Profits jumps at Premier, Soul Patt, Why AGL is surging, Ords on QBE post-VIC: ASX up 1.1% at noon

Market Reports

by Melissa Darmawan

The Australian sharemarket is off to a buoyant start jumping 0.8 per cent at the opening bell after the Federal Reserve completed their two-day meeting early this morning. At noon, the S&P/ASX 200 is 1.1 per cent or 78.9 points higher at 7,376. The SPI futures are pointing to a rise of 74 points.

Investors are also watching property giant Evergrande surge 29 per cent on the Hang Seng, as they dance in the earnings results and bullish updates from brokers.

Across the sectors the rally is almost across the board with heathcare as the outlier, down 0.2 per cent while technology is the best performer at 3 per cent with Afterpay doing the heavy lifting. Energy is powering up by 2.6 per cent as oil prices rose followed by communication services. Financials have rebounded following their poor performance yesterday, up 1.4 per cent.

Taking a look at the stocks on the move with Afterpay (ASX:APT) surging over four per cent with the buy-now pay-later provider on track for its best day since the news broke around the acquisition by U.S. payments giant Square.

News Corp (ASX:NWS) are trading nine per cent higher after Rupert Murdoch’s media empire doubled its share buy back program to $1.4 billion (US$1 billion).

Brickworks (ASX:BKW) jumped 2 per cent at $24.96 after they released figures that their after tax profit soared 95 per cent at $285 million for their financial year 2021 results ending at the end of July, compared to the year before. Earnings per share notched a 93 per cent jump at $1.89 with a dividend payout of 61 cents per share. The bullish results were due to the joint venture property trust with Goodman Group (ASX:GMG), while Washington H. Soul Pattinson (ASX:SOL) contributed to their top line after increasing their stake to $3.4 billion. Shares are trading over two per cent at $24.96

Washington H. Soul Pattinson (ASX:SOL) is set to reward their highest dividend in 19 years after profits nearly doubled in the 2021 financial year. Their after-tax profit jumped 93 per cent to $328.1 million while statutory profit slid 71 per cent to $273.2 million.

Profits in Premier Investments (ASX:PMV) nearly doubled in the year ending July despite store closures for most of the period. Net profits after tax soared 97.3 per cent to $271.8 million on revenue of $1.46 billion, 16.8 per cent higher from the year before. Shares are trading 3.3 per cent higher at $27.69.

Sandfire Resources (ASX:SFR) are in a trading halt due to a material acquisition and capital raising while Fortescue Metals (ASX:FMG) are leading the pack out of the miners, up 2.5 per cent at $15.76 while BHP (ASX:BHP) are trading 0.2 per cent higher at $38.74.

Revolver Resources Holdings (ASX:RRR) are trading 12.5 per cent higher at $0.225 after they opened at $0.25 on their first official day on the ASX. They issued shares at $0.20 while Iris Metals (ASX:IR1) are trading 7.5 per cent higher at $0.21 after they made their official debut after issuing shares at $0.20.

Meanwhile, shares in Transurban Group’s (ASX:TCL) are in the red after resuming trade, down 1.2 per cent after they raised $2.9 billion through their institutional component in a bid to takeover WestConnex.

Local economic news

Australia's private sector saw business activity decline for a third consecutive month in September according to the IHS Markit flash purchasing managers index.

The Flash Australia composite output index hit 46 points this month, the highest reading in three months from 43.3 points in August. The reading does sit below the 50-point mark which indicates contraction. The improvement comes as Covid-19 restrictions saw a “slight easing of restrictions” according to Jingyi Pan, economics associate director at IHS Markit.

However, the Flash Australia manufacturing PMI jumped to 57.3 points to a three-month high from 52 reading in August. The flash monthly manufacturing output index jumped to 53.3 points up from 45.7 a month ago.

Payroll jobs fell 1.3 per cent in the fortnight up to 28 August, down 0.4 per cent from the previous fortnight according to the Australian Bureau of Statistics (ABS). Meanwhile, household wealth grew driven by residential property prices which recorded the strongest quarterly growth on record of 6.7 per cent.

Total household wealth increased 5.8 per cent at $735 billion in the June quarter reaching a record $13,433.7 billion according to ABS. Wealth per capita rose to a record high of $522,032. Residential property assets contributed 4.5 percentage points to the quarterly growth in household wealth, followed by superannuation balances and directly held shares, at 1.1 and 0.3 percentage points.

Company news

Resuming trade today, roads developer Transurban Group’s (ASX: TCL) has raised $2.9 billion through their institutional component in a bid to takeover WestConnex.

Broker moves - AGL & QBE

Ord Minnett upgrades AGL (ASX:AGL) to a buy with a price target of $7.55. The broker notes that the shares are trading below the estimated value for AGL Australia (Retail) alone which contributed to the rating upgrade but and lowered target price to $7.55 from $7.80. The company remains committed to separating its business into retail and generation (Accel Energy) by mid-2022. Ords sees strong corporate appeal in AGL Australia however there's likely to be very little interest in Accel Energy. This is due to their exposure to coal, their leverage to wholesale prices and their sizeable rehabilitation costs. Shares in AGL (ASX:AGL) are surging 5.7 per cent higher at $6.00.

Ord Minnett rates QBE Insurance (ASX:QBE) as a buy with a price target of $14.55. The broker reviewed the potential economic losses due to earthquake in Victoria and believes the cost is likely to be around $138 million. They have not adjusted any of their forecasts. However, Ords considers Suncorp Group (ASX:SUN) would have greater risk than Insurance Australia Group (ASX:IAG) or QBE Insurance Group if it is a large event, via its higher maximum event retention. Shares in QBE Insurance (ASX:QBE) are trading 2.7 per cent higher at $11.50 while Suncorp Group (ASX:SUN) are trading 2.4 per cent higher at $12.46. Meanwhile, Insurance Australia Group (ASX:IAG) are trading 0.2 per cent higher at $4.88.

Best and worst performers

The best-performing sector is technology, up 2.8 per cent. The worst-performing sector is healthcare, down 0.2 per cent.

The best-performing stock in the S&P/ASX 200 is News Corporation (ASX:NWS), trading 9.2 per cent higher at $32.80 followed by shares in Bapcor (ASX:BAP) and AGL Energy (ASX:AGL).

The worst-performing stock in the S&P/ASX 200 is Reliance Worldwide (ASX:RWC), trading 2.6 per cent lower at $5.29 followed by shares in Ramelius Resources (ASX:RMS) and St Barbara (ASX:SBM).

Commodities and the dollar

Gold is trading at US$1763.69 an ounce.
Iron ore is 16.8 per cent higher at US$108.70 a ton.
Iron ore futures are pointing to a rise of 4.12 per cent.
One Australian dollar is buying 72.37 US cents.

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