Live markets, Wednesday February 23, 2022
The onset of sanctions against Russia ended up calming rather than rattling markets, with Asian markets all closing higher as sentiment improved. However, volatility indicators remain high and traders were nervous.
The benchmark S&P/ASX 200 improved from a negative start to close 0.6% higher at 7205.7 points, a gain of 44.4 points.
The market was dynamic with only 56 companies closing lower, mainly in the utilities and consumer discretionary sectors. The big banks were split, with Commonwealth Bank and Westpac up, while NAB, ANZ Bank and Macquarie closed lower.
Anthony Golowenko of MLC Asset Management said the ASX was buffered by geopolitical tensions in Eastern Europe, like all stock markets, and that uncertainty was making investors nervous. And some stocks were at extremely high prices, making them vulnerable to a sell-off.
For example, he was not surprised to see Domino’s fall 14% to a two-year low of $86.14 after reporting a 6.9% drop in half-year profits and warning that it could not respect the forecasts for the whole year. The stock was priced at 42 times earnings.
“Unless you provide that growth implied by valuations, it’s hard to sustain that higher rating,” Golowenko said, adding that he preferred Collins Foods, owner of KFC and Taco Bell, which is priced higher. of 28 times earnings.
Mr Golowenko also said he preferred Coles to Woolworths, which ended Wednesday up 1.4% despite falling profits and cutting its interim dividend.
“It looks like Coles could have navigated COVID-19 better, but both are incredibly well-run businesses,” he said.
After reporting results on Wednesday, Scentre Group fell 4.4%, but Stockland gained 3.5% and WiseTech Global gained 4.2%.
Meanwhile, new data showing annual wage growth was at a seven-year high of 2.3% prompted a recalculation of the time frame in which the Reserve Bank of Australia could start raising interest rates. .
“With inflation already at 3.5% a year, this could push the consumer price index to over 4% in the first quarter of this year, which could prompt the RBA to raise interest rates 25 basis points in May,” the chief said. of investments and capital markets at Van Eck, Russel Chesler, said in a note to clients.
He now expected to see rates as high as 1.25% by the end of this year, up from 0.1% currently.
Major miners had a positive session with South32 up 3.4% and Lynas Rare Earths up 5.2%. BHP gained 0.6% and Rio Tinto closed 1.2% before reporting its annual results on Wednesday evening.
There were also big gains in HUB24, up 9.9%, and Tyro Payments which gained 8.6% after falling sharply earlier this week. Zip Co gained 8.4% after falling for four consecutive sessions.
But Costa Group fell 8.6% and JB Hi-Fi fell 5.2%.