Tuesday 8th February 2022
Market recovers ground, Macquarie delivers record quarter, iron ore surge continues
The S&P/ASX200 recovered the ground lost on Monday, increasing 1.1% on Tuesday as the iron ore price showed no signs of slowing down.
Having oscillated between a new commodity supercycle and a bear market, a resumption of steel production supported a 2.2% jump in the materials sector and 3.7% for BHP Group (ASX: BHP).
Every other sector was higher barring technology, which fell 1.6% as Block (ASX: SQ2) fell close to 5% again.
The financial sector also performed strongly, adding 1.4% after Macquarie Group (ASX: MQG) reported a record quarter.
Shares in the company surged 3.9% despite little in the way of financial updates, apart from management confirming ‘improved market conditions’ had contributed to a record level of revenue for the company.
The market-facing businesses are benefitting from a global increase in merger and acquisition activity following the pandemic, but the traditional banking and asset management divisions are expected to detract from profits.
Shares in Santos (ASX: STO) gained 0.4% after announcing the first commitment for the Carbon Capture and Storage project in South Australia.
Suncorp profit weakens, Shopping Centres Australia revalued higher, Charter Hall hikes dividend
Shares in Suncorp (ASX: SUN) were among the leaders on the market, gaining 5.5% after the company reported a 7.5% increase in insurance premiums.
Despite the news of the positive sales, the company indicated that their investment portfolio returns on this capital had fallen, resulting in a 20% reduction in profit and ultimately a 3-cent cut to the dividend.
Catastrophe payouts remain a detractor from profits, but the market was clearly expecting much worse.
Shares in Shopping Centres Australia Property Trust (ASX: SCP) gained more than 3% after the company reported a 25% increase in revenue and a tripling of profit to $432 million in the first half.
Importantly funds from operations, being rental payments, increased 29%. But the biggest contributor was a revaluation of the underlying property portfolio by $426 million taking the net tangible asset value to $2.84 from $2.52.
Sticking with property, the popular Charter Hall Long WALE REIT (ASX: CLW) added 1% after announcing a 5% increase in the already strong dividend yield.
Market rallies on earnings, trade deficit spikes, NVIDIA deal finished
All three benchmarks finished higher overnight, benefitting from another strong earnings result and some pause for thought ahead of inflation data on Friday.
The Nasdaq outperformed gaining 1.3% as the Bond Yield continues to retreat from recent highs.
The S&P500 and Dow Jones delivered similar results, up 0.8 and 1.1% respectively.
Shares in semiconductor leader NVIDIA (NYSE: NVDA) were up 1% despite news that they would take a US$1 billion hit after announcing the deal to acquire competitor ARM Holdings from Softbank fell through due to regulatory concerns.
Harley Davidson (NYSE: HOG) was the latest to surprise investors reporting an unexpected US$21 million profit on a 25% spike in revenue amid a surge in demand for electric-powered bikes; shares jumped 15% on the news.
The US trade deficit widened more than expected in January to US$80 billion as a stronger US resulted in a growth in demand for imports.
Drew is editor of The Inside Network's publications and a principal adviser at Wattle Partners.
