ASX ends lower, AGL's Loy Yang A power station goes offline, consumer confidence rebounds (sort of) and bitcoin jumps to $US50,000 — as it happened
The Australian share market finished lower for the day as earnings season continued, while the price of bitcoin surged to $US50,000 for the first time in two years.
It came as AGL's Loy Yang A power station in Victoria suffered an outage as the state sweltered through a heatwave, sending wholesale electricity prices surging.
Look back on the day's developments with our blog.
Disclaimer: this blog is not intended as investment advice.
Key events
Live updates
Market snapshot
By Michael Janda
- ASX 200: -0.2% at 7,603 points (final values below)
- Australian dollar: -0.2% to 65.17 US cents
- Nikkei: +2.6% to 37,844 points
- Hang Seng: Closed for lunar new year
- Shanghai: Closed for lunar new year
- S&P 500: -0.1% to 5,022 points
- Nasdaq: -0.3% to 15,943 points
- FTSE: Flat at 7,574 points
- EuroStoxx: +0.5% to 487 points
- Spot gold: flat at $US2,019/ounce
- Brent crude: +0.1% to $US82.07/barrel
- Iron ore: +1.6% to $US128.60/tonne
- Bitcoin: +0.2% to $US49,914
Prices current at 4:20pm AEDT.
Updates on the major ASX indices:
ASX closes lower led by drops in Strike Energy, Breville, James Hardie
By Kate Ainsworth
The ASX has closed lower for Tuesday, dipping by 11 points — or 0.2% — to 7,603 points.
It's the second day in a row where the local market has finished lower, as reporting season ramps up.
Looking at the sectors, it was a mixed bag with six out of 11 finishing in positive territory — academic and educational services (+3.1%), utilities (+0.7%), industrials (+0.6%), financials (+0.3%), energy (+0.1%) and basic materials (+0.1%).
Health care had the biggest loss (-1.5%), followed by technology (-0.9%) and real estate (-0.1%) while consumer cyclicals ended flat.
As for the top five performers:
- Challenger +8.4%
- Beach Energy +6.7%
- Emerald Resources +6.4%
- JB Hi-Fi +5.6%
- West African Resources +4.2%
And the bottom five:
- Strike Energy -25%
- Breville Group -8.5%
- James Hardie Industries -8.5%
- Fletcher Building Limited -6.1%
- Seek -4.5%
Strike Energy in particular suffered the worst intraday percentage fall since January 2005, dropping by as much as 31% during trade — all because its well at South Erregulla in Perth Basin failed to flow.
That's where we'll leave the blog for today, but we'll be back to do it all again tomorrow.
Until then you can catch up on today's developments below, or download the ABC News app and subscribe to our range of news alerts for the latest news.
Load shedding in place after 'significant power system event' in Victoria, AEMO says
By Kate Ainsworth
The Australian Energy Market Operator (or AEMO for short) has just put out a statement regarding this afternoon's outage at AGL's Loy Yang facility.
A spokesperson for AEMO says "a significant power system event" occurred in Victoria this afternoon, noting:
"The Moorabool to Sydenham 500 kilovolt transmission lines tripped, multiple generators disconnected from the grid and some consumers experienced a loss of electricity supply."
While the outage is ongoing, AEMO says it has instructed AusNet Services to enact "load shedding", which it describes as an "absolute last resort" to protect system security and prevent "long-term damage to system infrastructure".
In simpler terms, the Australian Energy Market Commission (AEMC) says controlled load shedding is "where AEMO directs network businesses to interrupt supply to some customers to bring supply and demand back into balance and help avoid a system-wide blackout".
AEMO says it's investigating the cause for the outage.
AGL confirms Loy Yang offline, cause yet to be determined
By Kate Ainsworth
AGL Energy has confirmed that Loy Yang, Victoria's largest coal-fired power station is currently offline.
In a statement, AGL says all four of the units at Loy Yang have been offline since 2:15pm AEDT, and are currently investigating the cause.
Loy Yang generates approximately 30% of Victoria's power requirements, and its outage has sent the wholesale price of electricity soaring on the National Electricity Market (NEM).
It comes as Victoria is experiencing a heatwave, with authorities warning it could create "catastrophic" conditions in the state's west.
James Hardie shares down despite profit increase
By Michael Janda
Another company where market expectations appear to have been disappointed, potentially on a conservative earnings outlook.
Building products maker James Hardie Industries reported a net profit of $US454.6 million for the nine months to December 31, up 6% on the same period a year earlier.
But it is the third biggest loser on the ASX 200 today, slumping 6.66% to $3.945.
Not that the initial analyst notes about its profit numbers portended the likelihood of such a sharp drop.
