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Weak leads from Wall Street helped lower the share market for a third session as the interim reporting season reached a climax.
The S&P/ASX 200 dropped 25 points or 0.34 per cent to 7289 by mid-session. The fall set the Australian benchmark on track for a five-week closing low.
Investors faced a blizzard of corporate earnings during the busiest day yet. Results from Eagers Automotive, Smartgroup and Qube were rewarded with share price rallies. Qantas, Blackmores and Bega Cheese were among those feeling the wrath of disappointed expectations.
What’s driving the market
The market continued to lose altitude after the prospect of further rate hikes lowered most US stocks overnight. Nine of eleven S&P 500 sectors declined after the Federal Reserve said it needed “substantially more evidence” that inflation was falling.
“Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2%.,” the minutes from this month’s Fed meeting said.
The S&P 500 faded to a loss of 0.16 per cent. The Dow shed 0.26 per cent. The Nasdaq eked out a gain of 0.13 per cent.
“Equities swung into the red from modest gains after the release of the Minutes, which confirmed all participants anticipated ongoing increases in the months ahead,” NAB economist Taylor Nugent said.
Domestic data this morning showed little evidence Australian businesses are concerned about consumer demand as rates rise. Private capital expenditure jumped 2.2 per cent in the December quarter, twice the increase anticipated by economists.
The dollar bounced 0.25 per cent to 68.28 US cents, repairing some of the damage after a rally in the greenback drove the Aussie under 68 cents overnight.
Going up
Logistics and infrastructure provider Qube jumped 8.03 per cent after almost doubling its first-half profit from the prior corresponding period. Net profit after tax popped 97.7 per cent to $124.9 million as the company reported “high volumes” through its core businesses.
A post-Covid rebound in surgeries helped private hospital operator Ramsay Health Care increase half-year revenues by 13.6 per cent. The firm’s statutory net profit rose 22.3 per cent. The share price gained 2.75 per cent.
A special dividend was the winning ticket for investors in The Lottery Corporation as it reported double-digit first-half earnings growth. The firm will pay a fully-franked special dividend of 1 cent per share in addition to a maiden interim dividend of eight cps. The share price jumped 5.56 per cent.
Medibank rallied 5.84 per cent after reporting a modest increase in policyholders while the health insurer managed the fallout from a damaging cyber hack. First-half net profit increased by 5.9 per cent to $233.3 million. The insurer gained 1,700 new policyholders over the last half despite the loss of 13,000 clients in the second quarter.
Automotive retail group Eagers will pay a record dividend after its most profitable half ever in underlying terms. The firm reported an underlying operating pre-tax profit of $405.2 million amid strong demand for new and second-hand cars. Shareholders will receive an interim dividend of 49 cents. The share price climbed 9.64 per cent.
Fleet manager and salary packager Smartgroup also benefitted from demand for new vehicles. The share price rose 8.08 per cent after CEO Tim Looi flagged a backlog of $15 million in unfilled new orders as supply chain issues persist. The company reported a full-year net profit of $61.2 million.
A return to profitability lifted Auckland International Airport 3.47 per cent. Underlying profit rose to NZ$68 million.
Toll road operator Atlas Arteria firmed 1.21 per cent after reaffirming full-year distribution guidance. APA also reaffirmed guidance. The share price gained 1.88 per cent.
A record first-half profit of $20.1 million lifted Tasmanian lender MyState 4.04 per cent.
Among other companies reporting today, PolyNovo gained 1.8 per cent, Nanosonics 1.05 per cent, EQT 0.89 per cent, The Reject Shop 6.33 per cent, Gold Road Resources 2.8 per cent, Australian Clinical Labs 0.59 per cent and Maggie Beer 7.5 per cent.
Star Entertainment was in a trading halt pending an announcement about raising capital.
Going down
Qantas sank 6.8 per cent after indicating fares may decline as the airline adds more capacity. The airline swung to a record statutory half-year profit of $1 billion, ending a three-year run of losses. The group made 49 per cent more profit last half than it did when it last reported a record profit in 2018.
“Fares have risen because of higher fuel costs, but also because supply chain and resourcing issues meant capacity hasn’t kept up with demand. Now those challenges are starting to unwind, we can add more capacity and that will put downward pressure on fares,” CEO Alan Joyce said.
A cautious outlook helped drive Blackmores down 5.47 per cent. The vitamin manufacturer said cost inflation and rising interest rates were impacting shopper behaviour. The firm reported a 19.6 per cent lift in first-half net profit.
A 74 per cent collapse in first-half profit knocked Bega Cheese down 5.14 per cent to a three-month low. Revenues increased 11 per cent. Profits slumped as price increases lagged milk prices and other cost inflation.
Nine Entertainment retreated 3.88 per cent after a 16 per cent decline in first-half profit. Earnings slid 9 per cent as costs increased.
Property exchange platform Pexa Group sagged 7.58 per cent after a 9 per cent decline in transaction volumes helped slash group profit by 59 per cent.
Other companies reporting today included Humm -8.87 per cent, Insignia Financial -4.47 per cent, Zip Co -5.31 per cent, Pepper Money -0.82 per cent, Maas Group -3.92 per cent, Perpetual -2.81 per cent, Regis Resources -2.7 per cent, IDP Education -1.63 per cent, Cleanaway Waste -1.32 per cent, Platinum Asset Management -15.79 per cent and Shine Justice -21.31 per cent.
Other markets
China’s Shanghai Composite was the only major Asian market to log a rise, firming 0.09 per cent. The Asia Dow was little changed, off 0.02 per cent. Hong Kong’s Hang Seng dropped 0.29 per cent. Trade in Japan was suspended for a public holiday.
A positive outlook from tech giant Nvidia helped lift US futures. S&P 500 futures rallied 15 points or 0.38 per cent. Futures for the tech-heavy Nasdaq jumped 0.71 per cent.
Oil trimmed six days of losses. Brent crude firmed 16 US cents or 0.2 per cent to US$80.61 a barrel.
Gold succumbed to selling pressure in the wake of this morning’s Fed minutes. The yellow metal sagged US$7.20 or 0.4 per cent to US$1,834.30 an ounce.
