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A broad recovery saw the ASX claw back some of yesterday’s losses as a solid earnings report from IAG helped offset a 10.8 per cent profit dive at Commonwealth Bank.
The S&P/ASX 200 rebounded 38 points or 0.55 per cent by mid-session, recouping more than half of yesterday’s 59-point fall.
What’s driving the market
Australian stocks rose for the sixth time in eight sessions after yesterday pre-empting a Wall Street reversal that barely eventuated. Overnight, the S&P 500 broke its winning run, but dipped just 0.11 per cent following six days of gains. The Nasdaq edged up 0.14 per cent.
Here this morning, advances in IAG, Afterpay, Macquarie Group, BHP and Rio Tinto outweighed declines in Wesfarmers and most of the banks. Commonwealth Bank was the biggest drag on the index, falling 1.3 per cent despite raising its dividend and reporting a half-year profit of $3.9 billion.
“CBA reported a fall of 10% in the 1H21 cash profit and a 20.8% dip in statutory net profit amid swelled up credit losses and low interest rate regime. The bank declared an interim dividend of $1.50 per share, up from the $0.98 final dividend in August, though it was lower than last year’s payout of $2.00 per share. The bumper dividend as expected by the market can be attributed to growth in deposits, along with residential and business loans,” Kalkine Group CEO Kunal Sawhney said.
Despite the share price setback, Sawhney said interest in the financial sector was strong this reporting season. AMP reports tomorrow and Bendigo Bank on Monday.
“The revival of the banking sector, that was one of the laggards due to the Covid-19 economic shock, is closely evaluated by income seekers on the back of a potential global economic recovery and the easing of dividend payout norms by APRA. Going forth, the heated reported reason is likely to keep banks’ dividend announcements in focus amid improving asset quality, while the housing boom may provide some sort of insulation to the banks’ residential mortgage segment.”
Going up
IAG rallied 5.3 per cent as investors looked through a $460 million net loss due to Covid provisions to underlying growth in written premiums. The insurer said gross premiums improved by 3.8 per cent over the half. Underlying margins increased by 15.9 per cent. The headline loss was largely due to a $1.15 billion pre-tax expense for business interruption claims due to Covid that were never intended to be covered.
Northern Star rose 3 per cent after reporting a record half prior to merging with Saracen Mineral Holdings. Underlying net profit after tax increased 63 per cent to $194.4 million.
Investors took advantage of dips in BNPL leaders Afterpay and Z1P Co. Afterpay bounced 2.9 per cent. Z1p Co surged 8 per cent to a new peak.
Megaport put on 7 per cent on news recurring revenues increased by 11 per cent last half. Annualised revenue and total customers increased by the same percentage. Elsewhere in the tech space, Appen added 4 per cent and Nearmap 3.1 per cent.
The big miners were mixed. BHP and Rio Tinto each put on 1 per cent after iron ore climbed back above US$160 a tonne. Fortescue Metals slipped 0.4 per cent.
Macquarie Group rallied another 2.8 per cent on yesterday’s well-received profit update. A drop in US bond yields helped Woolworths gain 1.3 per cent, Coles 1.3 per cent, Transurban 1.3 per cent, CSL 0.9 per cent and Goodman Group 0.6 per cent.
Going down
While CBA was the biggest weight on the index, ANZ dropped 0.8 per cent, Wesfarmers 0.6 per cent, NAB 0.4 per cent, Woodside 0.2 per cent and Newcrest 0.1 per cent. Pokie-maker Aristocrat Leisure eased 0.1 per cent following a poorly-received update from rival Ainsworth.
Construction giant Cimic tumbled 16.5 per cent after unveiling a 22 per cent decline in revenue due to Covid delays. Lendlease gained 0.3 per cent following news CEO and Managing Director Steve McCann will retire.
Crown Resorts tumbled almost 9 per cent before trimming its loss to 3.3 per cent after NSW regulators ruled the company was unsuitable to run its new casino at Barangaroo in Sydney. Directors Guy Jalland and Michael Johnson resigned.
Other markets
A broadly positive morning on Asian markets saw the Asia Dow rise 0.84 per cent as gains in China’s Shanghai Composite +0.37 per cent and Hong Kong’s Hang Seng +0.92 per cent offset a decline of 0.18 per cent on Japan’s Nikkei.
US futures edged higher. S&P 500 futures climbed ten points or 0.25 per cent.
Oil rose for a ninth session. Brent crude improved five cents or 0.1 per cent to $US61.14 a barrel. Gold dipped 50 cents or less than 0.1 per cent to $US1,837 an ounce.
The dollar faded 0.13 per cent to 77.3 US cents.
