The ASX has again ended the day trading day in the green, this time reaching a three-week high.
The S&P/ASX200 gained 78.30 points or 1.10% to 7,189.10. Over the last five days, the index has gained 2.61%, but is down 3.43% for the last year to date.
Top-performing stocks in this index are Magellan Financial Group Ltd (ASX:MFG) up 6.70% and Flight Centre Travel Group Ltd up 6.65%.
The Materials sector had a good day, with the major iron ore miners up 2.9-3.5% after iron ore futures hit a 6-month high of $US153 a tonne.
The reason according to Bloomberg is the Chinese government has "quietly scaled back its ambition to cut carbon emissions" from the industry.
Financials was another strong performer with Suncorp up 6.8% and Macquarie Group Ltd up 4% on impressive earnings updates.
The major banks were up 0.6-1.7%.
Citi upgrade for Macquarie
Macquarie’s record December quarterly has led Citi to upgrade its FY22 net profit forecasts.
"Markets-facing businesses CGM and MacCap were the key profit drivers in Q3 FY22, seeing material upgrades to outlook commentary in commodities revenues (gas & power) and MacCap fees and investment realisations," Citi noted.
Citi’s broker added that while Macquarie has upgraded its FY22E NPAT by ~4.5%, it expects larger consensus upgrades given it is already ~5% ahead of consensus.
"We have made little change to forward forecasts post FY22E, expecting market volatility (& earnings leverage) to decline," the broker says.
Citi expects asset management to potentially be the sole point of weakness after the bank maintained guidance for base fees to be 'broadly in line'.
"We were more optimistic, expecting that base fees could have grown vs H1 FY22 given business drivers and foreign exchange," Citi said.
"However, we think that maintained guidance for ‘in line’ suggests a sequential decline in base fees vs H1 FY22 in the second half."
Citi retains a $226 target price and buy recommendation.
Flying high
“Good luck, we’re all counting on you.”
It’s a classic line from the move Flying High or Airplane if you are more familiar with the US title.
That’s a good message to give the travel industry now that international borders are opening up this month.
The industry has reacted strongly to the news, with travel stocks on the ASX close to recovering their omicron-inflicted losses.
The opening of international borders has provided the market with much-needed earnings clarity.
While shares rallied yesterday when the announcement was made, they have advanced on Tuesday.
Shares in local airlines and travel booking groups rallied on Monday after the announcement, and advanced further on Tuesday.
While it is unlikely to materially shift earnings forecasts for this year, longer term projection are now on investors’ radars.
“The announcement was good for sentiment, but it won’t impact analyst expectations this year – it’s still going to be a tough year for a lot of these travel businesses,” WAM Capital portfolio manager Oscar Oberg said.
“Analysts have already forecast a recovery in travel names. This announcement provides some certainty to those forecasts around earnings in the 2023 and 2024 financial years.”
On the small cap front
- Latin Resources Ltd is 16.67% higher.
- ClearVue Technologies Ltd is 10.81% higher
- Buru Energy Ltd is 9.52% higher.
- Andromeda Metals Ltd is 5.26% higher.
- Shree Minerals Limited is 4.17% higher.
- Patrys Ltd is 3.85% higher.
- Red 5 Ltd is 3.64% higher.
- Gascoyne Resources Ltd is 1.89% higher.
- Recce Pharmaceuticals Ltd is 1.61% higher.
- Alligator Energy Ltd is 1.37% higher.
- Creso Pharma Ltd is 1.15% higher.