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Worst session in three weeks as ASX slips 0.7%

Daily Market Update

Tech sell off weighs on ASX, Challenger downgrades earnings, Latitude finally lists

The ASX200 (ASX:XJO) moved further from a record close as a weak global lead and a bevy of early earnings updates sent the market 0.7% lower.

The only highlight was the telecommunications sector which added 0.2%, with IT and healthcare falling over 1% each as valuation concerns linger.

Challenger Financial Group (ASX:CGF) which provides annuities and distributes a series of investment funds, fell by over 15% after management downgraded earnings guidance to the lower end of their $390 to $440 million range.

The group cited an unexpected decline in credit spreads as a key influence, with the returns on their statutory fund falling compared to the fixed rate annuity payments they are contracted to make.

Despite the short term weakness, the company reported it had reached $100 billion in assets and delivered a record 9.2% growth in its Life book for the quarter. 

Consumer lending group Latitude Financial (ASX:LFS) finally listed on the ASX, a slimmed down version of the company it was 18 months ago, with the company closing at $2.70 after listing at $2.6 on a $2.6 billion valuation.

A recent pivot into BNPL has supported customer growth and complements their core personal lending, credit card, and car loan divisions.

Afterpay continues to roll, Hub24’s record inflows, Rio’s best start to a year

Afterpay Ltd (ASX:APT) has flagged a potential US listing as the group’s overseas operations finally exceed their Australian income.

Management reported a 104% increase in sales to $5.2 billion for the quarter, with US sales up 211%, and UK sales up 277%, key drivers of the strength.

Active customers increased by 75% to 14.6 million, with active merchants also hitting 85,800, a 77% gain on this time last year; evidencing the exceptional growth this company is achieving. Shares fell 0.8% on the news.

Investment platform Hub24 delivered record inflows of $1.9 billion, up 41% on 2020 levels with the company reaching assets of $51.4 billion; shares fell 2.6%.

Rio Tinto has recorded its strongest start to the year since 2018, shipping 77.8 million tonnes of iron ore in the first three months, amid calls that the iron ore price could hit US$200 per tonne on weaker Brazilian output.

Popular online furniture outlet Temple and Webster (ASX:TPW) has shown no signs of slowing down, reporting a 20% increase in April sales on the back of a 112% increase in revenue on this time last year. The group now has over 750,000 active customers, with shares jumping 1.5%.

Markets fall on virus, earnings concerns, Netflix underdelivers, Apple launches new iMac and iPads 

Global markets retreated overnight, pushed lower by surging virus cases as investors await more clarity as earnings season hits full gear this week.

Energy and financials led the fall, pushing the Dow Jones down 0.8%, the S&P500 -0.7%, and the Nasdaq 0.9%. 

Apple Inc (NYSE:AAPL) shares fell 1.3% despite announcing the first redesign of their iMac desktop in close to a decade.

The group also launched a new iPad, both to include the TSMC designed chips replacing their long history with Intel. The stay-at-home trade sent iPad sales up 30% each quarter but investors are clearly wary of whether this can continue.

Netflix Inc. (NYSE:NFLX) also disappointed adding just 4 million subscribers, well below the 15.8 million it gained for the same period in 2020 powered by the pandemic.

Management highlighted the pull forward impact of the pandemic but reported a quarterly profit of US$1.71 billion, doubling from $542.2 million in the year before. Shares were down heavily in after-hours trading.

Gucci was a rare highlight, with consumers sending comparable sales up 25% for the quarter as spending pivots from electronics and homewares to fashion.

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