Tech rally extends while NAB jumps on revenue beat, AMP confirms suitor: ASX up 0.3% at noon

Market Reports

by Melissa Darmawan

With the Reserve Bank of Australia set to end its $350 billion bond buying program today amid strong economic data, Australian shares took a strong lead from Wall St after US stocks extended its rally, helped by the ease in treasury yields ahead of the US January inflation print.

The Nasdaq continued to climb its way out of correction territory and was the outperformer, handing over the crown here onto the local bourse. The information technology sector is leading the winner’s circle as the best performing sector.

After yesterday’s warning from Chinese regulators to information providers against false price disclosure, the latest crackdown from Beijing to oversee prices of the steel-making ingredient, the iron ore price fell and is now recovering, amid its futures pointing to a lift, providing support for our material stocks.

Fortescue Metals Group (ASX:FMG) jumped 4.3 per cent at $22.35, Rio Tinto (ASX:RIO) is up 1.9 per cent at $118.68, while BHP Group (ASX:BHP) is trading 0.6 per cent higher at $48.59.

NAB’s net interest margin falls 5bps

The next bank off the rank to report was National Australia Bank (ASX:NAB) surging to a three week high after reporting a 12 per cent jump in quarterly cash earnings of $1.8 billion versus Morgan Stanley’s expectation of $1.6 billion, driven by home and business lending growth. The news sent its shares 3.5 per cent higher at $29.37.

Over the three months to 31 December 2021, the bank’s home lending grew by 2.6 per cent, small business lending grew by 3.4 per cent and deposits grew by $18 billion. The bank’s results were also buoyed by a credit impairment write-back of $35 million and a decrease in the number of borrowers making 90+ day overdue payments, reflecting continued improvement in the economic landscape.

NAB mimicked its peers in flagging the fiercely competitive home loan environment which attributed to its net interest margin falling 5 basis points to 1.64 per cent in the quarter, while the closely watched measure of spare cash, the common equity tier 1 ratio was 12.4 per cent for the December quarter, compared with 13 per cent the quarter prior.

Its peers are trading mixed, riding on the coat tails are Westpac Banking Corporation (ASX:WBC) up 0.8 per cent at $22.56 and ANZ Banking Group (ASX:ANZ) adding 0.6 per cent higher at $27.57. Leading the losses is Macquarie Group (ASX:MQG) nearly wiping all its gains from Tuesday after the investment bank unveiled its results, trading lower for a second day by 1.9 per cent at $193.84, and Commonwealth Bank of Australia (ASX:CBA) eased 0.3 per cent at $99.22.

AMP unveils $252m loss in FY21

AMP (ASX:AMP) confirmed that they received “inbound enquiries” for its AMP Capital business after handing down a full-year net loss of $252 million for 2021, driven by impairment charges, transformation costs and remediation expenses. The wealth giant said that it was not “unusual at this point in a demerger preparation process" to attract interest. Shares are trading 3.5 per cent higher at $1.04.

Meanwhile other companies that also posted profit updates included AGL Energy (ASX:AGL) rallying higher by 0.9 per cent, Northern Star (ASX:NST) down 0.2 per cent, Cimic (ASX:CIM) tumbling 4.4 per cent, Downer (ASX:DOW), ASX (ASX:ASX) declining 3.8 per cent and Mirvac (ASX:MGR) is trading 3.5 per cent lower.

The early morning rally has lost steam towards midday after hitting a three week high as investors mull on company earnings amid US futures pointing to a muted open with the Nasdaq set to open lower after surging for two days in a row.
 
At noon, the S&P/ASX 200 is 0.3 per cent or 23 points higher at 7,291.

The SPI futures are pointing to a rise of 54 points.

Local economic news

Payroll jobs rose 1.0 per cent in the fortnight to 15 January 2022, following a fall of 6.8 per cent in the last two weeks of December, according to the Australian Bureau of Statistics. This slower increase reflected some businesses and employees delaying their return from Christmas and New Year holidays, early impacts on businesses and employees from Omicron infections and related disruption, and weather events in some regions.

Seasonally adjusted business turnover increased in seven of the thirteen selected industries in December 2021, according to the Australian Bureau of Statistics. Accommodation and food services recorded the largest increase of 10.1 per cent in monthly turnover compared to November 2021, while a 5.6 per cent rise was also seen in transport, postal and warehousing, contributing to a 24.5 per cent year-on-year rise in this industry.

Best and worst performers

The best-performing sector is Information Technology, up 2.8 per cent. The worst-performing sector is Industrials, down 0.6 per cent.

The best-performing stock in the S&P/ASX 200 is Block (ASX:SQ2), trading 9.7 per cent higher at $158.06. It is followed by shares in Megaport (ASX:MP1) and Bapcor (ASX:BAP).

The worst-performing stock in the S&P/ASX 200 is Cimic Group (ASX:CIM), trading 3.2 per cent lower at $16.57. It is followed by shares in ASX (ASX:ASX) and Mirvac Group (ASX:MGR).

Commodities and the dollar

Gold is trading at US$1832.44 an ounce.
Iron ore is 2.1 per cent lower at US$146.75 a ton.
Iron ore futures are pointing to a rise of 0.37 per cent.
One Australian dollar is buying 71.72 US cents.

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