RBA holds rates on Ukraine "uncertainty": ASX closes 0.7% higher

Market Reports

by Lauren Evans

Early gains on the Australian sharemarket eased back in the afternoon session following the RBA’s decision to hold interest rates. The local bourse saw technology soar while utilities weighed.

The RBA kept the cash rate at 0.1 per cent and the interest rate on exchange settlement balances at zero per cent. The RBA said despite the global economy continuing to recover from the pandemic, the war in Ukraine injects a new source of “uncertainty”.

It also said inflation in parts of the world has increased sharply as energy prices rise and disruptions to supply chains continue at a time of strong demand. Prices of commodities have increased further due to the Ukraine war, while the Australian economy remains resilient as spending picks up from the Omicron setback.

Afterpay owner Block (ASX:SQ2) led the tech sector higher, adding 12.8 per cent to $175.16 despite no official company news released today. Meanwhile, major banks finished higher with several company updates. 

Commonwealth Bank (ASX:CBA) has unveiled its plans to divest its 10 per cent stake in Bank of Hangzhou. The nation’s largest bank is set to bank $1.8 billion from the transaction. The deal includes keeping its remaining 5.57 per cent stake till 2025. Shares rose 1.5 per cent to $94.82.

ANZ Bank (ASX:ANZ) has made executive changes following the decision to combine its digital division and separate out its commercial businesses in Australia. Maile Carnegie will step up as group executive for Australian retail, taking over Mark Hand’s role as he departs from the bank. Shares closed 0.7 per cent higher at $26.18.

Macquarie Group (ASX:MQG) has appointed Michelle Hinchliffe as an independent director to start today, following the retirement of Diana Grady. The banking giant said Hinchliffe will also become a member of Macquarie’s Board Audit, Board Risk and Board Nominating Committees. Hinchcliffe will also join BHP as an independent director after her 37-year career with KPMG. Shares closed 1.3 per cent higher at $183.05.

National Australia Bank (ASX:NAB) added 1.5 per cent to $29.37 and Westpac Banking Corporation (ASX:WBC) closed 0.7 per cent higher at $22.96.

Onto energy stocks, Beach Energy (ASX:BPT) rose 1 per cent to $1.54, Woodside Petroleum (ASX:WPL) lifted 0.5 per cent to $28.68 and Santos (ASX:STO) closed flat at $7.26.

Fortescue Metals Group (ASX:FMG) weighed on iron ore players, down 2.2 per cent to $17.76. Rio Tinto (ASX:RIO) fell 0.3 per cent to $117.82 and BHP Group (ASX:BHP) closed 0.2 per cent lower at $46.55.

Gold stocks weighed as Evolution Mining (ASX:EVN) tumbled 4.2 per cent to $4.09, Northern Star (ASX:NST) fell 2.8 per cent to $10.02 and Newcrest Mining (ASX:NCM) closed 1.3 per cent lower at $25.33.

Sandfire Resources (ASX:SFR) was the worst performer, closing 11.6 per cent lower at $5.92 after missing expectations yesterday. According to a note from Credit Suisse, the broker said that higher costs saw a 16 per cent earnings miss to its forecasts after reporting US$162 million. Production guidance was largely in line, though unit costs were more than double those outlined in September attributed to a 20 to 20 per cent increase in mining and processing costs since mid-2021 attributed to increased power and labour costs. Credit Suisse has warned of further cost pressure ahead for Matsa with the company guiding to annual capital expenditure of $100 million per annum to develop and sustain the mine. The price target falls from $7 to $6.40 with its neutral rating maintained.

At the closing bell, the S&P/ASX 200 was 0.7 per cent or 47 points higher at 7,097.

Local economic news

ANZ and Roy Morgan released their consumer confidence figures, which decreased 2.6 points to 99.2 during the last week of February. Consumer confidence is now 13.1 points below the same week a year ago, February 27/28, 2021 (111.3) and 2 points below the 2022 weekly average of 101.2.

The statement said almost two-thirds of the interviews for this week’s Consumer confidence were conducted prior to Russia's invasion of Ukraine. For those 947 interviews conducted from Monday – Wednesday (Feb 21-23) consumer confidence was 100.8, while for the 583 interviews conducted from Thursday-Sunday (Feb 24-27) consumer confidence had dropped to 97.1.

Driving the fall in this week’s consumer confidence were big falls in Queensland and Western Australia. Consumer confidence in Queensland was down 10.4 points to 90 as 18,000 homes have been flooded across the region according to Queensland Premier Annastacia Palaszczuk. Western Australia also took a turn this week, down 5 points to 97.4 as their Covid cases increased rapidly for the first time during the pandemic.

The Australian Bureau of Statistics released its lending indicators for January. New loan commitments rose 2.6 per cent for housing, lifted 0.8 per cent for personal fixed term loans, and jumped 41.6 per cent for business construction.

Company news

Software company BrainChip (ASX:BRN) has appointed Antonio J Viana as chairman of the board effective immediately, following the retirement of Emmanuel Hernandez. Shares rose 5.8 per cent to $1.27.

CapVest has improved its takeover offer for Virtus Health (ASX:VRT), while stepping on BGH Capital’s upgraded offer from yesterday. CapVest has offered $7.80 per share for the company, while BGH Capital offered $7.65 per share share. Both offers are less the value of any dividends declared or paid after today. Shares rose 4.2 per cent to $7.76.

Viva Energy (ASX:VEA) is set to splurge around $43.3 million to build a hydrogen fuel station in Geelong. The project is set to service trucks and recharge electric vehicles in a move to create a green-focused service station. Shares closed 0.8 per cent higher at $2.46. 

Elsewhere, Zip Co (ASX:Z1P) is tumbling 8.6 per cent to $2.02 after raising $148.7 million via an institutional placement, following a proposed takeover of payments company Sezzle announced yesterday. Shares fell 6.3 per cent to $2.07. 

Futures

The Dow Jones futures are pointing to a rise of 21 points.
The S&P 500 futures are pointing to a rise of 1 point.
The Nasdaq futures are pointing to a fall of 15 points.
The SPI futures are pointing to a rise of 39 points when the market next opens.

Best and worst performers

The best-performing sector was Information Technology, up 5.7 per cent. The worst-performing sector was Utilities, down 2.2 per cent.

The best-performing stock in the S&P/ASX 200 was PointsBet Holdings (ASX:PBH), closing 17.5 per cent higher at $4.17. It was followed by shares in Paladin Energy (ASX:PDN) and Block (ASX:SQ2).

The worst-performing stock in the S&P/ASX 200 was Sandfire Resources (ASX:SFR), closing 11.6 per cent lower at $5.92. It was followed by shares in Perseus Mining (ASX:PRU) and Zip Co (ASX:Z1P).

Asian markets

Japan's Nikkei has gained 1.5 per cent.
Hong Kong's Hang Seng has gained 0.03 per cent.
China's Shanghai Composite has gained 0.4 per cent.

Commodities and the dollar

Gold is trading at US$1906.19 an ounce.
Iron ore is 4.2 per cent higher at US$139.10 a ton.
Iron ore futures are pointing to a rise of 4.4 per cent.
Light crude is trading $0.91 higher at US$96.63 a barrel.
One Australian dollar is buying 72.59 US cents.

Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.