ASX only 37 points off all-time high and looks past red tech, closes 0.2% higher

Market Reports

by Melissa Darmawan

The Australian sharemarket clinched onto its gains for its fifth straight day, led by industrial and real estate stocks. The local bourse closed within 37 points of a record high as investors combed through a docket of quarterly corporate results and trading updates.

Traders rewarded Challenger (ASX:CGF) as the best performer, closing 9.8 per cent higher at $7.50 after reading that its fiscal 2022 profit ending June could hit nearly $500 million. The company revised its guidance "towards the upper end" of its $430 million to $480 million upward driven by momentum in the life business after sales rose 10 per cent to $2.7 billion in the third quarter. Fund outflows of 8 per cent to $100 billion were attributed by the derecognition of Whitehelm Capital. The investment manager recently bought bank MyLife MyFinance, however analysts believe integrating its banking and wealth business could come with its challenges if they take lead from the big banks who have been spinning off its wealth arms over the years.

Meanwhile, Megaport (ASX:MP1) plunged 21.6 per cent lower at $10.01 as the worst performer after its soft third quarter revenue update. Citi said the result was weaker than expected and saw misses on monthly recurring revenue and Megaport Virtual Edge additions.

Financials did the heavy lifting to offset an underwhelming quarterly report from BHP (ASX:BHP) with a market capitalisation of $257 billion.

Macquarie Group (ASX:MQG) rose 2.1 per cent higher at $210.95 followed by Commonwealth Bank of Australia (ASX:CBA) added 1 per cent at $108.35. ANZ Banking Group (ASX:ANZ) added the least, up 0.3 per cent at $28.00.

BHP (ASX:BHP) tumbled 3.1 per cent at $50.70 after a weak performance in its copper and thermal coal divisions detracted from its broadly in-line performance from its key iron ore business. Copper output fell short of estimates by around 11 per cent due to low ore throughput at Chile's Escondida plant, as flagged by JV partner Rio Tinto on Wednesday, leading to the iron ore miner to cut its full-year guidance for copper production. Coal volumes were mixed with thermal coal missing estimates by around 26 per cent while metallurgical coal showed beat expectations, coming in 14 per cent ahead of our estimates. The BHP iron ore business looks strong versus Rio Tinto's numbers yesterday, with financial year 2022 guidance maintained at a range of 278 to 288 million tonnes. However, analysts cited that the disappointing outcomes across the minor divisions are likely to weigh slightly on consensus estimates. We will see tomorrow when the broker notes come out.

Rio Tinto (ASX:RIO) lost 1.6 per cent to $116.36 amid several brokers slashing its price target, following Wednesday's disappointing quarterly update. Soft quarterly iron ore production from Rio Tinto and Brazilian giant Vale, combined with lower Ukraine shipments, bodes well for iron ore prices this year.

While BHP’s (ASX:BHP) iron ore operations slipped in the March quarter as skills shortage continued to weigh, shipping 67.1 million tonnes of iron from its Pilbara operations versus estimates of 67.2 million tonnes. Analysts said that Rio’s production miss could hinder its recovery from its underperformance and rates it behind Fortescue Metals (ASX:FMG) and BHP (ASX:BHP).

Santos (ASX:STO) rose 1.7 per cent to $8.37 as the energy giant maintained 2022 production guidance for 10- to 110 million barrels of oil equivalent even as March-quarter output of 26 million barrels of oil equivalent and revenue of $2.6 billion (US$1.92 billion) came in just below estimates. Strong LNG and crude oil output in the three months ending in March offset by weaker domestic gas production in Western Australia due to a customer outage.

CSL (ASX:CSL) added 0.9 per cent to $266.98 after raising US$4 billion in debt via the US private placement market. CSL aims to use the proceeds to “partially finance the proposed acquisition of Vifor Pharma announced on 14 December 2021, and for general corporate purposes”.The plasma product and vaccine manufacturer also confirmed regulatory approvals for the Swiss biotech Vifor transaction were on track for completion by June.

The buy now pay later provider Zip Co (ASX:ZIP) now known under ticker code ZIP unveiled its third quarter revenue up 39 per cent year on year to $159.2 million, up but down four per cent over the quarter. Customer numbers grew 78 per cent to 11.4 million with more than 86,000 merchants on its books. The group's transaction volume fell 21 per cent to $2.1 billion over the quarter, however rose 26 per cent over the year. Shares last traded at $1.20.

Brambles (ASX:BXB) rose the most since 15 February after boosting its underlying profit at constant currency rates forecast for the full year, jumping 8 per cent to $10.82 as the second best performer while Challenger (ASX:CGF) hit a 52 week high, soaring 9.8 per cent to $7.50 after the investment giant said it expected financial year 2022 profit before tax to land towards the top end of its $430 million to $480 million guidance range after a strong March quarter performance.

A consortium led by investment group KKR has put in a bid to Ramsay Health Care (ASX:RHC) at $88 per share which does not include dividends. However shareholders could expect a special dividend of $7.91 and an interim dividend of $0.49 which totals to $79.61 per share, Macquarie analysts said. The broker has previously cited upside value in the company's onshore business with the bid highlighting the local operations and property portfolio value, assuming an implied 12.6 time earnings multiple for the Australian business. Shares in Ramsay Health Care (ASX:RHC) closed 3.7 per cent higher to $82.99.

At the closing bell, the S&P/ASX 200 was 0.3 per cent or 24 points higher at 7,593.

Futures

The Dow Jones futures are pointing to a rise of 109 points.
The S&P 500 futures are pointing to a rise of 18 points.
The Nasdaq futures are pointing to a rise of 79 points.
The SPI futures are pointing to a rise of 30 points when the market next opens.

Best and worst performers

The best-performing sector was industrials, up 2.2 per cent. The worst-performing sector was information technology, down 2.6 per cent.

The best-performing stock in the S&P/ASX 200 was Challenger (ASX:CGF), closing 9.8 per cent higher at $7.50. It was followed by shares in Brambles (ASX:BXB) and Lendlease Group (ASX:LLC).

The worst-performing stock in the S&P/ASX 200 was Megaport (ASX:MP1), closing 21.6 per cent lower at $10.01. It was followed by shares in Block (ASX:SQ2) and AVZ Minerals (ASX:AVZ).

Asian markets

Japan's Nikkei has gained 1.2 per cent.
Hong Kong's Hang Seng has lost 1.9 per cent.
China's Shanghai Composite has lost 1.8 per cent.

Commodities and the dollar

Gold is trading at US$1952.86 an ounce.
Iron ore is 0.6 per cent higher at US$150.70 a ton.
Iron ore futures are pointing to a fall of 0.3 per cent.
Light crude is trading $1.48 higher at US$103.67 a barrel.
One Australian dollar is buying 74.43 US cents.

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