Join our daily newsletter At The Bell to receive exclusive market insights
Australian shares rose as a better-than-expected profit result from CSL and a relaxation of geopolitical tensions encouraged buyers.
The S&P/ASX 200 firmed 35 points or 0.5 per cent to 7242.
The busiest day of earnings season so far delivered upside surprises from CSL, Vicinity Centres and Treasury Wine Estates. The advance was constrained by negative reactions to reports from Fortescue Metals, Netwealth and EML Payments.
What’s driving the market
Equity markets rebounded overnight after Russia said it was sending some of the troops on the Ukraine border back to barracks. The S&P 500 rallied 1.58 per cent to its first gain in four sessions. Europe’s Stoxx 600 index jumped 1.43 per cent.
“The major Wall Street indices snapped a three-day losing streak overnight as geopolitical tensions eased between Russia and Ukraine,” Kalkine Group CEO Kunal Sawhney said. “Over the last three days, the conflict between Russia and Ukraine has been keeping global markets worried that this new headwind could aggravate inflation and spur other economic disruptions.
“As Russia appeared to be pulling back some troops from the Ukrainian border, a risk-on session was seen in the share market. Tech and tech-adjacent stocks drove gains.”
The rallies gave the ASX a solid platform for gains as investors parsed a slew of corporate earnings. More than a dozen ASX 200 companies reported this morning, including heavyweights CSL and Fortescue Metals.
Health giant CSL, the market’s third-largest company by index weighting, jumped 6.48 per cent after defying grim predictions for its half-year earnings. The company maintained its interim dividend following a 3 per cent dip in profits to US$1.76 billion.
Revenues increased 5 per cent to US$6.04 billion despite the pandemic’s impact on the company’s core plasma collection business.
“CSL has delivered a result in line with our expectations in a challenging environment brought about by the ongoing impacts of the global COVID-19 pandemic,” Paul Perreault, chief executive and managing director, said.
Healthcare has been the worst-performing sector this year, falling 16 per cent as pandemic tailwinds died down and rising rates dulled interest in defensive, dividend-paying assets. CSL has been a major drag, yesterday slumping to a two-and-a-half year low.
Going up
A strong return to profit propelled retail landlord Vicinity Centres up 8.93 per cent to its highest since June 2020. The shopping centre operator swung to a half-year net profit of $650.2 million from a loss of $394.1 million in H121.
“Retail sales rebounded in November and December 2021 as retailer and shopper confidence strengthened coming out of lockdowns across two major markets,” the company said.
A 12.9 per cent rise in half-year underlying net profit and a 9.6 per cent increase in sales revenue helped lift Orora 8.61 per cent. The packager announced a 23.1 per cent increase in interim dividend to 8 cents per share. Rival Pact Group firmed 7.54 per cent despite reporting a net half-year loss of $20.8 million.
Treasury Wine Estates jumped 11.48 per cent amid signs of recovery after the winemaker lost access to Chinese markets. Minus the loss of China, earnings before tax and interest increased 28 per cent. Half-year net profit declined 7.5 per cent to $109.1 million.
The strongest half in Pro Medicus‘s history boosted the health imaging firm’s shares by 8.61 per cent. Revenues spiked 40.3 per cent to $44.33 million as the company won contracts in the US and expanded its footprint in Europe. Net profit increased 52.7 per cent to $20.68 million.
A deal to supply lithium to Elon Musk’s Tesla lifted miner Liontown Resources 13.67 per cent. The five-year deal starting in 2024 is the second offtake agreement for the miner’s Kathleen Valley project in WA.
Nearmap rallied 5.71 per cent as growth in contracts helped offset an increased half-year loss. The aerial mapping firm’s annual contract value expanded by 32 per cent. Revenues grew 23 per cent to $67.5 million. The net loss blew out by 27 per cent to $11.9 million.
Corporate Travel Management narrowed its loss as business travel recovered last half. The share price advanced 4.55 per cent on news revenues and earnings bounced 76-77 per cent. The underlying loss contracted to $0.4 million from $26.6 million in 1H21. Shares in the business firmed 4.33 per cent.
Breville Group affirmed the consensus full-year forecast after reporting strong consumer demand through the first half. Revenues grew 23.6 per cent to $878.7 million. Net profit increased 25.1 per cent to $77.7 million. The share price inched up 0.7 per cent.
A 41 per cent bump in half-year net profit helped raise shares in Fletcher Building 7.12 per cent.
Among other companies reporting this morning, Evolution Mining gained 0.21 per cent, EBOS Group 3.71 per cent, Prospa 11.96 per cent, Redbubble 5.09 per cent, ReadyTech 0.61 per cent and SG Fleet 10.08 per cent. Maggie Beer was flat. Emeco fell 5.85 per cent.
Going down
Fortescue Metals dropped 3.61 per cent after cutting its dividend following last year’s sharp retreat in iron ore prices. Half-year revenues declined 13 per cent from FY21. Underlying earnings fell 28 per cent to US$4.8 billion. Shareholders will receive 86 cents per share, down from $1.47 in H121.
Rivals BHP and Rio Tinto shed 2.56 per cent and 0.92 per cent, respectively, in the wake of a pullback in ore prices yesterday.
Santos slipped 3.38 per cent as a sharp overnight retreat in crude partly offset a 284 per cent increase in half-year net profit to US$658 million. The oil and gas producer reported record free cash flow of US$1.5 billion. Shareholders will receive a final dividend of 8.5 US cents per share.
A 4 per cent dip in underlying half-year earnings helped drag EML Payments down 6.95 per cent. While revenues grew 20 per cent to $114.4 million from the prior corresponding period, underlying earnings dropped to $26.9 million as overheads increased and profit margins declined.
Netwealth skidded 13.94 per cent after reporting a 1.8 per cent dip in half-year net profit to $27.1 million. Operating expenses jumped 34.2 per cent.
Commonwealth Bank dropped 1.28 per cent as its shares traded ex-dividend.
Other markets
Asian markets joined a global rebound in equities The Asia Dow firmed 1.14 per cent, China’s Shanghai Composite 0.43 per cent, Hong Kong’s Hang Seng 0.92 per cent and Japan’s Nikkei 1.94 per cent.
US futures pared overnight gains. S&P 500 futures were recently down 14 points or 0.3 per cent.
Oil and gold continued to shed their Ukraine risk premiums. Brent crude fell 34 US cents or 0.36 per cent to US$92.94 a barrel. Gold slipped US$3.60 or 0.2 per cent to US$1,852.60 an ounce.
The dollar eased 0.04 per cent to 71.45 US cents.