"Adjusted EBIT of $234MM was slightly above our forecast of $229MM and in line with FactSet consensus of $234MM, while sales were also slightly above our expectations ($978MM vs. RBCe at $966MM), resulting in an adjusted EBIT margin of 23.9% vs. RBCe at 23.7%," wrote RBC Capital Markets analyst Matthew McKellar.
"Margins were somewhat above our expectations in North America, and somewhat below our expectations in Asia Pacific and Europe."
Apologies for the analyst jargon, but the takeaway is that the result was slightly better than McKellar thought and in line with most other analysts.
Lee Power from UBS thought the company's outlook was a bit disappointing, but that it will probably beat it.
"While the 4Q is below our expectations we remain optimistic around upgrades to FY25 given our view the volume outlook is conservative, pricing continues to flow through and JHX's margin sensitivity remains unchanged despite new capacity additions."
Clearly, other analysts and investors are not so upbeat.
Breville the ASX 200's second biggest loser amid revenue drop
By Michael Janda
Appliance maker Breville has been whacked on the market today, with a 10.3% plunge in its share price to $24.50 after it released its half-year results.
While the company's $84 million profit was up 6.7% compared to the same six-month period to December 31 a year earlier, which was roughly in line with analyst forecasts, its revenue was only up 2% to $906 million.
Analysts were typically expecting a 6% rise in total revenue.
The bigger rise in profits was due to a rise in margin from 35.1 to 36.7%, as the company kept its costs down.
In some circumstances, the market might view the ability to grow profit margin positively, but there's clearly a view this isn't a sustainable increase.
"Notwithstanding the slight earnings beat, we believe the market may focus on additional colour around BRG's top-line miss (-6%) which was offset by record gross margins," noted RBC Capital Markets analyst Wei-Weng Chen.
Other analysts pointed to better performing rivals.
"Considering the relatively upbeat trading updates released by key peers De'Longhi and Groupe SEB for their CY23 3rd and 4th Q sales we think the market will be disappointed at the weaker sales trend shown in this result," observed E&P analyst Olivier Coulon.
Disclosure, I have a small holding of Breville shares.
CSL shares whacked again after slight profit miss
By Michael Janda
Perhaps CSL management wanted to spread the pain by releasing disappointing results from a phase III drug trial yesterday, but Australia's biggest biotech is off again today thanks to a profit result that appears to have narrowly missed some expectations.
The headline numbers reported to the ASX were a 17% rise in net profit to $US1,901 million ($2,915 million) based on a 12% increase in revenue to $US8,053 million ($12,348 million).
The company's preferred measure of underlying profit was up 11% to $US2,017 million ($3,092 million).
The analyst reaction? Not too bad.
"CSL reported a 1H24 result with revenue and gross profit coming in line but EBITDA [earnings before interest, tax, depreciation and amortisation] being a slight beat to consensus expectations," wrote Craig Wong-Pan from RBC Capital Markets, who maintains a $279 price target on the stock.
"NPATA [underlying net profit after tax] and NPAT were a slight beat to RBCe and consensus expectations. Management has reaffirmed FY24 constant currency NPATA guidance $[US]2.9-3.0bn."
UBS analyst Laura Sutcliffe has a positive view on the stock.
"We are encouraged by the c.10% sales beat in Ig [immunoglobulin] and the 10% reduction in plasma cost per litre (reduced donor costs, reduced labour costs)," she noted, while adding that the recently acquired Vifor is expected to weigh on the earnings growth from other parts of the company.
CSL is paying an interim dividend of around $1.81 per share.
But investors were expecting better, with CSL shares down 3.3% to $280.80 by 2:09pm AEDT.
Chocolate prices on the rise as cocoa production dips, cost surges
By Michael Janda
I really don't like this story … we've had to put up with rampant inflation in all sorts of products, but now chocolate???
The even worse news is that the price rise isn't even benefitting most of the cocoa farmers in west Africa, it's happening because a lot of them are seeing their crops wiped out or yields fall.
Audrey Courty with this bitter story about sweets.
ASX edges into the red midway through trading day
By Michael Janda
As we near the halfway mark of the trading day, the benchmark ASX 200 index has dipped its toes into the red.
It is down just 2 points to 7,613 — that's 0.03%.
A raft of profit results are driving a lot of the big moves on the market today. I've been sifting the analyst notes and I be posting on the key ones over the next couple of hours, before Kate Ainsworth takes you through to the market close.
The worst performing sector is healthcare, thanks to that near-3% fall for CSL, its second big decline in the past couple of days.
Tech is also down, with employment website Seek the biggest drag there.
Meanwhile, JB Hi-Fi has kept climbing up the leader board with a 5.4% rise to a fresh record price of $63.85 — that's after big gains yesterday on reporting a 20% fall in profit. Market expectations must have been very low.
