Markets at a glance 17 February
Around the grounds
The S&P/ASX200 has started off the weak in the red, retreating from record highs as financials and gold plays drag down the bourse. Breaking it down, the banking sector is under pressure thanks to disappointing earnings from Westpac (WBC:ASX) and Bendigo and Adelaide (BEN:ASX).
Insurance companies are also drooping after Opposition Leader Peter Dutton accused them of price gouging and threating to break them up if the coalition wins the next federal election.
Elsewhere, the price of gold as fallen back below the US$2,900 level, ahead of the release of the FOMC’s latest meeting minutes and lacklustre US retail sales data that was released on Friday.
Iron ore futures meantime are lower as concerns over cyclone-related supply disruptions eased in Australia following the reopening of local ore ports. The most-traded May iron ore contract on China’s Dalian exchange is down over 2%, rebounding from a January 16 low earlier in the session.
Finally, the Australian dollar has kissed a fresh two-month high against its US counterpart, ahead of the all-important Reserve Bank of Australia interest rate decision tomorrow. Over 90% of economists surveyed by Reuters see a 25-basis point cut at tomorrow’s meeting, with the market pricing around an 87% chance.
In the news
Quick check in some of the stocks to watch in today’s trade. Australian listed shares of Perpetual (PPT:ASX) are marching higher after the fund manager confirmed it has received a sweetened indicative buyout offer from private equity firm KKR. The offer includes commercial terms that still need to be finalised, no financial details were disclosed.
Shares of Star Entertainment Group (SGR:ASX) are having a stellar session, up over 8% at the time of writing as the embattled casino operator says Oaktree Capital Manager has offered to buy out its lenders and is wiling to provide up to AU$650 million in two debt facilities. The move comes just a month after the company raised concerns about liquidity and cash, with only AU$79 million in available cash at the end of the December quarter.
The stock is down over 31%, YTD.
To earnings, in the consumer staples sector, A2Milk (A2M:ASX) shares are soaring after declaring its first-ever dividend on the back of better-than expected sales of infant formula in China. And in tech, Audinate (AD8:ASX) shares have popped after first half profit topped the street.
Finally, analysts are forecasting a tough year ahead for the miners, as iron ore and other commodity prices are set to weaken on the back of tariffs imposed by the Trump administration which are expected to weigh on global growth and China continues to grapple with anaemic domestic demand. BHP (ASX:BHP), which is reporting on tomorrow is expected to post a sharp 23% drop in its half year underlying earnings, which would mark its worst first-half decline in six years.
Rio Tinto (ASX: RIO), which reports on the 19th is forecast to post an over 6% dip in annual profit which could be its worst annual profit in five years.
For more on February’s earnings season head to nabtrade’s reporting season hub here.
Going global
Rounding things out on the global stage, equities around the Asian region are creeping higher though geopolitics remains a catalyst with reports talks on the Russian-Ukraine conflict will begin in Saudi Arabia this week.
MSCI’s broadest index of Asia-Pacific shares outside Japan is a touch firmer, while Tokyo’s Nikkei 225 has edge up after fourth quarter GDP surprised to the upside though gains were limited by a further rise in the yen.
Chinese blue chips meantime are taking a breather after a 7% run up last week on optimism Chinese firms could deliver low cost versions of AI to compete with the West. That surge was also underpinned by a 24% spike in Alibaba shares on news it would partner wit Apple to support iPhones’ artificial intelligence services offering in China. Alibaba will report earnings on Thursday.
Finally, the threat of reciprocal U.S. tariffs is still looming, while U.S. President Trump has signalled a delay until April there are now fresh reports the European Commission could explore tough import limits on certain foods made to different standards in an effort to protect its farmers.
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