Mixed results on Wall St overnight, have had no real effect on the ASX as it opened higher this morning.
The S&P/ASX 200 index was up by 0.6% to 7,326.1 at 10.13am AEDT.
Wall Street’s results were brought on by the release of Federal Reserve’s January meeting minutes, which reiterated support for a faster pace of interest rate hikes, along with a major reduction of the central bank’s near $9 trillion balance sheet: this is particularly important as inflation sits near 40-year highs.
The S&P 500 added 3.94 points, or 0.1%, to finish at 4,475.01, after flipping positive in afternoon trade. The Dow Jones Industrial Average lost 54.57 points, or 0.2%, closing at 34,934.27, while the Nasdaq Composite Index fell 15.66 points, or 0.1%, ending at 14,124.09.
The minutes were as expected and factored in by investors.
“On balance, there was nothing in the minutes that suggested the Fed would be more aggressive than what the market has already priced in,” senior investment strategist for Allianz Investment Management, Charlie Ripley said.
Meanwhile, news of easing tensions between Russia and Ukraine and a withdrawal of troops from Ukraine’s border had a positive early impact.
That was until NATO Secretary-General Jens Stoltenberg told reporters that “we have not seen any withdrawal” of those Russian forces.
“What we see is that they have increased the number of troops and more troops are on their way,” he said.
Upbeat US economic data was also well-received. With sales for US retailers jumping 3.8% in January, the largest since March 2021's stimulus spending.
“Omicron and inflation were not enough to deter US consumers from spending in January as retail sales sprung back to life with a 3.8% surge, the strongest gain since March 2021 when stimulus checks reached households’ bank accounts, wrote Oxford Economics economists Lydia Boussour and Kathy Bostjancic.
“The rebound was nearly twice stronger than consensus expectations and led by buoyant vehicle sales and online shopping as virus fear kept consumers away from restaurants,” they wrote.
Here’s what we saw (source Commsec):
- The Aussie dollar rose from lows near US71.50 cents to highs near US72.05 cents and was near US72.00 cents at the US close.
- Global oil prices climbed with US crude inventories rising by 1.1 million barrels last week, but stockpiles at the Cushing hub falling by 1.9 million barrels. Product supplied - a proxy for demand - hit a record 22.1 million barrels per day over the past four weeks, according to the US EIA.
- The Brent crude price rose by US$1.53 or 1.6% to US$94.81 a barrel.
- The US Nymex crude price added US$1.59 or 1.7% to US$93.66 a barrel.
- Base metal prices advanced.
- Aluminium jumped 1.7% to near 13-year highs, supported by geopolitical tensions in Ukraine and supply constraints.
- Copper lagged, up just 0.3%.
- The gold futures price rose by US$15.30 or 0.8% to US$1,871.50 an ounce.
- Spot gold was trading near US$1,869 an ounce at the US close.
- Iron ore gained US$4.10 or 3.0% to US$140.30 a tonne.
Australian market
It was mixed again on the earnings front.
King of the Domain
Domain Holdings Australia Ltd reported a net profit after tax jump of 2.4% to $19.5 million for the six months to December 31.
Statutory revenue grew 27.4% to $176.2 million, while EBITDA was 53.4% higher from the previous corresponding period to $61 million.
In the first half of the year, the property listing company which is majority-owned by Nine Entertainment Co Holdings Ltd (ASX:NEC) reported expenses of $114.3 million and higher earnings per share of 4.46 cents.
Domain expects FY22 ongoing costs to increase in the low-teens range from the FY21 ongoing expense base of $195.5 million.
"Since our AGM update, strong market performance as Covid restrictions were eased in Sydney and Melbourne, and targeted investment decisions, have increased our FY22 cost expectations by around $3 million," Domain said.
A jump in expenses is a mix of revenue-related expenses and targeted investment is expected to accelerate the evolution of its Marketplace strategy.
The company declared an interim dividend of 2 cents per share.
Telstra communicates loss
Telstra Corporation Ltd (ASX:TLS) took a first-half hit due to an "expected decline in significant one-offs". Telstra was referring to a taper-off in payments from NBN, amid growth across its mobile unit.
Telstra reported earnings before interest, taxation, depreciation and amortisation (EBITDA) of $3.5 billion for the half, 14.8% lower than the previous year.
Net profit after tax was down 34% to $700 million.
There was some growth: underlying EBITDA rose 5.1% to $3.5 billion, while underlying earnings per share were up 55% to 6.6 cents and EBITDA for Telstra’s mobile unit grew 25%.
