Wage growth lifts to 2.3%, Tech surge buoys ASX rally, up 0.4% at noon

Market Reports

by Melissa Darmawan

A cautious start was expected after Wall St’s sell-down as investors mull on the potential economic damage and the impact of inflation from the current geopolitical tensions.

The local bourse dipped 0.2 per cent at the open before renewed optimism supported by rising US and European futures pushed the index higher. Risk appetite slowly resumed, helping information technology stocks rebound powering up the winner’s circle led by communication services and consumer staples. In the loser’s corner are utilities, consumer discretionary, and property while muted performances are seen from financials and energy stocks.

Wage growth hits 2.3%, slightly softer than estimates

With inflation rising and the unemployment rate down to 13-year lows, the Reserve Bank of Australia said it is prepared to be patient in hiking the cash rate while low wage growth was one of the reasons why.

Wage growth rose 0.7 per cent for the December quarter, in line with expectations while the annual growth rate rose to 2.3 per cent, slightly softer than 2.4 per cent estimates, according to the Australian Bureau of Statistics. The RBA wants to see annual wages growth rise to at least three per cent.

The Aussie 3 and 10-year government bond yields rallied, Aussie dollar has strengthened amid the reversal of losses on the Australian sharemarket.

Pilbara Minerals & Scentre Group names CEO

Earning results continue to unveil with over 15 companies reporting today.

News of executive shakeups has emerged this morning with shares in Pilbara Minerals (ASX:PLS) rose 3.2 per cent to $2.88 on news that its chief executive officer is set to step down after the company posted an inaugural interim profit, while Scentre Group (ASX:SCG) lost 4.6 per cent to $3.01 after Elliott Rusanow was appointed to succeed Peter Allen as chief executive officer.

Rally by Woolworths, WiseTech Global, Stockland

Grocery giant Woolworths (ASX:WOW) has trimmed its interim dividend by 26.4 per cent to 39 cents after describing its 27-week period to January 2 as the “most challenging halves we have experienced”. Group sales grew 8 per cent to $31.8 billion though earnings before interest and taxes fell 11 per cent to $1.3 billion with net profit fell 6.5 per cent to $795 million. Strong Christmas performance helped offset a slowdown in sales as lockdown eased amid higher costs and supply chain disruptions. Shares are on the move, up 1.7 per cent to $35.80.

WiseTech Global (ASX:WTC) jumped 2 per cent to $46.63 after upgrading its earnings guidance with its net profit after tax soared 74 per cent to $77.4 million for the six months ending December 31.The software company’s revenue rose 18 per cent to $281 million and EBITDA jumped 54 per cent to $137.7 million. Revenue growth was mainly driven by increased market penetration and customer usage, particularly from its CargoWise platform. However, Covid-19 did result in congestion, labour shortages and higher freight rates. An interim dividend of 4.75 cents per share, up 76 per cent from a year ago and is set to be paid in April.

Property giant Stockland (ASX:SGP) has announced two capital partnerships deals with Ivanhoé Cambridge and Mitsubishi Estate Asia (MEA). News has been well received with shares rallying, 4.4 per cent to $4.19.

APA dips, Domino’s share price melts

Energy infrastructure business APA Group (ASX:APA) shares have dived 2.7 per cent to $9.88 after reporting revenue growing 4.3 per cent to $1.1 billion while underlying EBITDA lifted 4.5 per cent to $859.8 million versus $835 million consensus. Net profit after tax came in at $155.6 million which fell short of the consensus of $201 million for its half year results for the six months ending December 31.

Domino’s Pizza (ASX:DMP) posted its half year results for the 27 weeks ending January 2. The pizza chain’s revenue lifted 10.2 per cent to $1.21 billion, while profit after tax fell 6.9 per cent to $89.1 million and EBITDA fell 2.5 per cent to $212.8 million. Domino’s earnings were heavily impacted by temporary stores closures and staff shortages from Covid-19. The company will pay an interim dividend of 88.4 cents per share in March. Shares are trading 11.7 per cent lower at $88.49.

Energy & gold stocks stalling

Woodside Petroleum (ASX:WPL) declined 1.2 per cent to $28.91, Beach Energy (ASX:BPT) down 0.7 per cent to $1.52 and Santos (ASX:STO) down by a hairline, 0.07 per cent lower at $7.08.

Evolution Mining (ASX:EVN) led the declines by 3.1 per cent to $4.21 while Northern Star (ASX:NST) is trading 1.4 per cent lower at $10.02.

Rio Tinto & CBA gains

Heavyweight miners are bucking the trend, Rio Tinto (ASX:RIO) adding 1 per cent to $119.62, BHP (ASX:BHP) is up 0.6 per cent to $48.10 and Fortescue Metals (ASX:FMG) is trading 0.5 per cent higher at $19.42.

Major banks are lower except Commonwealth Bank of Australia (ASX:CBA), trading 0.5 per cent higher at $96.53, Westpac Banking Corporation (ASX:WBC) is flat at $23.54 while the other majors are lower by up to 0.8 per cent.

The Reserve Bank of New Zealand has hiked its cash rate to 1 per cent and the committee has agreed to start the gradual reduction of the Reserve Bank’s bond holdings under the Large Scale Asset Purchase programme. 

Meanwhile, Japanese markets closed for a national holiday while Korean Kospi is higher.

SPI futures

At noon, the S&P/ASX 200 is 0.4 per cent or 29.10 points higher at 7190.40.

The SPI futures are pointing to a rise of 34 points.

Best and worst performers

The best-performing sector is communication services, up 1.7 per cent. The worst-performing sector is utilities, down 1.9 per cent.

The best-performing stock in the S&P/ASX 200 is Paladin Energy (ASX:PDN), trading 8.7 per cent higher at $0.72. It is followed by shares in Worley (ASX:WOR) and Tyro Payments (ASX:TYR).

The worst-performing stock in the S&P/ASX 200 is Domino Pizza Enterprises (ASX:DMP), trading 14.6 per cent lower at $85.59. It is followed by shares in Costa Group Holdings (ASX:CGC) and Ramelius Resources (ASX:RMS).

Commodities and the dollar

Gold is trading at US$1899.89 an ounce.
Iron ore is 1.6 per cent lower at US$136.75 a ton.
Iron ore futures are pointing to a fall of 2.6 per cent.
One Australian dollar is buying 72.26 US cents.

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