 per cent.
James Hardie eased 1.8 per cent after housing market uncertainty and inflationary pressures prompted a guidance cut. The fiber cement supplier lowered its fiscal year adjusted net income guidance to US$730-US$780 million from previous guidance of US$740-$US820 million.
Buy now, pay later player Sezzle slumped 12.2 per cent after its half-year net loss blew out to US$43.1 million from US$30.4 million in the prior comparative period.
Landlord SCA Property dropped 4.07 per cent after warning changes to interest rates will impact distributions. The firm expects adjusted funds from operations to contract to 15 cents per unit this year from 15.3 cpu in FY22.
Seven West Media fell 5.29 per cent as a decline in 1H23 advertising overshadowed “the best Seven television EBITDA results in 11 years”. Underlying full-year net profit jumped 60 per cent to $200.8 million. However, the company warned the total TV advertising market declined 7 per cent in 1H23.
Job search engine SEEK faded 6.65 per cent despite increasing full-year profit from continuing operations by 130 per cent to $240.8 million. The company expects revenue to expand this year to $1.25-$1.3 billion.
Sims dropped 3.25 per cent after warning aggressive interest rate hikes had dented demand for recycled metals. The firm said ferrous prices peaked at US$700 a tonne in March and have since fallen to US$320-US$400.
Other markets
A subdued morning on Asian markets saw the Asia Dow ease 0.16 per cent and Japan’s Nikkei 225 index trade unchanged. China’s Shanghai Composite firmed 0.37 per cent. Hong Kong’s Hang Seng added 0.24 per cent.
US futures drifted lower. S&P 500 futures faded three points or 0.1 per cent.
Oil remained under pressure from yesterday’s soft Chinese economic data. Brent crude declined 73 US cents or 0.8 per cent to US$94.37 a barrel.
Gold slipped US$1.60 or 0.1 per cent to US$1,796.50 an ounce.
The dollar bounced 0.16 per cent to 70.3 US cents after falling more than 1 per cent overnight.
