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The Australian market is off to a softer start this morning, shrugging off a positive lead from a volatile Wall Street with the ASX 200 down by 0.6 per cent. Equities are being weighed down by losses near 1 per cent for the banks as the Royal Commission kicks off together with substantial falls from energy stocks as the price of oil slides for a sixth day.
On Friday, US stocks jumped by ~1.5 per cent after lawmakers ended a brief Government Shutdown by agreeing on a budget deal. This should avoid the need for further budget negotiations for 13 months. Concerns of a lift in inflation and higher US interest rates however pushed the Aussie market down by 4.6 per cent last week and by 5.2 per cent in the US (worst week since January 2016).
The Australian sharemarket shed ~$90bn of its value last week and hit a four-month low, with equities unable to shake the US volatility. The erratic moves could continue for the time being as markets look for support.
JB Hi-Fi (JBH) is down by 8 per cent at lunch following disappointing FY18 guidance provided with its half year results this morning. The discount retailer met the market’s expectations with its 1H18 results however, lifting total sales by 41 per cent, net profit by 37 per cent and its dividend by almost 20 per cent. The result was driven by strong Christmas trade and the contribution from its The Good Guys chain acquired in 2016. JBH expects to make between $235m – $240m over the year (11 analysts surveyed by Bloomberg were expecting an average ~$241.9m).
No such issues for rail freight operator Aurizon (AZJ), which is up 4 per cent after lifting 1H18 profit by 52 per cent and maintaining its EBIT guidance of $900-$960m for FY18.
Ansell (ANN) and Bendigo & Adelaide Bank (BEN) are down slightly following their earnings this morning.
On the economic front, no market moving data is due today although the Royal Commission into misconduct in banking, superannuation and financial services holds its initial public hearing. Final findings are expected in February 2019.
This will be a busy week for markets. While conditions are likely to remain volatile, earnings season ramps up, with the next two weeks the busiest of the Feb half year earnings season. Cochlear (COH), CSL, IAG, Woodside (WPL), Telstra (TLS) and Medibank (MPL) will be just some of the companies posting results. An update on jobs will be released Thursday. An update on US inflation will be key mid-week considering a catalyst for market volatility has been concerns of higher inflation and interest rates.
1.6bn shares have changed hands today, worth $2.3bn. 466 stocks are up, 602 down and 331 are flat.
Originally published by CommSec