ASX bounces to 50-day high as CBA, AGL soar

The Australian sharemarket has hit a 50-day high as investors sent shares soaring in some of the bourse’s biggest companies after they beat expectations in their profit results.

Commonwealth Bank and AGL were among the big winners as the S&P/ASX 200 closed up sharply on Wednesday, gaining 147.4 points or 1.66 per cent to end the day at 9014.8, with eight out of 11 industry sectors trading in positive territory.

Commonwealth Bank initially bounced 8 per cent after it announced a rise in half-year profits to $5.4 billion, but ended the day up 6.82 per cent. It also hiked its dividend while chief executive Matt Comyn said that persistent inflation was putting “upward pressure” on interest rates. The rest of the big four also closed higher. Westpac was up 2.52 per cent, National Australia Bank rose 3.43 per cent and ANZ Bank was up 1.33 per cent.

After tumbling 12.9 per cent in early trade, health giant CSL’s shares closed down 4.64 per cent. The fall followed news its earnings for the December half-year had dived 80 per cent after it was forced to write down the value of its assets by $US1.1 billion ($1.55 billion). The biotech giant’s poorly timed announcement of its chief executive’s departure on Tuesday afternoon wiped tens of billions of dollars from its market valuation.

Mining stocks also advanced. Among the big iron ore miners BHP gained 1.61 per cent, Rio Tinto rose 1.21 per cent and Fortescue moved 2.27 per cent higher. Gold miner Northern Star was stable but Evolution Mining jumped 8.68 per cent after it reported a record underlying profit of $785 million.

Energy giant AGL soared 11.75 per cent despite its net profit falling more than 40 per cent from $162 million to $94 million in the six months to December 31. Earnings were dragged down by losses on energy derivative contracts. But on an underlying basis, AGL’s half-year profit, which fell 6 per cent to $353 million, was better than analysts had been expecting. The company also announced it has agreed to sell its telco business to Aussie Broadband in a deal it says will simplify its operations and slash costs. Woodside Energy added 0.5 per cent while Santos was flat.

Kerry Stokes’ $20 billion industrial group SGH reported a slight lift in net profit to $471 million. It’s the group’s last result that includes its stake in embattled group Seven West Media which merged with Triple MMM owner Southern Cross Media, last month.

Revenue fell 1.8 per cent to $5.4 billion but SGH managed to lift earnings after cost-cutting and a strong performance from Boral. Offsetting that were declines across WesTrac, Coates, and its energy business as well as another sharp decline at Seven West. Its shares rose 3.58 per cent.

Shares in materials company James Hardie jumped sharply, by nearly 11 per cent, after it reported higher-than-expected December quarter earnings.

Stagnating pizza giant Domino’s gained 2.91 per cent after announcing senior McDonald’s executive Andrew Gregory will be its new global chief executive. The group’s executive chairman Jack Cowin has been hunting for a new global CEO since June last year, when Mark Van Dyck resigned after just seven months in the top job.

The Australian dollar was trading higher at around US71¢.

Overnight, stocks drifted on Wall Street following a mixed set of profit reports from big US companies, as toy maker Hasbro jumped but drinks giant Coca-Cola slipped. Hopes also rose that the Federal Reserve would cut interest rates later this year to boost the economy following a discouraging report on retail sales.

The S&P 500 fell 0.3 per cent after briefly rising above its all-time high, which was set a couple of weeks ago. The Dow Jones Industrial Average added 52 points, or 0.1 per cent, to its own record, while the Nasdaq composite fell 0.6 per cent.

The action was strong in the bond market, where Treasury yields fell after a report showed US retailers made less money at the end of last year than economists expected. Shoppers spent roughly the same amount in December as they did in November, less than the modest growth that economists expected.

Altogether, the data should help the Federal Reserve decide what to do with interest rates. The Fed has put interest rates cuts on hold, and too-hot inflation could keep it on pause for a long time. But a weakening of the job market, on the other hand, could push it to resume cuts more quickly.

With AP

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.