Thursday 24th February – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

The ASX 200 fell 215 points to 6991 (3.0%). It was all about results and Russia. Mainly Russia today as the drums of war beat loud and Putin sent troops into Ukraine. The index opened badly with BHP ex-dividend accounting for ~40 points alone and as the day wore on it became a rerun of the Red Wedding from Game of Thrones. Broad-based losses with technology and high PE stocks hit for six. This is not a GFC event based on a collapse in financial confidence but a sentiment event. But it is still painful. For a market already rattled by the Fed and inflation, this has just kicked it down to risk-off at any cost. Banks fell hard with the Big Bank Basket hitting $173.90 down 2.3%. NAB off 2.5%, CBA down 2.1% and MQG falling 4.9%. Insurers too were whacked QBE down 3.6% and SUN down 2.1%. MFG fell 3.3% and NWL down 4.14%. Healthcare suffered too with CSL down 1.5% and RHC holding up on results. Industrials kicked lower, TLS down 1.7%, WES down 2.2% and TCL off 1.2%. Miners were weaker except in gold, BHP fell 6.9% ex-dividend and RIO dropped 3.8% on results last night. FMG down 4.2% and lithium shares depressed, PLS down 8.1% and MIN off 6.4%. Oil stocks were also weaker perversely, STO off 0.4% and WPL down 2.7% (ex-dividend). Gold was a bright spot but only just, NCM up 4.0% and NST up 5.9%. Tech stocks were decimated. SQ2 down 12.9%, XRO off 5.5%, WTC down 7.5% and CPU down 4.0%. Second liners were bashed lower, CCX lost 30.9% on results, 360 became 240 down 28.8% and APX crashed 28.7% on its results. The All–Tech Index was down 5.3%. In corporate news, QAN fell 5.1% on its numbers and delays to reopening WA took their toll. CIM saw its majority holder finally put other shareholders out of their misery with a bid at $22. LOV rallied 11.8% on its numbers, impressive given the backdrop and FLT landed badly down 10.1% on its numbers. Nothing on the economic front. Nothing to worry about anyway. Asian Markets fall but outperform local markets. 10-year yields dropped to 2.17%.

End of Day Podcast – Thursday, February 24

MAJOR MOVERS:

Winners: CIM, PRU, LOV, WGX, NST, ALK, EVN
Losers: CCX, 360, APX, CUV, IMU, SQ2, SXL, PBH
Positive sectors: Gold miners
Negative sectors: Everything else

High 7153 Low 6959 Big volume day
Brent Oil pushes up above $100
Big Bank Basket: Falls to $173.90 (-2.4%)
All-Tech index: Down 5.3%
Gold: Runs hard to $2685
Bitcoin: Falls to US$34865
Aussie Dollar: Falls to 71.85c
10-YEAR YIELD: Falls to 2.17%
Asian markets fall, Japan down 1.5%, China down 0.89% and HK down 3.11%
US Futures: Dow down 665 points 2%. Nasdaq Futures down 325 points. 2.3%. EuroStoxx futures down 3.5%

Stocks on the Move

CIM +33.41% majority holder bids $22.00
SSR +14.19% fourth quarter results.
ALK +4.84% half yearly reports.
GOR +4.05% SLR +4.14% WGX +5.96% gold miners a bright spot.
CCX – 30.89% results disappoint.
360 -28.77% Apple issues.
APX -28.70% results.
MGX -11.50% iron ore falls.
MWY -23.97% results presentation.
NTO -14.62% results
Speculative stock of the Day: Perseus Mining (PRU) +12.26% big volume. Yesterday’s results bring upgrades.

In The News

Downer (DOW) said it would recognise ~$30m of outstanding claims unpaid by Probuild which was placed into administration. Downer contracted the construction company for mechanical and electrical works for the new Victoria Police building in Melbourne. First half results didn’t impress the market. Finished down 2.5% on the day. The first half trading environment continued to be affected by labour shortages, supply chain impacts and lower customer activity.
Lovisa (LOV)- lifts its dividend as profit jumps. Interim dividend of 37c vs 20c last year. The company’s gross margin was at 78.3%, that’s even factoring in higher freight costs. Said trading for the first eight weeks of the second half has seen a continuation of strong performance.
Nine (NEC) – Declares biggest dividend in six years. Group EBITDA before items was $406m, up 15%, ahead of the 10% guidance given at the AGM in November. Momentum remains clearly positive, sees 25% EBITDA growth for the full year.
Appen (APX) – Maintained its final dividend despite profit falling by ~20% during the 2021 calendar year.
Qantas Airways (QAN) first-half underlying loss before tax of $1.28bn was better than the $1.34bn loss expected. Revenue $3.07bn vs consensus $2.85bn. No interim dividend. Back in January QAN downgraded guidance for domestic capacity so some of the risk had been taken out of this update. The share price has been supported recently by the international border reopening. Management did say that despite the strengthening demand for travel Omicron is likely to negatively impact EBIT by ~$650m in the second half.
RIO Tinto (RIO) – the second-biggest profit in Australian corporate history. Not a small achievement. Neither is declaring the country’s biggest-ever dividend of $23.24bn. The final and special dividend brought Rio’s total dividends for the year to a record-breaking $US10.40 per share. The ex-dividend date is March 10. The payout eclipsed BHPs in 2011. Underlying earnings of US$21.38bn missed consensus of $21.63bn, revenue of $63.5bn came in ahead of estimates. Result buoyed by higher commodity prices. RIO’s copper and aluminium segments contribute ~30% to revenue with iron ore at 66%. BHP’s breakdown is iron ore at 52% and copper at 28%. Aluminium and iron ore priced have lifted ~22% and ~40%, respectively, since December 2021.
Ramsay Health Care (RHC) profits slips ~20% on COVID impact.
CIMIC (CIM) up 33% – Responds to Hochtief takeover offer at $22.00. Hochtief is its 78% shareholder trying to clean up the balance finally.

Economic News/Bond Markets