(SYDNEY, AUSTRALIA) – The Australian sharemarket closed lower on Thursday as falls in major companies including Commonwealth Bank, Rio Tinto and Telstra outweighed gains elsewhere. The S&P/ASX 200 lost 20.90 points, or 0.2%, to close at 9188.50.
Six of the 11 industry sectors finished in the red. The index trimmed heavier declines from earlier in the session. The ASX lost 0.5% on Wednesday. The Australian dollar dropped 0.2% to 70.48 US cents.
Commonwealth Bank shares fell 2.2% as investors cashed out after the bank reported an 11 billion Australian dollar cash profit on Wednesday (about 7.2 billion US dollars, or roughly 5.65 billion British pounds). Rio Tinto slumped 3.6% after securing a 2.5 billion Australian dollar government bailout (about 1.64 billion US dollars, or roughly 1.28 billion British pounds) to keep its Tomago aluminium plant operating. The plant has faced high energy costs.
The bailout for Australia’s biggest aluminium smelter, majority owned by Rio Tinto, ends months of crisis talks with federal and New South Wales officials. The deal aims to keep the plant viable and safeguard more than 1,000 jobs. Tomago Aluminium will invest 1.1 billion Australian dollars (about 720 million US dollars, or roughly 565 million British pounds) into the future of the smelter. BHP shares were flat. Fortescue dropped 0.5%.
Earnings season is now in full swing. Telstra, ANZ Bank, Origin and Treasury Wine Estates were among the major companies that reported results before the start of trading.
Telstra fell 3.2% despite sweetening its full year result with a 10.5% bigger dividend and a fresh 1 billion Australian dollar share buyback (about 654 million US dollars, or roughly 514 million British pounds). Net profit edged up 2.7% to 2.4 billion Australian dollars (about 1.57 billion US dollars, or roughly 1.23 billion British pounds). Revenue dipped 0.8% to 22.9 billion Australian dollars (about 14.98 billion US dollars, or roughly 11.77 billion British pounds).
The telco handed chief executive Vicki Brady an 11% pay rise to 6.8 million Australian dollars (about 4.45 million US dollars, or roughly 3.49 million British pounds). The payday came against a backdrop of 1,200 job cuts and just weeks before a network outage cut off Triple Zero calls.
ANZ Bank jumped 4.5% after reporting 1.9 billion Australian dollars in cash profits for the June quarter (about 1.24 billion US dollars, or roughly 976 million British pounds). That was up 2% from a year ago. The bank said home loan applications have fallen 12% since the May budget, excluding applications received through a government deposit guarantee scheme.
The trading update came a day after Commonwealth Bank said its home loan applications fell 15% since the budget. The budget included moves to rein in negative gearing and capital gains tax concessions. Westpac added 0.9%. National Australia Bank rose 1.2%.
Treasury Wine Estates rallied 4.9% as signs of growth in its China market outweighed a steep drop in full year earnings. The winemaker ran up a 1.08 billion Australian dollar loss (about 707 million US dollars, or roughly 555 million British pounds) as it deals with weakening consumer demand for alcohol and problems in its United States business. Strong demand in China helped push its shares higher. The company is making progress in cracking down on third party sales that threaten the reputation of its Penfolds brand.
Origin Energy gained 5.3% after its full year profit beat analyst estimates. Net income rose 6.3% to 1.57 billion Australian dollars (about 1.03 billion US dollars, or roughly 807 million British pounds). Underlying profit fell 22% to 1.16 billion Australian dollars (about 759 million US dollars, or roughly 596 million British pounds). That was slightly ahead of forecasts.
Origin said Australia’s energy transition is increasingly being driven by households embracing rooftop solar, batteries and electric vehicles. The large scale build out of renewables and grid infrastructure faces rising costs, lengthy approvals and regulatory uncertainty, the company said.
Cleanaway Waste Management shares surged 15.2% to 2.73 Australian dollars after the company said it received a takeover bid from Swedish private equity firm EQT Infrastructure. Cleanaway will give the suitor exclusive access to its books for due diligence. The board said it is likely to support the 3.13 Australian dollar per share offer (about 2.05 US dollars, or roughly 1.61 British pounds). That is 32% above the stock’s closing price on Wednesday.
Energy stocks were mixed. Woodside fell 0.7%. Santos inched up 0.1%. Refiner Ampol added 1%. Oil held the bulk of a six session gain as the stand off continues over the Strait of Hormuz. Brent traded just below 89 US dollars a barrel after rising 12% over the previous six sessions.
Talks between the United States and Iran appear deadlocked as both sides harden their positions. Washington is pressing on with a blockade of Iranian ports to raise economic pressure on Tehran.
Tech stocks benefited from gains on Wall Street. WiseTech Global and data centre operator NextDC both rose 1.7%.
| Stock | Move | Detail |
|---|---|---|
| S&P/ASX 200 | -0.2% | Closed at 9188.50 |
| Commonwealth Bank | -2.2% | Investors cashed out after $11b cash profit |
| Rio Tinto | -3.6% | Slumped despite $2.5b Tomago bailout |
| BHP | Flat | No major move |
| Fortescue | -0.5% | Declined with mining sector |
| Telstra | -3.2% | Fell despite dividend boost and buyback |
| ANZ Bank | +4.5% | Jumped on $1.9b quarterly cash profit |
| Westpac | +0.9% | Rose with banking sector |
| National Australia Bank | +1.2% | Gained in session |
| Treasury Wine Estates | +4.9% | Rallied on China market growth |
| Origin Energy | +5.3% | Rose after full year profit beat |
| Cleanaway Waste Management | +15.2% | Surged to $2.73 on EQT takeover bid |
| Woodside | -0.7% | Fell with mixed energy sector |
| Santos | +0.1% | Inched up |
| Ampol | +1% | Added gains as oil held |
| WiseTech Global | +1.7% | Rose with tech sector |
| NextDC | +1.7% | Gained on Wall Street AI strength |
On Wall Street, the S&P 500 added 0.3% and marked its first gain since setting its all time high on Friday. The Dow Jones Industrial Average slipped less than 0.1%. The Nasdaq composite climbed 0.5%. Stocks in the artificial intelligence technology business helped lead the way after strong profit reports bolstered hopes they can continue to deliver growth.
Super Micro Computer jumped 19.6% after reporting earnings per share for the latest quarter that were 84% higher than analysts expected. The company also gave forecasts for upcoming profit and revenue that topped expectations.
CoreWeave leaped 19% after reporting better revenue for the latest quarter than analysts expected, along with a milder loss. Chief executive Michael Intrator said demand is accelerating from customers as big businesses adopt artificial intelligence.
CoreWeave gives its customers access to AI chips from Nvidia. Nvidia climbed 3% and was the single strongest force lifting the S&P 500.
It is a return to strength for AI stocks, which have been on a roller coaster ride. After surging to records, AI stocks came under pressure on worries that they shot too high. Investors wanted to see big spenders on AI prove that their investments are yielding enough in profits and productivity. That could lead to continued demand for chips and other AI infrastructure.
Wall Street also got support from easing yields in the bond market. Treasury yields fell after a report showed United States consumers paid prices for gasoline, groceries and other living costs last month that were 3.4% higher than a year earlier.
That is higher than desired but not as bad as June’s 3.5% inflation rate.
The slowing could give the Federal Reserve more room to hold off on interest rate hikes. Higher rates would help keep a lid on inflation but would make it more expensive for American households and companies to borrow. Higher rates would also undercut prices for stocks and other investments.