ASX to open lower ANZ doubles dividend as profits boom
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Tradie platform Hipages has managed to grow revenues by 14 per cent for the quarter despite COVID lockdowns stalling many jobs in the industry.
The News Corp-backed startup reported a 10 per cent jump in tradespeople on the platform in the three months to September, while recurring revenue increased to $14.2 million. The business said its sponsorship of Nine’s TV show The Block helped cement its brand. Nine is the owner of this masthead.
Hipages is cashflow positive and has $28.4 million in cash at the bank.
“Despite the short-term headwinds from COVID-19, hipages is confident that the strong bounce back it has experienced will continue,†the company said.
Shares closed up 1.4 per cent on Wednesday to $3.65.
ANZ Bank chief executive Shayne Elliott has said the bank’s full-year profits were hampered by slow mortgage processing times, despite posting a 65 per cent jump in cash profits to $6.2 billion.
The big four bank declared shareholders would receive a full-year dividend of $1.42, more than double the 60¢ it paid out last year, which Mr Elliott said reflected the benefits of the diversified nature of the business.
ANZ chief executive says the full-year results show the benefits of the diversified business. Credit: Arsineh Houspian
A key driver of the bank’s headline profits was a $567 million reduction in the provision for bad loans, caused an improved economic outlook aided by ongoing government and bank support packages from COVID-19.
Mr Elliott said the bank’s retail and commercial arm grew lending and customer deposits during the year ending September 30 and delivered “good margin performance across the divisionâ€, but he pointed to problems in mortgages.
“Home loan revenue growth was in the low double digits. However, second-half volumes were impacted by a competitive refinancing market, customers paying down their loans faster and processing issues,†Mr Elliott said.
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RATINGS CHANGES
Lingering disruption to international supply chains caused by the pandemic, strong demand for goods and soaring energy prices have combined to push consumer prices sharply higher in many nations.
Some prominent economists have even drawn comparisons to the 1970s when economies were plagued by stagflation â€" the ugly combination of high inflation and weak growth.
So far inflationary pressures in Australia have been more moderate than in other advanced economies.
But Bureau of Statistics figures released on Wednesday showed a broad-based uptick in prices. A key measure of underlying inflation (which accounts for temporary volatility) reached a six-year high of 2.1 per cent in the year to September. The annual headline rate was 3 per cent, which is at the top of the Reserve Bank’s inflation target.
Consumer fears of rising inflation were confirmed by the numbers released today. Credit:Kathleen Adele
Australians are beginning to anticipate higher living costs. Each week an ANZ-Roy Morgan survey asks a representative sample of consumers how they expect prices to change in the coming two years. The latest poll showed the average expectation was for a rise of 5 per cent, the highest in more than six years. A recent spike in fuel costs was a likely driver of the higher price expectations. Australia’s average unleaded petrol price reached a record high of 169.5 cents a litre last week according to the stockbroker CommSec.
Recent public statements by the Reserve Bank suggest it is not yet convinced the current inflationary pressures will persist. Minutes of the bank’s September board meeting said, “most central banks in advanced economies had continued to characterise pandemic-related price increases as either temporary or one-off price level changes that would have only a transitory effect on inflationâ€.
Inflation data is still being distorted by the disruptions of the pandemic, complicating the outlook for prices. It may be many months before the picture becomes clearer.
For much of the past decade the Reserve Bank tolerated an inflation rate well below its target band of between 2 and 3 per cent. That period was also marked by very low wages growth.
In the years before the pandemic the RBA was one of many central banks trying to engineer a move to higher inflation and stronger wages growth â€" the very thing that now seems to be happening.
That suggests the Reserve would tolerate inflation being somewhat above its target band for a period if that helped to drive down the unemployment rate and put upward pressure on wages growth.
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Stocks wobbled in afternoon trading on Wall Street on Wednesday (US time), a day after the S&P 500 and the Dow Jones Industrial Average set their latest record highs.
In late trade, the S&P 500 is down 0.3 per cent, the Dow Jones has slipped by 0.5 per cent and the Nasdaq is 0.3 per cent higher. The Australian sharemarket is set to slip, with futures at 6.25am AEDT pointing to a fall of 22 points, or 0.3 per cent, at the open.
Tech giants have helped prop up Wall Street on Wednesday. Credit:Bloomberg
The S&P 500 had more losers than gainers, but several big technology and communications companies gained ground and helped counter losses elsewhere. Microsoft rose 4.5 per cent after reporting a 24 per cent surge in profits last quarter as its cloud computing business bounded ahead. Chipmaker Advanced Micro Devices rose 0.5 per cent after reporting encouraging earnings.
Google’s parent company, Alphabet, rose 5.9 per cent, within striking distance of an all-time high, as a continued rebound in digital ad spending bolstered surprisingly good financial results.
A mix of companies that rely on direct consumer spending also gained ground. Domino’s Pizza rose 3.4 per cent.
Bond yields fell significantly and weighed down banks, which rely on higher yields to charge more lucrative interest on loans. The yield on the 10-year Treasury fell to 1.53 per cent from 1.61 per cent late Tuesday. JPMorgan Chase fell 1.8 per cent.
US crude oil prices fell 2 per cent and pushed energy stocks lower. Exxon Mobil fell 2.2 per cent.
Investors are busy reviewing the latest round of earnings from a variety of well-known companies. McDonalds rose 2.6 per cent after reporting solid financial results as an easing of business restrictions helped sales growth. Coca-Cola rose 1.7 per cent as sales grew along with the reopening of many venues and businesses over the summer.
General Motors fell 3.7 per cent after reporting mixed financial results as the broader auto industry continues to face production problems because of a chip shortage. Rival Ford will report its results later Wednesday.
“After some strong days, markets are taking a breather,†said Kristina Hooper, chief global market strategist at Invesco. “They’re certainly digesting earnings.â€
The steady flow of corporate report cards will continue Thursday with industrial bellwether Caterpillar and technology giant Apple. Amazon and Starbucks will also report their results on Thursday.
Outside of earnings, investors are also awaiting the latest update on US economic growth when the Commerce Department releases its report on third-quarter gross domestic product on Thursday.
Rising inflation remains a key concern for investors as they monitor earnings and the impact from supply chain problems and higher prices on businesses and consumers. Investors are also looking ahead to the Federal Reserve’s meeting next week to see how it moves forward with plans to trim bond purchases and its position on interest rates.
The central bank has maintained that inflation will prove to be “transitory†and tied to the economic recovery, though it has been more persistent than initially anticipated.
“Investors are coming to the realisation that transitory could be significantly longer,†Hooper said.
Markets in Asia closed lower as a Chinese newspaper warned that more real estate developers are likely to default on bonds. Investors are watching whether one of the biggest developers, Evergrande Group, can avoid a default on 2 trillion yuan ($420 billion) of debt.
European markets were mostly lower.
AP
ASX futures down 40 points or 0.5% to 7380 at 6.59am AEDT
Hello and welcome to today’s Markets Live.
Your editors today are Emma Koehn and Colin Kruger.
Today’s agenda includes quarterly reports from Fortescue, and Newcrest Mining as well as Boral and JB Hifi’s shareholder meetings.
This blog is not intended as financial advice.
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