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Market weakens a cyclicality returns, Hub profit surges, BHP cuts dividend

Daily Market Update

The S&P/ASX200 weakened a further 0.2 per cent on Tuesday, with little in the way of a lead from US markets. The materials and energy sectors stood out, gaining 0.4 and 0.6 per cent, while each of the technology, communications and staples sectors dropped by more than 1 per cent as reporting season stepped up another gear. Shares in BHP (ASX:BHP) were a heavy detractor despite falling just 0.3 per cent, with Australia’s largest company delivered a 40 per cent cut to the dividend after half year profit fell by 32 per cent to US$6.4 billion. This offers a reminder to those seeking to back last year’s winners that material companies remain highly cyclical. Shares in investment and super platform Hub 24 (ASX:HUB) gained 7.7 per cent after the company reported an 85 per cent increase in statutory profit to $15.5 million, as funds under administration exceeded $73 billion; this supported a near doubling of the dividend.

Ingenia sinks on downgrade, Seek guidance narrowed,

Housing rental group Ingenia (ASX:INA) fell by 13 per cent after the company announced a significant reduction in earnings expectations, falling to growth of just less than 10 per cent for the financial year. This is a significant reduction from the 30 per cent growth expected in November last year and well weaker than expected by the market. The group is struggling to settle new home constructions, which are expected to be as much as 20 per cent weaker than expected. Shares in employment platform Seek (ASX:SEK) fell by 1.7 per cent, hitting the technology sector after the company narrowed guidance to the bottom end of the previously stated range for the full financial year. The group now expects $250 million in profit for the full year after delivering just 10 per cent growth in the first half.  Among the key drivers is a ‘gradual moderation’ in the labour market which is impacting on job volumes. The news comes as the RBA minutes were released showing that the board had considered a 50-basis point hike at the prior meeting.

  • Dow Jones slumps after long weekend, rate hike probabilities grow, PMIs sink

    The Nasdaq lead global markets lower overnight, as selling pressure hit US markets following an extended weekend. The Nasdaq fell 2.5 per cent, following by the Dow Jones, down 2.1 and the S&P500, down 2 per cent. The tail of reporting season continues to drive the market, however, the apparent increasing likelihood of another rate hike remains on the cards. Interestingly, Canada’s inflation rate fell faster than expected to 5.9 per cent from 6.3 per cent in December. Shares in Meta (NYSE:META) were broadly flat after the company announced its intention to release a paid subscription service in a similar way to Twitter. Shares in Walmat (NYSE:WMT) bucked the trend, gaining 0.6 per cent after announcing 8 per cent same-store sales growth, with the group seeing margin contraction as discounts offset price increases on some products. E-commerce sales rose once again by 17 per cent for the quarter. It was the opposite story for Home Depot (NYSE:HD) which fell by more than 7 per cent after announcing they would spend another US$1 billion on wages while delivering no profit growth during the quarter on just 0.3 per cent increase in sales.

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