Telstra reaffirmed its guidance for FY22. The board will pay a fully franked interim dividend of 8 cents per share, returning around $940 million to shareholders.
"This was the second consecutive half of underlying growth,” Telstra CEO Andy Penn said in a statement. “The results show we have stayed disciplined and focussed on delivering what we said we would. The benefits of T22 are flowing through for our customers and our shareholders.
“Our reported total income includes declines of around $450 million in one-off NBN receipts and around $200 million in NBN commercial works, while our underlying results demonstrate the benefits of our T22 strategy. In addition to the impact of the NBN, the declines on a reported basis reflect the one-off gains last year, including the sale of our Velocity and South Brisbane exchange assets and the sale and leaseback of our Pitt St exchange."
A quick reporting wrap
- Star Entertainment Group posted a statutory net loss of $74 million for the six months through December 31, down 249% from last year.
- Transurban Group (ASX:TCL) a half-year loss of $103 million – an improvement on the prior corresponding period's $448 million result. The loss was due to pandemic-led traffic declines negatively impacting revenue and earnings.
- Newcrest Mining Ltd will pay a US7.5 cents a share interim dividend. It posted a slump in half-year net profit to US$298 million (down 46%) due to major maintenance at key mines. Newcrest’s mines produced 832,298 ounces of gold in the half – down from just over 1 million ounces in the first half of the previous financial year – along with 50,900 tonnes of copper, at an average all-in-sustaining cost of US$1194 an ounce.
- The Reject Shop Ltd reported a 9.9% slide in half-year profit to $15.35 million. The discount merchandised store has hired former Officeworks CEO Mark ward to turn things around.
US markets
Nvidia Corp’s. holiday quarter exceeded Wall Street’s and its own expectations, posting record sales and doubling its profits from a year ago.
However, shares slipped 1% after hours, following a less than 0.1% advance in the regular session to close at $265.11.
Nvidia reported fourth-quarter net income of $3 billion, or $1.18 a share, compared with $1.46 billion, or 58 cents a share, in the year-ago period.
Revenue surged to a record $7.64 billion, up 53% from $5 billion in the year-ago quarter.
Analysts’ estimates for adjusted earnings were $1.23 a share on revenue of $7.42 billion. Nvidia executives forecasted revenue between $7.25 billion and $7.55 billion in November.
“We are entering the new year with strong momentum across our businesses and excellent traction with our new software business models with Nvidia AI, Nvidia Omniverse and Nvidia Drive,” Nvidia chief executive Jensen Huang said. “GTC is coming. We will announce many new products, applications and partners for Nvidia computing.”
Nvidia saw gaming sales rise 37% to a record $3.42 billion from the year-ago quarter, or a sequential gain of 6% as opposed to expected sales of $3.36 billion in the quarter.
“The year-on-year increases for the quarter and fiscal year reflect higher sales of GeForce GPUs,” said Colette Kress, Nvidia’s chief financial officer, in a statement. “We continue to benefit from strong demand for our Nvidia Ampere architecture products. The sequential increase for the quarter from GeForce GPUs was partially offset by a seasonal decrease in game console SOCs.”
For the first, or current, quarter, the Santa Clara, Calif.-based chipmaker expects revenue of $7.94 billion to $8.26 billion, while analysts have forecast revenue of $7.31 billion on average.
The monster dash
DoorDash shares surged more than 30% after hours, after falling nearly 7% in the regular session to close at $94.88.
The company reported an increase in fourth-quarter gross-order value to $11.16 billion, exceeding analysts’ expectation of $10.64 billion, on 369 million orders, more than the 361 million orders analysts expected.
The delivery-app company did however post bigger losses than analysts had expected for both the fourth quarter and the full year.
DoorDash revenue rose to $1.3 billion from $970 million in the year-ago quarter. The company reported a narrower fourth-quarter loss of $155 million, or 45 cents a share, compared with its net loss of $312 million, or $2.67 a share, in the year-ago period.
Analysts had forecast a loss of $92 million, and an adjusted loss of 23 cents a share, on revenue of $1.28 billion.
For the full year, the company reported a net loss of $468 million, or $1.39 a share, on revenue of $4.9 billion.
European markets
They were mixed. The pan-European STOXX 600 index rose by less than 0.1% and the German Dax index fell by 0.3%.
The UK FTSE index lost 0.1% after the annual rate of UK consumer price inflation rose to 5.5% in January, the highest since March 1992 (survey: +5.4%).
In London trade, shares in Rio Tinto rose by 1.1% and BHP gained 1.9%.