ASX dips on healthcare, earnings, Mesoblast tanks on FDA queries, Block hit by growth

The local market (ASX:XJO) managed a 0.2 per cent gain on Friday, overcoming significant weakness in the healthcare sector, which fell 1.2 per cent. Broader strength in the energy and technology sectors, up 1.1 and 1.3 per cent, were enough to overcome the weakness, with Karoon (ASX:KAR) gaining 4.2 per cent on higher energy prices. Resmed (ASX:RMD) was the biggest detractor, with the company falling 9.3 per cent as investors looked past the 18 per cent recent increase, to the narrowing of profit margins. Embattled healthcare research firm Mesoblast (ASX:MSB) saw shares fall by more than 56 per cent, after the company confirmed that the US regular had requested more data on a key pediatric treatment that management were hoping to monetise. Shares in ANZ Bank (ASX:ANZ) gained 0.8 per cent with management vowing to fight the ACCC’s decision to block the proposed merger with Suncorp Bank, close to 12 months after it was initially announced. Over the week, the market finished 1.1 per cent lower, with retailers the only winner, finishing 0.8 per cent higher and utilities dropping 3.4 per cent.

Dow, S&P500 snap three week winning streak, Amazon, Apple diverge

All three US benchmarks weakened on Friday, with news of another 187,000 jobs being added and the unemployment rate falling to 3.5 per cent, reopened the threat of rate hikes. The Dow Jones and Nasdaq fell 0.4 per cent and the S&P500 0.5 per cent, with the Dow and S&P500 ending three straight winning weeks, to finish 1.1 and 2.3 per cent lower. All eyes were on reporting season, with shares in Apple (NYSE:AAPL) falling close to 5 per cent after the company reported a slight fall in quarterly revenue to USD$81.8 billion. iPhone and iPad sales were the largest detractors, albeit only marginally, with the wearables business continue to offset this with stronger growth. The flat result wasn’t unexpected given the incredible year thus far. Amazon (NYSE:AMZN) shares gained 8.3 per cent after the company doubled profit expectations for the quarter, with cloud sales surging 12 per cent. Overseas sales also continued to improve.

China tariffs unwind, mixed results from big tech, margins under pressure

News that the Chinese government had reserved anti-dumping tariffs on Australian barley is a massive positive for the economy and a number of other sectors, including wine exports. The tariffs had been in place for three years as part of a ‘trade war’ with the news sending Treasury Wines (ASX:TWE) finishing the week more than 5 per cent higher. After the likes of Alphabet and NVIDIA smashed expectations on higher growth expectations, the result from Apple offered a reminder that growth and sales don’t continue in a straight line. While there were positives, it showed that pressure remains on the consumer. Another key takeaway was the fact that traders are increasingly focused on the sustainability of profit margins, rather than solely on profit or revenue growth.

Drew Meredith

Drew is editor of The Inside Network's publications and a principal adviser at Wattle Partners.