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ASX declines 0.1%; banks and materials drag

Daily Market Update (47)

ASX flat, iron ore retreats, Bank of Queensland hit on revenue

The S&P/ASX200 (ASX: XJO) fell 0.2% Wednesday, the third straight lower close.

The selling pressure once again turned to the iron ore sector, but primarily the most leveraged, with materials down 1.1% but the likes of Mineral Resources (ASX: MIN) and Fortescue (ASX: FMG) falling 4.6 and 5.3% respectively.

Nine of the 11 main sectors were actually positive, suggesting some divergence in performance and expectations with the real estate sector adding 1.6% as Vicinity Centres (ASX: VCX) was 3.0% higher.

Financials also fell 0.6% after the Bank of Queensland (ASX: BOQ) was sold off on a weaker than anticipated result.

Shares were down 4.3% despite reporting an 83% increase in cash earnings to $412 million and a tripling of profit to $369 million.

Net interest margin also improved, albeit only slightly, with the dividend hitting 22 cents.

The group continues to grow its loan book above the broader industry, at 9% compared to 6%, but traders were clearly worried about the blowout in costs from $600 million to $645 million.

Challenger stakes claim, Bubs, A2 Milk rocket

Challenger (ASX: CGF) outlined their ambitious plans to dominate the retirement income space in the years ahead, delivering a solid update to the market today.

Assets under management increased 3% on the back of strong life annuity sales, of 32% to $2.1 billion.

Assets under management are now $108 billion with strong momentum across every part of the business, according to the CEO.

Institutional demand remains strong following the release of the Retirement Income Covenant whilst the group now has excess capital that can be used to shield from unexpected volatility.

Goat milk formula marketing group (ASX: BUB) was a standout today jumping 39% in a single session after reporting a turnaround in the first quarter following a near shutdown in 2020 as border closures hit.

Revenue was 45% higher to $18.5 million. Market share gains and scan sales growth were 35% high, with the Daigou sales up over 6 times last year’s levels.

A2 Milk (ASX: A2M) benefitted from the rally, moving 13.4% higher without any announcement.

Tech rallies on inflation, tapering threat, JP Morgan, AMEX fall

US markets were buoyed by the technology sector as reporting season gets underway. However, it was all about a number of macro drivers overnight.

The notes from the Federal Reserve meeting confirmed that they had all but agreed on tapering bond purchases from November and potentially above the US$15 billion per month rate; whether they do is another question.

Consumer price data was also released showing inflation remains elevated, jumping another 0.4% in September, taking the annual rate to 5.4%, but closer to 4.0% when more volatile food and energy prices are excluded. Whilst many will see this as persistent, six months is barely long enough to register.

The result was the Nasdaq leading the way, up 0.7% as investors flocked to companies most able to pass costs onto consumers, with the S&P 500 up 0.3 and the Dow Jones flat.

Elsewhere JP Morgan (NYSE: JPM) sent the financial sector lower despite reporting a record level of investment banking fees, which were 52% higher amid a boom in M&A.

Shares fell 2.7% as investors were concerned about anaemic loan growth.

Apple (NYSE: AAPL) also fell slightly after announcing their production of iPhone 13s would be slowed by the chip shortage.

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