Local shares have followed their northern hemisphere peers into record territory in early trade on Thursday. In overnight trade US & European sharemarkets hit record highs encouraged by a decline in the number of new coronavirus cases and hopes of more stimulus from Beijing -including cash injections and mergers to bailout airlines. The ASX 200 and All Ordinaries indices each hit record highs over the morning.
Energy names were supported by a 2% rally in oil prices overnight after the US applied sanctions on a subsidiary of Russia’s state oil firm Rosneft, due to the company’s involvement with Venezuela’s state run oil company PDVSA. The sanctions will make it more difficult for Venezuela to export oil. Woodside Petroleum shares firmed to $33.50 for a gain of 27 cents or 0.8%. Iron ore miners were higher despite flat iron ore prices in the last day. Fortescue Metals Group (FMG) was higher by 1.4% at lunch, enjoying a tailwind reporting a record net profit a day earlier. The Healthcare sector was weighed down by a 0.2% for CSL shares, with the shares consolidating, having risen by ~3% yesterday – CSL shares are 23% higher in year to date terms.
The technology sector bucked the trend seen in US trade that delivered new record highs for the Nasdaq. The local experience was marred by another fall for WiseTech Global (WTC) which was 15% lower at lunch in response to a number of broker downgrades. A day earlier WTC fell 27% after cutting its FY 2020 revenue guidance in reaction to the coronavirus-driven shutdown of China’s production.
In company news, Thursday is one of the busiest days of the year for half year results. More than 30 companies have released their earnings, with the market’s response to the results being mixed. The strongest performers include Qantas (QAN) +5%, Iluka (ILU) +8%, Super Retail Group (SUL) +2%, Lend Lease (LLC) +8% and Origin (ORG) +2%. Felling in response to their numbers were: Domain (DHG) -7%, Whitehaven (WHC) -6%, Sydney Airport (SYD) -1%, IRESS (IRE) – 6% and Medibank (MPL) -2%.
Property classifieds company Domain (DHG) posted a 38 per cent decline in half year net profit to $12.9 million. This was below market expectations and was mainly held back by the unprecedented decline in property listings. Nationally, the number of properties listed for sale fell by 12 per cent in 2019, slumped by 30 per cent in Sydney and 24 per cent in Melbourne. To partially offset this, DHG has made an effort to cut costs and improve business efficiencies. This included reducing expenses by 8 per cent and increasing the number of real estate agents subscribed to paid packages. This has helped the Group generate regular income regardless of property listing volumes. DHG has kept its dividend steady at $0.02 per share. The fully franked dividend will be paid to eligible investors on March 13. It has also decided to cease sponsorship of the cricket mid-way through its four-year contract. DHG shares are down by close to 7 per cent.
Australia’s national carrier, Qantas (QAN) reported a small decline in its first half underlying profit before tax (its preferred reporting measure) to $771 million, down 0.5% from the prior year. Statutory profit after tax was also weaker by 3.9% to $445 million but total revenue managed to lift 2.8% to $9.46 billion, in part due to higher passenger revenues. In response to the ongoing Coronavirus outbreak, Qantas has suspended its Sydney-Shanghai service. With demand weakness also flowing through to other major Asian hubs like Hong Kong, Singapore and to a lesser extent Japan, flights throughout Asia will be reduced by 15% until the end of May, the earliest. Pushing the shares higher was news of a $150 million off-market share buy-back.
The ABS reported that employment rose by 13,500 jobs in January, a stronger than expected result. Economists had tipped an increase in total jobs of around 10,000. The unemployment rate rose from 9-month lows of 5.08 per cent in December to 5.29 per cent in January Which pushed the Aussie dollar down to 66.50 US cents on the notion that the higher unemployment rate increases the chances of a near term rate cut.
Published by CommSec