The Australian sharemarket had one of its most significant declines of the year so far, with the ASX 200 sliding by 78.7 pts or 1.1 per cent to 7352.2 and hitting a 4-week low in the process. The local bourse has only improved twice in eight sessions, due in part to increased rate hike concerns, elevated US inflation and disappointing profit results. Keep in mind that this follows the strongest January since 1986 for the All Ords, with the index coming close to a record high just last week.
Significant declines from our major banks held the market back most on Wednesday, with Commonwealth Bank (CBA) slumping by 5.7 per cent after handing down its half year results. Cash profit rose by 9 per cent to $5,153m, its Net Interest Margin edged higher by 18 basis points to 2.1% and its interim dividend rose by 20 per cent to $2.10 per share. Loan impairment expenses increased however, to $511m, reflecting ongoing inflationary pressures, rising interest rates, supply chain disruption and declining house prices. Close to $100bn worth of fixed rate mortgages are due to expire in 2023.
Fortescue Metals (FMG) fell by 0.8 per cent after recording a 15 per cent drop in half-year earnings and 4 per cent fall in revenue. A lift in costs (up 14 per cent) and lower iron ore prices (a 9 per cent drop in average revenue per tonne), offset the benefit of record iron ore sales. FMG has kept guidance for its FY23 shipments, costs and investment unchanged.
Treasury Wine Estates (TWE) fell by 6.9 per cent after handing down a below consensus half year result. Sales still rose by 1.4 per cent to $1,284.5m, EBIT jumped 17.2 per cent and net profit surged by 72.5 per cent to $188.2m. The result was driven by its luxury portfolio of wines. Penfolds accounted for 60 per cent of profits, led by sales across Asia (up 8.4 per cent) and ANZ (up 4.6 per cent).
Retail conglomerate Wesfarmers (WES) rose by 1.3 per cent after recording a 27 per cent lift in half-year sales and 14.1 per cent advance in profits. It will pay eligible shareholders an 88c per share interim dividend. Improved sales at Bunnings, Kmart and Officeworks helped.
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Cochlear (COH) rose by 7.8 per cent after handing down a 9 per cent gain in sales, while maintaining its FY23 underlying profit guidance range at $290-$305m. Sales growth was driven by a
‘continued recovery from Covid surgery delays’ that hit the hearing implant maker during the pandemic.
3.9 bn shares were traded, worth $8.4 bn. 564 stocks rose, 757 fell and 433 finished unchanged.
An update on UK inflation is due tonight at 6pm AEDT, together with data on US retail sales, production and the American housing market. Kraft Heinz, Barrick Gold and Cisco are scheduled to post quarterly earnings.
Originally published by Steven Daghlian – Market Analyst (Author), CommSec
