Sydney Airport departs the ASX lounge after 20 years, CBA leads bank rally: XJO closes 1.1% higher

Market Reports

by Melissa Darmawan

The nation’s largest bank unveiled a surprise share buyback, easing fears on the outlook of tighter monetary policy as inflation hit multi-decade highs. Materials and energy sectors closed lower while information technology stocks switched higher, extending the wins on the local bourse to a two-week high.

At the opening bell, the index spiked 0.8 per cent then lost momentum, heading towards the flatline by midday. Though appetite grew buoyed by a rally in Asian markets which saw the local bourse recover with a vibrant surge into the close, amid the US futures pointing to a positive start.

Contributing to the heavy volumes was Sydney Airport (ASX:SYD) after the Supreme Court gave its tick of approval of its takeover by a consortium of superannuation funds and infrastructure investors. This followed the long process by the Sydney Aviation Alliance after they offered a $8.75 a share bid to takeover the Airport. The consortium is made up of IFM Investors and a few other super funds, including AustralianSuper and QSuper.

After 20 years being listed on the ASX, today marks the last day for the Airport as market participants traded the stock in preparation for its delisting.

Commonwealth Bank (ASX:CBA) soared 5.6 per cent at $99.56 after unveiling a share buyback of up to $2 billion, a move that was not forecasted by analysts. Cash earnings for the first half period came in 4 per cent ahead of market estimates, though it was deemed a low quality beat, given it was driven largely by non-interest income in the form of the final milestone payment from AIA for its purchase of the Comminsure life business and treasury income.

The interim dividend of $1.75 per share fell short of the $1.80 expectation while the net interest margin mimicked its peers, falling 17 basis points in the second half of 2021 amid lower fixed-rate spreads and the competitive mortgage landscape, weighing on margins. With interest rates set to rise, interest margins will remain under pressure - a tune that we have heard many times before.

Riding on the coat tails was Westpac Banking Corporation (ASX:WBC) added 2.4 per cent at $22.38, National Australia Bank (ASX:NAB) rose 2.4 per cent higher at $28.39, while shares in ANZ Banking Group (ASX:ANZ) closed 1.7 per cent higher at $27.42. Macquarie Group (ASX:MQG) eased from its 3.9 per cent climb on Tuesday, closing 1.9 per cent lower at $197.65.

Despite the buoyant trade in Asia, the iron price retreated after a warning from Chinese regulators to information providers against false price disclosure. The warning is the latest sign of Beijing cracking down on efforts to oversee prices of the steel-making ingredient.

Fortescue Metals Group (ASX:FMG) led the declines by 3.6 per cent at $21.43, followed by BHP Group (ASX:BHP) down 1.7 per cent lower at $48.32, then Rio Tinto (ASX:RIO) shedding 0.6 per cent at $116.53.

In the resources space, Woodside Petroleum (ASX:WPL) lost 0.9 per cent at $26.80, Santos (ASX:STO) fell 1.3 per cent at $7.50 while gold players Northern Star (ASX:NST) jumped 2.4 per cent higher at $8.68 and Newcrest Mining (ASX:NCM) closed 1.9 per cent higher at $22.99.

Elsewhere, Temple & Webster (ASX:TPW) soared 9.7 per cent to $8.83 after revenue grew 46 per cent over the half year to $235.4 million, thanks to their customer base growing by 34 per cent to 906,000. However, its first-half profit fell 40 per cent largely due to rising costs and supply-chain disruptions.

Computershare (ASX:CPU) skyrocketed 11.2 per cent to $22.17 after the share registry upgraded its earnings growth guidance for to 9 per cent from 2 per cent for this financial year. The company said that expectations for more interest rate rises would bode well, stating that a 100 basis point hike would generate annualised earnings per share growth of US26 cents per share.

IDP Education (ASX:IEL) fell 3.1 per cent to $30.67 despite first-half revenue jumping 47 per cent to $397 million. Even though Australian student placement volumes remained subdued, the company said there were early signs of a rebound, which coincided with the relaxation of border restrictions and an extension of post-study work rights.

Nickel Mines (ASX:NIC) entered into a trading halt after it executed a binding definitive agreement with Shanghai Decent Investment and Decent Resource Group to buy a 70 per cent stake in the Oracle Nickel Project for US$525 million.

The Australian dollar rose from the 71.45 cents this morning, extending gains for a third day in a row on improved risk sentiment. The Aussie dollar was also supported by the forecast for an earlier rate hike amid ANZ and Commonwealth Bank economists calling for an interest rate announcement from June onwards.

Investors now turn to Wall St for more earnings with the likes of AstraZeneca, Uber, Walt Disney on the table. Federal Reserve Bank of Cleveland President Loretta Mester is slated to speak while the U.K. Bank of England Governor Andrew Bailey is also scheduled. All this ahead of the US consumer price index figures for January. Meanwhile, stocks in China are climbing in the wake of intervention by state-backed funds on Tuesday.

At the closing bell, the S&P/ASX 200 was 1.1 per cent or 81 points higher at 7,268.

Local economic news

Westpac and the Melbourne Institute released the February consumer sentiment report. Consumer sentiment fell by 1.3 per cent to 100.8 in February from 102.2 in January. The report said given that the health disruptions from the Omicron variant have eased and the labour market has strengthened it is surprising that we did not see some improvement in the Index in February.

The report also said most likely explanations for these elevated pressures on finances relate to: Omicron-related disruptions to activity and earnings at the start of the year, the rising cost of living and the prospect of rising interest rates.

Futures

The Dow Jones futures are pointing to a rise of 148 points.
The S&P 500 futures are pointing to a rise of 24 points.
The Nasdaq futures are pointing to a rise of 83 points.
The SPI futures are pointing to a rise of 88 points when the market next opens.

Best and worst performers

The best-performing sector was information technology, up 4.2 per cent. The worst-performing sector was materials, down 0.6 per cent.

The best-performing stock in the S&P/ASX 200 was Computershare (ASX:CPU), closing 11.2 per cent higher at $22.17. It was followed by shares in Imugene (ASX:IMU) and Commonwealth Bank of Australia (ASX:CBA).

The worst-performing stock in the S&P/ASX 200 was Mineral Resources (ASX:MIN), closing 8.9 per cent lower at $52.72. It was followed by shares in Bapcor (ASX:BAP) and Nanosonics (ASX:NAN).

Asian markets

Japan's Nikkei has gained 1.2 per cent.
Hong Kong's Hang Seng has gained 2.2 per cent.
China's Shanghai Composite has gained 0.5 per cent.

Commodities and the dollar

Gold is trading at US$1828.50 an ounce.
Iron ore is 0.4 per cent higher at US$149.95 a ton.
Iron ore futures are pointing to a fall of 5.4 per cent.
Light crude is trading $0.39 higher at US$89.75 a barrel.
One Australian dollar is buying 71.66 US cents.

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