Markets at a glance 12 August
Around the grounds
It’s a positive start to the trading week locally, with the S&P/ASX 200 higher for a second straight session helped by gains in the banks as traders’ focus shifts to reporting season. Heavyweight CBA and market darling CSL are on the docket later this week.
Looking around the sectors, the healthcare index is up nearly 1%, tech stocks have jumped 1.5% while miners and energy sectors are largely flat and gold has risen 1%, tracking the price of bullion higher.
Looking deeper into the rise of the banks, Australian financial stocks are ruling the roost against the miners, as equity funds become more wary of the commodity sector due to poor Chinese demand.
The financial sub-index is up over 15% this year, while the local metals and mining index has dropped more than 18% and given up its top weighting on the ASX 200 index. Stock specific, Commonwealth Bank (CBA) has taken the title of the most valuable stock, dethroning global miner BHP Group (BHP). Driving the change, lower bad debts, growing net interest margins and less competition, coupled with soaring property prices are all proving to be tailwinds for the sector.
In the news
Let’s get stuck in. Local reporting season is in full swing, with JB-Hi Fi (JBH) unveiling a special dividend, thanks to a strong net cash position, after it reported a better-than-expected annual result, sending shares soaring over 9% to touch a record high.
On the numbers, full year net profit after tax came in at AU$438.8 million, topping forecasts, but lower on the prior year’s AU$524.6 million. The company will pay a special dividend of 80 cents per share, on top of the final dividend of AU$1.03, taking the fiscal 2024 payout ratio to 65% of post-tax net profit.
Looking ahead, while consumer sentiment has been under pressure amid decade-high interest rates and sticky inflation, a turnaround could be on the horizon, especially for discretionary retailers as the RBA looks poised to begin an easing cycle and inflation abates, which will likely boost non-essential spending.
CAR Group (CAR) shares are also marching higher after the online automotive marketplace provided posted a 24% surge in adjusted net profit after tax for FY24 and a 41% pop in revenue, underpinned by a robust used car market. The stock is up 8% YTD, as of last close.
In stark contrast, shares of Australian oil and gas explorer Beach Energy (BPT) have slumped to a 16-month low after the company posted an 11% slide in full year underlying NPAT. The stock is down nearly 11% YTD, as of last close.
And Aurizon Holdings (AZJ) shares are suffering a similar fate, sliding to their lowest level since November last year as an AU$150 million on-market buyback announcement wasn’t enough to offset a miss on full year EBTIDA. The stock has fallen over 11% this year as of last close.
Going global
Rounding it out on the global stage, it’s a welcome quiet start around the Asian equity region as a holiday in Japan removed at least one source of recent volatility, and investors sit on the side lines ahead of key US inflation figures and a raft of economic data out of China.
US CPI, released on Wednesday, is expected to show a rise of 0.2% in both the headline and core, with the annual rate slowing a tad to 3.2%. An inline print will likely bolster the US Federal Reserve’s confidence that disinflation is ongoing and will likely lead to a rate cut in September.
Futures are currently pricing in a 49% chance the Fed will cut by 50 basis points at the September meeting, though that is down from the 100% a week ago when Japanese markets went into free fall, according to the CME Group’s FedWatch Tool.
Nikkei futures are trading higher, while MSCI’s broadest index of Asia-Pacific shares outside of Japan have edged up 0.2% in today’s trade.
Ahead of the US open, both the S&P and Nasdaq futures are flat in thin trade with investors eyeing the last of second quarter earnings.
Results from Walmart (NASDAQ: WMT)and Home Depot (NASDAQ: HD) this week will provide an update on how U.S consumers are holding up and will book end the US earnings season.
So far, over 90% of the S&P 500 have reported earnings, with nearly 80% of those beating the Street’s estimates.
Finally, on the day’s currency plays, the yen is a tad softer against the greenback, the Euro is relatively flat and the Australian unit is unchanged, hovering around the 65 point 7 US cent mark.
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