ASX ends flat; LendLease plummets, A2 Milk soars

By Sumeyya Ilanbey
Updated

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

The numbers

The Australian sharemarket retreated at the close of trade after almost hitting an intraday record high at lunchtime, and ended relatively flat.

The S&P/ASX 200 lifted 6.8 points, or 0.1 per cent, to 7665.1 points at the close. The local bourse climbed to 7683 just after 12pm, just 20 points shy of its intraday high of 7703.6 points on February 2.

The ASX has edged higher on Monday to kick off a busy week of results.
The ASX has edged higher on Monday to kick off a busy week of results.Credit: Louie Douvis

It is a busy week for the ASX, with 80 major listed companies scheduled to report earnings over the next few days. Five out of 11 sectors were in the green on Monday, offsetting the losses elsewhere, especially real estate investment trusts, which slumped 2.6 per cent.

The lifters

Miners led the rally throughout the day, but pared back some earlier gains, to end the day 0.5 per cent higher. Communication services (up 0.7 per cent) and financials (up 0.7 per cent) recorded the strongest uplift at the close.

Boral was the leading large-cap advancer after its shares rose 4.62 per cent when Kerry Stokes’ Seven Group made an offer to buy the remaining 28.4 per cent stake in Boral it doesn’t already own. The construction material giant’s shares closed at $6.12.

QBE, which slumped 1.7 per cent on Friday after saying premium growth would slow, was the second best performing mega-cap stock on the ASX on Monday. Its shares rose 3.72 per cent.

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Westpac climbed 2.7 per cent, hitting a two-year-high, after reporting a $1.5 billion in cash profit over the first quarter of its calendar year, 6 per cent lower than the average of its two previous halves.

A2 Milk’s first-half profits jumped 15.6 per cent compared with the same period last year, beating analysts’ expectations. A2 Milk’s English-label products have gained more market share through online channels as the daigou market continues to decline. Shares soared as much as 16 per cent in the morning before closing 12.5 per cent higher.

The laggards

All mega-cap REITs fell, but Lendlease (down 14 per cent) was the worst hit after reporting a net loss of $136 million in the first half of fiscal year 2024, compared with a loss of $141 million in the same period last year.

It was a sea of red among mega-cap REITs too, except for PEXA Group, which lifted 1.4 per cent.

IDP Education tumbled 4.7 per cent, IGO fell 3.2 per cent, and EBOS Group was down 2.9 per cent.

BlueScope reported half-yearly profits of $439 million but warned the outlook for the second half was slightly below the first six months of financial year 2024. The steel giant’s shares fell 2.3 per cent.

The lowdown

JP Morgan global market strategist Kerry Craig said there was not much economic data produced on Monday, and that investors were awaiting the minutes of the Reserve Bank board meeting, due to be released on Tuesday.

“There’s positive sentiment towards China given the improvement coming back from the week-long national holiday and the market consolidating a bit after last week’s volatility,” Craig said.

The S&P 500 fell 0.5 per cent from its all-time high set a day earlier. The Dow Jones 0.4 per cent, and the Nasdaq composite sank 0.8 per cent.

A report in on US inflation at the wholesale level gave the latest reminder that the battle against rising prices still isn’t over. Prices rose more in January than economists expected, and the numbers followed a similar report from earlier in the week that showed living costs for US consumers climbed by more than forecast.

Treasury yields rose immediately after the report’s release, adding pressure onto the sharemarket.

The data kept the door closed on hopes that the Federal Reserve could begin cutting interest rates in March, as traders had earlier hoped. It also discouraged bets that a Fed move to relax conditions on the economy and financial markets could come even in May.

The recalibrated bets for cuts to rates have simply brought Wall Street’s forecasts closer to what the Federal Reserve has been outlining. Critics have been saying traders’ expectations had gone overboard in how quickly and how much the Fed could cut rates in 2024.

The wide expectation for the Fed’s next move is still for a cut to its main interest rate, which is at its highest level since 2001, as it’s said it likely will do.

“Markets are likely to take a well-deserved breather following a staggering rally since October, though the lack of emotional reaction to elevated inflation readings and shifting Fed expectations reflect the optimism of investors,” said Mark Hackett, Nationwide’s chief of investment research.

In the meantime, the hope is that the economy continues to remain solid despite the challenge of high interest rates.

A preliminary report on Thursday suggested that sentiment among US consumers is rising, though not by quite as much as economists hoped. That’s key because spending by consumers makes up the bulk of the economy.

In one potentially discouraging signal, the report from the University of Michigan also said that expectations for inflation in the coming 12 months ticked up to 3 per cent in February from 2.9 per cent in January.

Wall Street recorded a rare losing week.
Wall Street recorded a rare losing week. Credit: Bloomberg

If the economy does remain resilient, it would allow companies to deliver growth in profits, which can prop up stock prices.

Cryptocurrency company Coinbase Global leapt 8.8 per cent after it reported much better results for the latest quarter than forecast. Higher crypto prices helped drive more transaction revenue for the company.

Tweet of the day

Quote of the day

“We do not take this decision lightly, but I’m not yet sure they have addressed the cultural reform [Adam] Bell identified in his first report,” NSW Independent Casino Commission chief commissioner Philip Crawford said, announcing Star Entertainment Group will be subjected to a second inquiry in NSW because he was not yet convinced Star Sydney had changed its culture since its casino licence was stripped in October 2022.

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Source: Thanks smh.com