Archives: Reports
It was a very strong end to the week, with the local market spending most of the session showing triple-digit gains before ending the day 105 points, or +1.3%. The impressive session in the US, following strong economic data, provided the initial bullish catalyst for the ASX, and selling was noticeably absent throughout the day as broad-based buying saw almost 85% of the index close higher.
A slight format change this Friday as reporting season dominates the market after the BOJ’s rate hike and recession fears become a distant memory. This morning, we looked at some of Thursday’s worst-performing stocks in the ASX200, plus one other that surged to fresh post-COVID highs. As expected for this time of year, reported season dominated the moves. Interestingly, four of the stocks had enjoyed a stellar few years, while the fifth had been a distinct underperformer. Still, it doesn’t matter if you disappoint a fickle market with bad earnings and/or our forward guidance; you will be dealt with accordingly.
It was a reasonable day for the ASX, which rewarded investors with five consecutive positive sessions; the mood was buoyed by relative calm in Asia. The Nikkei in Japan was up 0.8% while US Futures also improved during our time zone to be ~0.2% higher around our close. Buying was tentative, with only 63% of the main board closing higher, led by the companies which have reported well over the last 48-hours, conversely, the losers enclosure was dominated by stocks that disappointed investors today, e.g. Nufarm (NUF) -9.8% and Origin (ORG) -9.4%.
Yesterday saw Iron Ore plunge to its lowest level since May 2023 as China Baowu Steel Group Corp, the world’s largest steelmaker, warned of a crisis ahead in China, increasing concerns about demand just as major miners boost output. Futures of the bulk commodity subsequently dropped in Singapore for the sixth time in seven days. Hu Wangming, chairman of China Baowu Steel Group Corp., said the sector now faced a crisis more painful than the downturns of 2008 and 2015, likening conditions to a “severe winter” and highlighting a need to preserve cash. Iron ore has plunged by almost a third this year in a slump that’s made it one of the worst-performing major commodities and, by definition, sectors in the stock market.
Another positive session for the ASX as we continue to gradually recover from last week’s aggressive sell-off, though, the best of it was seen early and the index finished ~60 points below the morning highs, which isn’t a great look having hit resistance at the mid-point of the trading range – see chart below. The Iron Ore miners were the catalyst with weakness in Iron Ore Futures coming out of Singapore, while ANZ and NAB saw reasonable selling after the market digested the quality of CBA’s result, and what it meant for peers – NAB out tomorrow with a trading update.
Yesterday saw strength return to the banking sector with ANZ and CBA leading gains, though the broad sector was up an average of 1%. That was offset by weakness in Healthcare and a muted session for the miners, keeping the index in a tight range to start the week. We’re starting to see a more eclectic mix of performers, while some of the recent winners are buckling under high expectations.
Stocks that have been under earnings pressure are starting to show signs of life. Packaging company Orora (ORA) rallied 19% on an informal takeover approach that could prompt other bidders from the sidelines, with ORA bringing forward their results announcement and strategy update to today. Metal recycler Sims Group (SGM) announced further rationalisation of their business, selling non-core assets – the market likes that pushing shares 10% higher, while Challenger Group (CGF) provided a strong outlook for annuity sales in FY25.
A mildly positive session at the index level, with solid banks offset by weakness in CSL that detracted over 20 index points from the main board alone. Elsewhere, some hits and misses as reporting season ramps up.
We are taking profit on a retail holding today in the Active Growth Portfolio
The ASX200 recovered a further +0.5% on Monday, although it wasn’t an overly impressive day for the Australian market. The local index surrendered ~40% of its early morning gains, closing near the day’s low. The resources sector continued to weigh on the broader market, e.g. Beach Energy (BPT) -12.6%, Mineral Resources (MIN) -3.8%, Fortescue (FMG) -1.4%, and BHP group (BHP) -0.5%. The banks again boosted the index from a points perspective, although the retailers provided some of the best performances after JB Hi-Fi’s (JBH) solid result, plus a surprise 80c fully franked special dividend and a positive trading update for July helped send the household name up over 8%.
An okay session for the ASX today, though it traded a long way below the session highs as sellers came in throughout the day. Results from JB Hi-Fi (JBH) and CAR Group (CAR) both solid, underpinning good rallies from both. We’re not getting too optimistic on the broader market though, and wouldn’t be surprised to see more volatility/downside play out from here i.e. we’re sticking with our more cautious short term stance.