Investment manager Challenger is today's top performer on the ASX 200 after what UBS analysts described as a "modest earnings and dividend beat" driven by improved profit margins. Its shares were up 7.1% to $7.05.
Let's talk about tax
By Michael Janda
I enjoyed Daniels report on stage 3 tax cuts and how our population isn't getting younger but older can you maybe expand on that story please
- Rob
We hear you Rob, lot's more from the team planned around tax, including further analysis on reform options.
I hear some other ABC teams also have some good tax stories coming up, which we'll repost in this blog.
As for Dan's story, it was a cracker wasn't it? If anyone missed it yesterday, this is what Rob is talking about.
Business confidence edges up even as conditions deteriorate
By Michael Janda
Manufacturing and construction drove a slight uptick in business confidence last month to +1, from 0 in December and -8 in November.
But confidence fell further in wholesale and retail as consumers kept their wallets shut in response to higher interest rates, taxes and consumer prices.
While confidence has trended up over recent months, trading conditions have worsened to fall just below the long-run average.
Conditions fell from +8 in December to +6 in January, with declines across all the major components — trading, profitability and employment.
"Both profitability and trading conditions are now below average with conditions supported somewhat by still above-average employment conditions," NAB's chief economist Alan Oster noted.
"The easing in conditions in January was led by a pull-back in the services sectors though conditions in retail also remain weak."
Forward orders improved to -1, but is still negative, pointing to further weakness ahead, especially in the retail sector (where they were -19).
Labour costs and purchase costs for inputs were at similar levels to December, and down on November, but product and retail prices were generally up in January compared to December, although retail price growth was half of the quarterly rate reported in November.
"Price pressures remain solid despite the ongoing easing in activity measures," noted Oster.
"However, they typically lag activity in the economy and we expect an ongoing easing in price pressures across the economy in early 2024. The survey will provide a key early read on how things are tracking in both the retail and services sectors."
Consumer sentiment surges to 20-month high despite RBA rate warning dampening gains
By Michael Janda
The long running and widely-watched Westpac-Melbourne Institute Consumer Sentiment Index jumped 6.2% in February to 86 points.
While still below the 100-point level where optimists equal pessimists, Westpac's senior economist Matthew Hassan says it's the strongest result in 20 months, and the biggest monthly gain since the RBA briefly paused its interest rate hikes in April 2023.
However, Hassan notes that sentiment is fragile and the gains could well disappear next month after the RBA took a 'hawkish' tone following its latest meeting last Tuesday, warning further rate rises could not be ruled out.
"Responses over the survey week show a sharp turnaround midweek, following the announcement of the RBA Board's February policy decision," he observed.
"Those surveyed prior to the decision recorded a sentiment index read of 94.1. Those surveyed post the decision recorded a sentiment read of just 80.
"The 15% swing is on a par with some of the biggest pre and post-RBA deteriorations seen when the bank was still actively raising interest rates in mid-2023."
Time to buy a major household item jumped 11.3% to 86.8, although this is way off its historical average of 124.7 points.
The economic outlook over the next 12 months sub-index also rose a strong 8.8% to 88.9, the highest reading since the Labor government's election in May 2022.
The government's change to the stage 3 tax cuts appears to have been reasonably well understood by survey respondents.
"Overall, the 'finances, next 12 months' sub-index only posted a fairly muted 2.4% rise to 95.3," Hassan noted.
"However, the sub-group detail suggests the mixed result was due to differing reactions to recently announced changes to the Stage 3 tax cuts.
"It shows solid gains amongst consumers in middle income bands that will now see tax relief, contrasted with declines amongst consumers in higher income bands that are set to see smaller gains than had previously been planned."
Jobs, employment higher than if COVID didn't happen: report
By Daniel Ziffer
Hi team, jumping in with the latest snapshot from probably Australia's top labour economist Jeff Borland.
(And we're talking about the concept of work, not the Labor [no 'u'] political party).
So the actual employment/ population rate compared to a forecast, based again on a 5-year trend prior to COVID, is higher.
This is quite astonishing because while a pandemic was a potentially foreseeable event, the timing and circumstances of COVID were not. There was immense dislocation from workplaces, whole sectors went idle... immense disruption.
As Pr. Borland puts it:
"In 2023, the employment/ population rate remained consistently above trend, on average by 0.5ppt. During this time, population growth via migration may have sustained a high rate of employment growth by relaxing the labour supply constraint".
We do have more people (a lot of the additions are cute babies, but a lot are also workers who've migrated here).
Population fell below trend growth when COVID hit and we closed our borders and sent migrants home.
"The biggest gap of 413,000 persons was reached in December 2021. After that though, it’s all been rapid growth"
The actual population overtook the (pre-COVID) trend in August 2023 and by December 2023, population was above trend by 100,000 people.
