This was published 4 years ago
And that’s it for another day,
Thank you for your time and your comments.
The markets team will be back tomorrow with Suncorp among the big names with reporting their financial results.
Goodnight.
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Australians are facing the risk of rising electricity bills in coming months as a global energy crunch pushes coal prices higher and adds to the cost of fuelling coal-burning power plants.
While power companies last week declared retail prices had hit eight-year lows, wholesale and future prices that flow through to bills have begun climbing in parts of the country, raising the prospect of energy becoming another cost-of-living issue for voters at this year’s federal election.
The average wholesale electricity price in the east-coast grid rose by nearly 25 per cent during the final three months of 2021, to $73 a megawatt hour.
Meanwhile, futures prices – those used by large businesses and electricity retailers wanting to guarantee energy supply at a certain price – are presently as high as $81 a megawatt hour in NSW and $106 in Queensland for the 2022 calendar year.
Rising oil costs saw oil and petrol stocks outperform on Monday, while good growing conditions saw profit upgrades for the agricultural sector.
However, the benchmark S&P/ASX 200 closed 0.1 per cent lower, down 9.4 points, at 7110.8 as the financial sector dragged on the market.
Banking stocks came under pressure with ANZ Bank falling 1.9 per cent after a weak market update confirming margins were being squeezed. And Magellan Financial closed at a seven-year low of $16.43, down 11.2 per cent, after co-founder Hamish Douglass took medical leave.
Managing director of listed investment company Argo Investments, Jason Beddow, said it was very difficult to know how markets would behave as stimulus was withdrawn and interest rates increased. Argo increased dividends and reported a 92 per cent jump in profit for the six months ending 31 December, thanks to better dividend payouts from ASX-listed companies like Macquarie Group, Rio Tinto, BHP, and NAB.
The ASX’s downtrodden travel stocks are soaring this afternoon on the back of news Australia will reopen its doors to foreign tourists from February 21, almost two years after the international border slammed shut.
At 3.30pm today Qantas’ share price was trading 6 per cent higher to $5.50. That’s a 23 per cent jump in two weeks, and the highest they have traded since mid-November, before the Omicron variant crashed its long-anticipated COVID-19 recovery. Qantas shares did reach $5.97 in late October.
Flight Centre was 8 per cent higher this afternoon at $18.99, also a high since November, while Webjet was up 5.4 per cent at $5.47.
Australia’s domestic airlines have been downgrading scheduled capacity since December as Omicron caused a “shadow lockdown” and prompted travellers to cancel plans, and after Western Australia’s decided to keep its border closed to the rest of the country indefinitely.
The energy sector is outperforming today, up 1.9 per cent compared to a flat ASX200. Woodside Petroleum hit a one-year high of $26.98 today, while Viva Energy is up 3.6 per cent, Santos is up 1.7 per cent, and Ampol is up 2.9 per cent.
Woodside is set to deliver its full-year results on February 17, and the market is expecting to see profits of about $2.6 billion.
Meanwhile, local electricity, gas, and liquefied petroleum gas (LPG) producer Origin, has returned to a 23-month high of $6.04 this morning. It is reporting half-year results on 17 February too.
As reported last week, rallying global commodity prices are feeding into higher wholesale prices across the east-coast electricity market, with average spot prices rising 23 per cent in January to $92 per megawatt hour.
ANZ Bank’s profit margins have taken a hit from the fierce competition in mortgage lending, as the bank tries to stem losses in home loan market share following last year’s blowout in processing times.
ANZ shares were down 3.3 per cent to $26.19 in mid-morning trading after it became the latest lender to underline the pressure on net interest margins, which are being crunched by low-interest rates and aggressive competition.
A market update from ANZ said its net interest margin - which compares funding costs with what it charges for loans - had slumped 8 basis points in the latest quarter, citing “structural headwinds” in the sector.
Although ANZ did not publish a profit figure, the update was weaker than expected by brokers, and some analysts said the market was likely to downgrade its estimates for ANZ’s half-year profits.
Australia’s largest listed retailers are set for a volatile and potentially punishing corporate reporting season this month with supply chain woes and the Omicron COVID-19 strain poised to bruise bottom lines.
Analysts and fund managers are steeling themselves for a disparate set of results as major retailers like JB Hi-Fi, Wesfarmers, Endeavour Group and Harvey Norman report their half-year earnings over the next three weeks.
Core to their concerns is the impact of the ‘shadow lockdown’ caused by the recent Omicron outbreak, and the weakened state of international supply chains, which has led to empty shelves and heightened costs as businesses scramble to shore up their supplies.
Craig Woolford, a seasoned retail analyst with MST Financial, told The Age and The Sydney Morning Herald he expected sales growth for most retailers to be quite healthy through the six months to the end of December, despite Omicron’s arrival and lockdowns in NSW and Victoria.
Those wild gyrations in markets late last week have enlarged the question marks over some long-standing convictions investors have had about the dominant technology giants.
The first was a view that all the big tech companies have similar attributes. Throughout the pandemic the share prices of the big tech companies – Facebook (now Meta Platforms), Apple, Amazon, Netflix, Google et al – have broadly moved in unison, or at least in the same direction.
From the onset of the pandemic in 2020 until their share prices peaked last November the share prices of the “FAANG” companies, as that group is known, were up about 200 per cent as the lockdowns and incentives to stay at home saw a massive growth in online activity.
The second was a belief that network effects and scale made the tech giants almost invulnerable and guaranteed growth -- the more people who used them the more others were inclined to join the platforms, generating ever-increasing scale and revenues. To use Warren Buffett’s lexicon, companies like Facebook, Apple, Google and Amazon were seen to have deep “moats.”
The S&P/ASX 200 is hovering around 7090 points at lunchtime, down 0.4 per cent. It has been as much as 1 per cent lower at 7046 points today, with the financial sector dragging away the most points.
Real estate is underperforming, down 1.4 per cent, while communications, healthcare, and industrials are also in red.
Within financials, ANZ Bank is down 2.7 per cent after this morning’s market update, while National Australia Bank is down 1.8 per cent and Commonwealth Bank is down 0.8 per cent at $93.36. But the biggest decline is Magellan Financial, where chairman and founder Hamish Douglass is stepping aside for medical reasons and will be replaced by deputy chair Hamish McLennan, with the shares down 10.8 per cent to $16.52 today.
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Iluka Resources has defeated a shareholder class action that started seven years ago based on a share price fall that occurred nearly a decade ago in mid-2012.
In early May 2012, Iluka announced a downgrade in its previous guidance and in then in Iluka announced a sharp downgrade in sales anticipated for the year - to a little over half of what had been forecast just two months earlier.
Iluka’s share price plummeted 24 per cent on 9 July 2012, from $11.70 to $8.88.
The action was brought by ACA Lawyers and was filed in the Federal Court in 2018.
After nearly four years of hearings, today, Justice Margaret Jagot dismissed the class action “with her Honour finding that all of the claims of the applicant and group members failed”.
Today, shares are up 3.3 per cent to $10.74.