The ASX 200 closed down 37 points at 7207 (-0.5%) as banks and miners sagged. Iron ore futures in Asia under pressure, BHP reported record numbers but fell 0.3%, FMG down 5.1% and RIO off 2.3%. Lithium miners remain depressed, PLS down 2.0% and MIN off 5.3%. Gold miners holding firm after big run yesterday. NCM down 0.3% and EVN off 0.5%. Base metals were also under pressure with energy stocks running out of gas, WPL down 2.5% and STO down 4.2%. BPT reversed all engines after good gains yesterday falling 10.5%. Banks were weaker with the Big Bank Basket at $180.78. WBC fell 3.4% giving up the gains from yesterday and ANZ down 1.4% but NAB holding steady. Industrials were better, BXB jumped 6.2% on takeover rumours, COL up 1.4% and WOW better by 1.1%. Healthcare still in ICU with CSL at two-year lows down another 0.2%. RMD taking a hit down 4.6%. Tech flat but SQ2 up 4.2% on Block moves in US. In corporate news, results, results, results dominated. SGM was a standout rising 13.7% on dividends and buyback, SEK did well on its numbers, up 6.1%, SWM slipped despite decent numbers. On the economic front, RBA minutes out and backed up the patience on rates mantra. We do not have the 7.5% inflation that the US has, and Lowe is in no hurry. Consumer confidence bounces back. Asian markets mixed, HK down 0.9%, Japan down 1.1% and China up 0.2%. 10-year yields pushing higher again to 2.18%

Major Movers:

  • Winners: SGM, BXB, SEK, IFT, SQ2, STX, JBH, NAN
  • Losers: 88E, BPT, AVZ, CHN, NMT, SWM, MGX, PPS, GRR
  • Positive sectors: Tech. Staples
  • Negative sectors: Banks. Iron ore miners. Lithium. Healthcare. Travel
  • High 7251 Low 7198
  • Big Bank Basket: Slips to $180.78
  • All-Tech index: Up 0.9%
  • Gold: Slips to $2634.
  • Bitcoin: Rises to US$43534
  • Aussie Dollar:  Slips to 71.26c
  • 10-Year Yield: Pushes ahead to 2.18%
  • Asian markets mixed, HK down 0.9%, Japan down 1.1% and China up 0.2%
  • US Futures: Dow down 107 Nasdaq up 5

Stocks on the Move

  • SGM +13.68% results cheer.
  • BXB +6.16% KKR could be at the gate as they run the numbers.
  • SQ2 +4.23% Block better in US.
  • JBH +3.85% research positive.
  • STX +3.92% oil play.
  • NWE +10.00% Lockyer Deep testing and seismic operations.
  • BOC -18.30% froth gets blown off.
  • 4DS -10.39% proposed issue of stock.
  • BMT -7.26% half yearly results.
  • 88E -13.33% oil stocks cooling.
  • BPT -10.46% broker downgrades.
  • MGX -6.31% iron ore price falls in Asia.
  • CXO -5.66% lithium under pressure.
  • WBT -3.03% no news is bad news.
  • PPS -6.16% broker downgrades.
  • Speculative stock of the Day: Nothing special on any volumes.

In the News

  • BHP – Record profits, up 144% to $US9.44bn and US$150c dividend. Higher realised commodity prices, disciplined cost performance and near-record production at Western Australia Iron ore.
  • SEEK (SEK) first-half profit ahead of consensus. Revenue and EBITDA also beat expectations. Interim dividend of 23c was the biggest in three years although slightly below estimates of 25.5c. Full-year guidance upgraded. Profit expected in the range of$230-250m vs prior at the upper end of $190-200m.
  • Ansell (ANN) – First half EPS of 60.6c missed consensus of 62c. They expect full-year EPS in the range of 125-145c without any comment on whether earnings would be skewed to the second half. It suggests that earnings for the full year are likely to come in at the bottom end of that guidance range.
  • Carlton Investments (CIN) – reported a 73% increase in net profit to $15.4m for the half year, compared with the previous period. Consistent with the previous half year, the group’s largest investment, Event Hospitality and Entertainment will not pay an interim dividend in March.
  • Dexus (DXS) – Dexus increased net profit after tax by 82% in HY22 to $803.2m but cut distribution by 2.8% to 28c.
  • ELMO Software (ELO)  reported group annualised recurring revenue at the end of the first-half of $98.3m after upgrading its full-year ARR guidance previously to $107m to $113m.
  • ANZ is seeking to raise $1bn on capital notes for capital requirement purposes. The offer consists of perpetual securities with a mandatory conversion to ordinary shares on September 20, 2031.
  • Tassal (TGR) – revenue rose 43.3% to $419.1m while EBITDA climbed 14.1% to $89.5m and net profit firmed 10.3% to $31.2m. Salmon revenue rose 37.1% to $349.9m with a recovery in both export pricing and volume. Prawn revenues climbed 480%.
  • Adore Beauty (ABY) – interim revenue increased 18% to a record $113.1m. No dividend was declared and net profit was $1.97m, down from $2.54m. Margin guidance of 2-4%.
  • Seven West Media (SWM) – EBITDA of $215.3m for the fiscal half year, up 31% on the prior year. upgraded its full-year group EBITDA guidance to between $315m and $325m.
  • Sims (SGM) – reported a 73.9% increase in sales revenue from the prior corresponding period, with an EBIT of $361.7m in HY22, 541.3& higher than last year. Margins were also up to 45% but costs were higher. 41c dividend and an on-market buyback.
  • Bowen Coking Coal (BCB) – raising $41.5m to buy NHC coal assets. Priced at 20c.

Economic News/Bond Markets

Commonwealth Bank has brought forward its forecast for the RBA’s first interest rate increase to June this year.

  • Consumer confidence up 3.3% last week. The index is back above the neutral 100-level. Despite the improvement, confidence is still well below its long term average. ANZ said, “the passing of the Omicron peak along with the news that international borders will reopen to vaccinated tourists later this month no doubt helped lift sentiment despite rising petrol prices”.

RBA minutes. Click here for the full release.

  • Inflation had picked up more quickly than the Bank had expected.
  • Underlying inflation was expected to increase further over coming quarters.
  • Moderation in inflation was also expected as supply problems were resolved.
  • Over time, stronger growth in labour costs was expected to become the more important driver of inflation.
  • Better-than-expected progress towards the Board’s goals had been made.
  • Members observed that the achievement of the goals was within sight for the first time in several years.
  • Agreed it was an appropriate time to end bond purchases.
  • There was a discussion about the reinvestment of the proceeds of maturing bonds.
  • A decision about reinvestment would be made in May 2022.
  • Too early to conclude that inflation was sustainably within the target band.
  • Wages growth also remained modest, and it was likely to be some time before aggregate wages growth would be at a rate consistent with inflation being sustainably at target.
  • Prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve.

Winter Olympics

  • The IOC has said there will be no medal ceremony if Russian skater Valieva gets one after drugs ruling overturned.

Asian Markets

  • Chinese monetary authority injected a net 100bn yuan (US$15.7bn) into the banking system with its medium-term lending facility.
  • Hong Kong has no plans for full lockdown despite rising CV19 cases.

US and European News

  • Elon Musk donated US$5.7bn worth of Tesla shares to mystery charity.
  • US sees no real olive branch from Moscow.
  • US banking regulators warn of risks in leveraged loan market.
  • US regulators are probing block trading at MS, GS and others giving hedge funds a heads up before large blocks traded.
  • Intel close to deal to buy Tower Semiconductor.
  • US has suspended Mexican avocados imports after a inspector had death threats.
  • Ivan Reitman. Vale.

And finally….