ASX climbs as banks lead, JB Hi-Fi rally rolls on
By Michael Janda
The Australian share market is posting early gains, led by the financial sector.
The ASX 200 was up 0.1% to 7,625 points shortly before 11:00am AEDT.
The financials sub-index was up 0.8%, trailing only education (which is essentially just IDP Education), which was up 3.7%.
The big banks had gains ranging from 0.7% (Westpac) to 1.4% (ANZ), while Macquarie lost 1.6% on a trading update.
Utilities, industrials and consumer non-cyclicals were also posting solid gains.
JB Hi-Fi was making further gains today after a big rally yesterday, despite reporting a 20% drop in its half-year profit.
It was up 2.6% to $62.16, a record high.
Healthcare was the market's biggest drag, with another steep fall for sector heavyweight CSL, off 4% to $278.70, continuing yesterday's slide after a disappointing drug trial.
Breville (-10%), Seek (-8.6%) and James Hardie (-5.1%) also fell heavily after releasing their latest profit results.
Market snapshot
By David Chau
- ASX 200: -0.1% to 7,610 points
- Australian dollar: flat at 65.27 US cents
- Wall Street: Dow Jones +0.3%, S&P 500 -0.1%, Nasdaq -0.4%
- Europe: FTSE (flat), DAX +0.7%, Stoxx 600 +0.5%
- Spot gold: -0.3% at $US2,019/ounce
- Brent crude: -0.1% to $US82.08/barrel
- Iron ore: +1.2% to $US128.10/tonne
- Bitcoin: +4.3% to $US49,565
Figures updated at 10:15am AEDT
Live figures below:
Negative gearing the new (old) front in tax debate
By Michael Janda
That has thrust negative gearing back into the spotlight of tax and economic debate.
Some experts say negative gearing has little impact on home prices and the more urgent area of reform is reducing planning restrictions on property developers so that more homes can be built more quickly to boost supply.
Others argue negative gearing and other policies that effectively subsidise property purchase and investment are boosting demand and the prices that buyers are willing and able to pay.
Rachel Mealey took a (necessarily) brief look at both sides of the debate in her AM story this morning.
What's in store for car prices? The Business interviews CAR Group's CEO
By David Chau
Cameron McIntyre, chief executive of CAR Group, says the local car market is holding up well despite higher interest rates.
He says the fuel efficiency standards will drive up car prices and demand for electric vehicles will grow.
For more, you can listen to his full interview with The Business host Kirsten Aiken here:
Alan Kohler's report on yesterday's share market losses
By David Chau
Despite its recent falls, the Australian share market is still trading near record-high levels.
When the trading day begins (in just over half an hour), the ASX is likely to recover from yesterday's slight losses — despite a mixed performance on Wall Street overnight.
For a recap of what happened yesterday on the local share market, here's Alan Kohler's finance report:
Productivity slump likely to fix itself: RBA
By Michael Janda
There's been a lot of hand-wringing about Australia's recent plunge in productivity.
Combined with a recent pick-up in wages (although pay packets have only just started to eclipse inflation over the past couple of quarters), this has pushed up "unit labour costs" — how much in wages employers have to pay out for a given amount of output.
High and rising unit labour costs are one of the Reserve Bank's biggest fears, as it would likely entrench high inflation over the longer term.
But the RBA's head of economic analysis Marion Kohler doesn't seem too concerned about the outlook for productivity.
"While it is difficult to forecast productivity growth, much of the recent weakness in productivity has likely been a by-product of the pandemic and the economic cycle and so can be expected to unwind over the next few years," she told the Australian Business Economists annual forecasting conference.
"Examples of these temporary factors are the capacity challenges faced by firms related to pandemic or weather disruptions, capital shallowing (as the increase in hours worked outpaced growth in the capital stock) and additional employee training required given the high turnover and jobs growth we've seen in a very tight labour market.
"As these influences fade or indeed unwind, productivity growth should pick up in the period ahead."
When you think about it, this all makes perfect sense.
When borders closed and the labour market tightened, a lot of local workers were pulled into roles they'd never done before and had to get up to speed.
And, again, since borders reopened, a lot of international students and backpackers are coming into the labour force, doing jobs they've never done before — if they've worked before at all.
On top of that, pandemic supply constraints meant many businesses couldn't get the equipment they needed to help their workers be more productive.
All those factors are temporary as long as we don't have further upheavals in labour and equipment supply.
Why experts say Australia's tax system is broken
By David Chau
Changes to the stage 3 tax cuts have ignited debate about broader reform to Australia's tax system.
Experts are warning that we rely too much on taxing employees' wages, and that we should be targeting wealth and assets instead.
For more, here's the latest story from Daniel Ziffer:
ABC/Reuters