The ASX 200 (ASX: XJO) is heading towards another negative open on Friday as the US tech sell-off continued overnight. Here’s what’s making headlines.
ASX down as dividends rule the day, Myer share price smashed
The S&P/ASX 200 fell another 0.8% on Thursday, dragged down by a flurry of major companies paying out dividends. The likes of BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL) and Rio Tinto Limited (ASX: RIO) fell 3.1%, 4.2% and 6.2%, respectively, as they paid out billions of dollar in dividends to income-starved investors.
Financials and real estate were the only sectors to finish higher, up 1.1% and 0.6%, with both potential beneficiaries of the much talked about ‘bond rate’ increases – the banks via their ability to charge higher interest rates, and property potentially through inflation-linked rental payments.
Retail sales saw a modest improvement on December figures, growing 0.5%, which must be seen as a positive given the strength of that month’s results.
Myer Holdings Ltd (ASX: MYR) has been unable to benefit from the recovery, however, falling 10.6% despite reporting half-year results and announcing an 8.4% increase in underlying or operating profit to $42.9 million. The company benefitted from some $67 million in rent waivers and JobKeeper subsidies, but the dividend remains on hold due to strict banking covenants.
Sticking with ASX reporting season, I recently sat down with Rask Australia founder and analyst Owen Raszkiewicz to talk about the best and worst stock reports from February. You can watch the video below or subscribe for episodes of The Australian Investors Podcast – it’s Australia’s premier investing podcast, it’s regular and it’s free.
Cleanaway on the hunt, Xero makes its largest deal yet
Cleanaway Waste Management Ltd (ASX: CWY), a company in which I hold shares, jumped 4.0% after responding to rumours in The Australian Financial Review that it was seeking to purchase major competitor Suez’s domestic operations. The deal was said to be in the vicinity of $2 billion, half of the current value of Cleanaway. The Australian Competition and Consumer Commission responded quickly, suggesting any deal would be subject to a full inquiry on competition concerns.
Cloud accounting software firm Xero Limited (ASX: XRO) announced its largest acquisition on record, buying Planday for $241.6 million; shares fell 2.6% on the news. Planday is a workforce management platform that already partners with Xero but assists in scheduling and employee ‘punch cards’. Xero is clearly seeking to expand its product offering for small businesses around the world. The purchase will be funded 55% from cash and 45% from new equity being issued.
The key driver behind the strength of the AUD remains on track, with a $10.1 billion trade surplus in January driven by a 6% increase in exports. However, with IGO Ltd (ASX: IGO) falling 7.9% after a rebound in nickel supply hit prices, the saying that ‘the solution to high prices is high prices’ remains apt.
US sell off hits 10%, Federal Reserve fails to settle markets
The market sell-off hit 10% overnight, with all three US benchmarks falling as 10-year yields exceeded 1.5% once again. This time the Federal Reserve didn’t offer explicit support to the market, indicating only that they would be ‘concerned’ with disorderly markets, but not outlining any further action.
The Nasdaq continues to feel the brunt of the sell-off, down 2.1% as investors move away from big tech names, with COVID-winners remaining among the biggest losers, PayPal (NASDAQ: PYPL) falling 7.0%.
The Dow Jones and S&P 500 fell 1.1% and 1.3%, respectively, despite a rally in the oil price following further OPEC production cuts, meaning the ASX will open weaker to finish the week.
Machine learning and big data company Splunk (NYSE: SPLK) fell 2.6% despite reporting just a 6% fall in revenue on the back of an 83% increase in cloud-based revenue.