Selloff worsens, every sector lower, tech slumps, Macquarie delivers bumper profit

The local market closely followed the global lead with the S&P/ASX200 experiencing its worst session since Russia invaded Ukraine.

All 11 sectors of the market were lower with technology and real estate the hardest hit, down 4.5 and 3.4 per cent for the day, whilst consumer staples naturally outperformed, falling just 0.2 per cent behind a solid gain from both Coles (ASX: COL) and Wesfarmers (ASX: WES).

Macquarie (ASX: MQG) was the standout, however, with the financial conglomerate delivering a 56 per cent jump in profit to $4.7 billion driven by strong growth in their Capital Markets and commodities businesses.

Macquarie Capital, which undertakes takeovers, capital raisings and the like, nearly tripled profit to $2.4 billion, whilst the commodities facing division had another record period with higher levels of volatility in energy and oil prices driving up demand for their unique hedging products.

The result was a near 25 per cent increase in the dividend, however, shares fell 7.8 per cent on the weaker global market sentiment.

Both News Corp (ASX: NWS) and REA Group (ASX: REA) also reversed, with the latter falling more than 8 per cent on the global tech selloff despite delivering revenue growth of 23 per cent, and a similar jump in earnings.

The loss across the week was 3.1 per cent with every sector lower, but utilities and staples outperformed, down 0.3 and 1.3 per cent.

The highlight was Magellan (ASX: MFG) which gained 5.8 per cent alongside Challenger (ASX: CGF) which added 2.9 per cent.  
 
Markets end week lower, selloff spreads despite strong employment data
 
The S&P500 has capped the worst five-week run in over a decade after falling another 0.6 per cent on Friday, making it the fifth straight week of losses.

The Dow Jones continues to outperform, falling 0.3 per cent whilst the Nasdaq has borne the brunt of the selling pressure, down 1.4 per cent again.

It seems the smallest piece of news can turn the tide on a daily basis, with comments that a 75 basis point rate hike was unlikely met with a rally, only to be reversed the following day, once again reiterating the importance of diversification and patience.

Both the Dow Jones and S&P500 were down just 0.2 per cent for the week in which the US economy gained another 428k jobs but unemployment remained stuck a 3.6 per cent.

Shares in real estate platform Zillow (NYSE: Z) fell another 4 per cent after reporting a 400 per cent jump in revenue as the company continues to sell off its on-balance sheet property holdings, whilst forecasting a more challenging year ahead.

Popular cyber security firm Cloudflare (NYSE: NET) fell 15 per cent due to weaker than expected forecast sales of their software.
 
The end of an era, bumper profits but banking costs jump, AGL and ESG
 
May 2022 officially marked the end of an era in Australia and around the world, with the Reserve Bank of Australia joining the ‘rate hike’ party somewhat unexpectedly.

Responding to an outbreak in inflation that reached 5.1 per cent for the 12 months to March, the central bank increased the cash rate from 0.1 to 0.35 per cent.

Cue mayhem and predictions about house price corrections, property crashes and mortgage delinquencies.

The RBA is seemingly following the likes of the US and NZ in an effort to remove the further flame from the inflation fire, however, it remains to be seen what rate hikes will do to a challenging economic backdrop as signs of weakness emerge in the UK who were among the first to hike.

The divergence in bank returns is beginning to grow with both NAB and ANZ delivering profit results this week.

The former has quickly returned to its previous glory under new leadership with an online focus, however, ANZ continues to lag.

Whilst profit results were solid, buoyed by central bank funding, net interest margins remain weak due to increasing costs meaning they may actually need higher rates to boost profits once again.

With hung parliaments or a very small majority on the cards at the Federal Election, climate progress is likely to look like what is occurring between AGL and Mike Cannon-Brookes.

The billionaire took a blocking stake in the business as he seeks to put the demerger of their coal assets on hold ahead of a key vote in the coming weeks

Drew Meredith

Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.