The ASX has again opened in the green on the back of a strong finish on Wall St, several company reports due, National Australia Bank’s higher earnings and AGL’s news about coal plant closures.
The S&P/ASX 200 was up 0.6% to 7,312.2 at 10.10am AEDT.
Looking at Wall St, the Nasdaq Composite finished 2.1% higher closing at 14,490.37, marking its best daily percentage climb since January 31.
The rise was partly due to the easing of a bond selloff a day ahead of the anticipated inflation report.
Dow Jones Industrial Average rose 305.28 points, or 0.9%, ending at 35,768.06.
The S&P 500 gained 65.64 points, or 1.5%, finishing at 4,587.18.
Here’s what we saw (source Commsec):
- The Aussie dollar rose from near US71.45 cents to US71.93 cents and was near US71.80 cents in afternoon US trade.
- Global oil prices were higher as US crude stocks fell by 4.8 million barrels last week. Overall product supplied, a proxy for demand, hit a record 21.9 million barrels per day over the past four weeks.
- The Brent crude price US77 cents or 0.8% higher to US$91.55 a barrel.
- The US Nymex crude price rose by US30 cents or 0.3% to US$89.66 a barrel.
- Base metal prices were firmer by up to 3.0% with copper leading the way and tin rising just 0.4%.
- The gold futures price rose by US$8.70 or 0.5% to US$1,836.60 an ounce.
- Spot gold was trading near US$1,833 an ounce in late US trade.
- Iron ore fell by US$3.20 or 2.1% to US$146.75 a tonne as Chinese regulators warned information providers against false price disclosure.
Australian market
AGL flags quicker transition to renewables
AGL Energy (ASX:AGK) Limited reports its earnings today, but is flagging a lower interim profit due to falling power prices: profit after tax fell 41% to $194 million while its dividend was slashed to 16 cents from 41 cents.
Despite this, the power giant has upgraded its annual earnings guidance and its 2022 financial outlook is positive.
Underlying earnings are expected to be between $1.275 billion and $1.4 billion compared with previous guidance of $1.2 billion to $1.4 billion. Underlying net profit is seen between $260 and $340 million from a prior forecast between $220 million and $340 million.
“With the rise of energy and commodity prices across the globe, AGL Energy (ASX:AGK) is well positioned to benefit from improving wholesale electricity prices, seen over the past six months, and if it is sustained, we expect to see this reflected in future earnings beyond FY22 as hedging positions roll off,” AGL's chief executive Graeme Hunt said.
The bigger news for AGL is that it will shut two of Australia’s largest coal power stations earlier than flagged.
The company is bringing forward its transition to renewables and will shut the 2640 megawatt Bayswater coal plant in NSW’s Hunter Valley no later than 2033 compared with its scheduled closure date of 2035 and the 2210MW Loy Yang A facility in Victoria’s Latrobe Valley before 2045 from its expected retirement in 2048.
“The readiness of the entire energy system to operate without our critical baseload generation will determine whether the earlier, more ambitious, targets within the range can be achieved,” AGL says in a statement alongside its half year results.
“AGL Australia and Accel Energy are committed to working with government, industry and the community in pursuit of this and will be reporting annually on progress towards this ambition.”
NAB reports higher earnings
National Australia Bank Ltd has reported higher first quarter cash earnings.
Cash earnings are up 12% to $1.8 billion and revenue is 8% higher, but net interest margin is down.
The lift in revenue reflects higher volumes across housing and business lending, increased fees and commissions and a recovery in Markets & Treasury (M&T) income.
The banks said the level of growth and emerging inflationary pressures have presented challenges.
"Cash earnings increased 12% compared with the quarterly average of 2H21, asset quality remained benign and good momentum has continued across our business despite the environment remaining competitive," NAB chief executive Ross McEwan said.
In Australia, home lending is up 2.6% over the three months and SME business lending is 3.4% higher.
US markets
Bond sell off eases as investors factor in interest rate rises
The bond selloff eased yesterday, which gave investors a breather in the US. The yield on the 10-year Treasury note fell 2.6 basis points to 1.928% after reaching 1.954% on Tuesday, its highest since 2019.
Sectors that stood out were the S&P 500’s technology and communications sectors, up 2.3% and 2.5%, respectively. Meta Platforms closed 5.4% higher to halt a 4-day losing streak.
“Today we are primarily up with somewhat of an easing off in the bond selloff,” chief economic strategist at Capitol Securities Management Kent Engelke told MarketWatch.
“I do think the CPI [reading] is going to be strong, but I also think it’s discounted by the market,” he said, adding that “all but the worst is already factored into the bond market” in the intermediate term.
Inflation continues to cause concern, with interest rate rises expected at the next policy meeting in March. Investors look to already be factoring in aggressive rate rises, which has dragged down the technology sector and other growth stocks.
“You have the potential for a walloping effect,” said Eric Schiffer, CEO of private equity firm Patriarch Organization.
“They are trying to land the plane in a way that doesn’t create a whole new set of giant problems. I think it will be painfully volatile for the next four to five months.”
Uber rides high
Uber shares gained approximately 5% after hours after surging 9% on a strong fourth quarter report.
Uber’s revenue of $US5.78 billion beat Bloomberg’s consensus estimate by 8% and EPS of $US0.44 compared to an expected $US0.33 loss.
Fourth quarter delivery bookings were 34% higher, while freight soared 245% and mobility gained an impressive 67%.
European markets
European sharemarkets were firmer, buoyed by solid earnings results.
The pan-European STOXX 600 index rose 1.7% - the best gain in two months. It saw auto stocks rise 4%, with shares in Volkswagen gaining 6.1% on reports of a potential listing of Porsche AG at Volkswagen's press conference set for March 15.
The German Dax index rose by 1.6% and the UK FTSE index lifted by 1.0%.
In London trade, shares in Rio Tinto rose by 1.0% while BHP rose by 0.5%.