ASX climbs on tech rally; Altium soars, BHP slumps

Welcome to your five-minute recap of the trading day and how experts saw it.

The numbers

The Australian sharemarket jumped on Thursday, as fresh data revealed unemployment jumped to 4.1 per cent, renewing hopes for a rate cut.

The S&P/ASX 200 climbed 58 points, or 0.8 per cent, to 7605.7 at the close, with tech stocks leading the way on a frantic day of results. The local bourse was also bolstered by gains by a positive lead from Wall Street overnight.

Wall Street had a strong session, providing a positive lead for the Australian sharemarket.
Wall Street had a strong session, providing a positive lead for the Australian sharemarket.Credit: Bloomberg

Investors were buoyed by Australian Bureau of Statistics data showing unemployment hit 4.1 per cent in January, the first time in two years that the jobless rate rose above 4 per cent. The Reserve Bank is looking for a softening in the labour force to bring inflation back to its 2 to 3 per cent target.

The lifters

Tech stocks (up 6.8 per cent) led the rally as Altium shares soared 28.8 per cent. The software maker hit a record high after Japanese chipmaker Renesas Electronics announced a $9 billion takeover bid for the company.

Wesfarmers surged by 5 per cent after record earnings at Kmart helped it deliver a 3 per cent profit rise, while fund manager Magellan jumped 4.4 per cent after appointing Sophia Rahmani as the new leader of its asset management business, with the view to make her CEO within 12 months.

Warehouse and data centre property trust Goodman Group jumped 7 per cent after reporting a 29 per cent rise in first-half operating profits and raising its full-year profit forecast due to strong rental growth.

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Treasury Wine Estates’ share price closed 3.3 per cent higher despite revealing a 5.9 per cent drop in first-half net profits as it held back some wine shipments on hopes China’s tariffs on Australian wine would be lifted. The company now expects those tariffs to be lifted next month. The winemaker beat market expectations and predicted a stronger second half.

The laggards

Energy and mining stocks failed to capitalise on the ASX rally, with the sectors down 2.1 per cent and 0.7 per cent, respectively.

Oil and gas giant Woodside slumped 3 per cent, Whitehaven Coal tumbled 5.7 per cent and Yancoal slipped 2.7 per cent.

BHP shares slumped 1.7 per cent after the miner warned of more than $10 billion in writedowns ahead of its results next week due to the collapse in global nickel prices and the need to double provisions for its Samarco dam disaster.

Telstra was 2.3 per cent lower after it posted a $1 billion net profit but cut its outlook following a disappointing result from its enterprise business.

Pro Medicus was the worst performing large-cap stock, with its shares crashing 13 per cent after the company lifted its interim net profit by a third, which failed to live up to consensus expectations. IDP Education was down 8.8 per cent and Meridian Energy fell 4.8 per cent.

The lowdown

MLC Asset Management portfolio manager Anthony Golowenko said the Australian sharemarket was stronger following a solid lead from Wall Street and some positive company earnings results.

“Goodman Group moved the real estate investment sector higher,” he said, with consumer heavyweight Wesfarmers also stepping up.

Golowenko said investors had priced in a huge uptick in returns at the end of last year on hopes of earlier rate cuts, but company results were yet to justify the optimism.

“The Christmas present has already been opened,” he said, and now investors were cross-checking their valuations with the earnings being announced. “Expansions on earnings [which have been priced in] are yet to be delivered.”

Overnight on Wall Street, the S&P 500 climbed 47.45 points, or 1 per cent, to 5000.62 and clawed back more than two-thirds of its loss from Tuesday. A hotter-than-expected report on inflation forced investors to delay forecasts for when the Federal Reserve may begin cutting interest rates, potentially into the summer. Expectations for such cuts are a big reason US stocks rallied to records recently.

The Dow Jones gained 0.4 per cent a day after dropping 524 points for its worst loss in nearly 11 months. The Nasdaq composite jumped 1.3 per cent.

The smallest stocks, which took the hardest hit from worries about higher interest rates on Tuesday, bounced back more than the rest of the US market. The Russell 2000 index leaped 2.4 per cent.

Helping to keep things steadier on Wall Street was a calmer bond market. Treasury yields eased after shooting upward a day earlier on expectations the Fed would keep rates high for longer. The central bank has already jacked its main interest rate to the highest level since 2001 in hopes of slowing the overall economy just enough to grind high inflation down to its target.

The yield on the 10-year Treasury fell to 4.25 per cent from 4.32 per cent late Tuesday. It’s still well above its 3.85 per cent level at the start of this month.

Critics have been arguing that stock prices may have run too far, too fast in their rally since October. A pullback could be healthy if it takes some of the “froth” out of the market, according to JJ Kinahan, CEO of IG North America.

Most companies in the S&P 500 have been topping analysts’ forecasts for the last three months of 2023. Hopes for stronger growth in 2024 from a solid economy have been another reason the S&P 500 has set 10 records already this year.

Lyft shares leaped 35.1 per cent after a wild ride in off-hours trading driven in part by a typo in its latest earnings report. The ride-hailing company reported stronger results than analysts expected, but its press release also said it expects a key measure of profitability to improve by 500 basis points, or 5 percentage points. Later, it said that should have been 50 basis points, or 0.5 percentage points.

Lyft’s stock rocketed by more than 60 per cent in after-hours trading Tuesday following the typo.

Rival Uber Technologies rose 14.7 per cent after its board authorised a program to buy back up to $US7 billion ($10.8 billion) of its stock. Investors tend to like such programs because they send cash directly to shareholders and can boost per-share profits.

In stock markets abroad, London’s FTSE 100 rose 0.7 per cent following a better-than-expected report on inflation in the United Kingdom.

Hong Kong’s Hang Seng index gained 0.8 per cent after trading reopened there, but markets remained closed in mainland China for the Lunar New Year holiday. Stocks fell elsewhere in Asia, with Japan’s Nikkei 225 down 0.7 per cent and South Korea’s Kospi down 1.1 per cent.

Tweet of the day

Quote of the day

“In this environment, the retail divisions’ core offer of everyday products with market-leading value credentials supported growth in sales and customer transaction numbers,” said Wesfarmers chief executive Rob Scott as the retail conglomerate saw its profits rise in the December half, thanks to shoppers flocking to its Kmart discount department store in the cost-of-living crunch.

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Telco giant Telstra has reaped the benefits of rising prices, posting a bumper profit and strong growth in its mobile business with chief executive Vicki Brady not ruling out a further price hike this year.

With AP, Bloomberg

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Source: Thanks smh.com