The ASX finished more than a per cent lower after the mining sector was crunched on weaker commodity prices.
This was the day's financial news and insights from our specialist business reporters.
Disclaimer: this blog is not intended as investment advice.
Key events
Live updates
Market snapshot at 4:50pm AEDT
By Michael Janda
ASX 200: -1.1% at 7,225 points
All Ords: -1.2% to 7,420 points
Australian dollar: -0.3% to 67.05 US cents
Nikkei: -0.1% to 27,416 points
Hang Seng: -0.6% to 19,889 points
Shanghai: -0.3% to 3,256 points
Dow Jones (Friday close): -1% to 32,817 points
S&P 500 (Friday close): -1.1% to 3,970 points
Nasdaq (Friday close): -1.7% to 11,395 points
FTSE (Friday close): -0.4% to 7,879 points
EuroStoxx 600 (Friday close): -1% to 458 points
Brent crude: -0.6% to $US82.66/barrel
Spot gold: -0.1% to $US1,809/ounce
Iron ore: -4.6% to $US123.90/tonne
Bitcoin: +1.2% to $US23,402
ASX sheds more than 1 per cent on growing interest rate fears
By Michael Janda
The ASX 200 index has closed more than 1 per cent lower, with the resources sector leading the fall.
The benchmark ASX 200 index finished down 1.1 per cent at 7,225 points, while the broader All Ordinaries closed at 7,420, a loss of 1.2 per cent.
Every sector on the market finished in the red, with 163 of the top 200 companies losing ground, but it was the mining sector that posted the biggest slump.
Basic materials dropped 3.1 per cent, not helped by a 7.3 per cent plunge for Fortescue Metals Group as it traded without rights to its latest 75-cent dividend.
However, BHP Billiton (-3 per cent) and Rio Tinto (-2.9 per cent) were also hit amid wobbles in the iron ore price.
The two biggest losers on the market were victims of disappointing profit results and trading updates.
Five biggest losses:
- Downer EDI: -23.7% to $3.02
- InvoCare: -10.9% to $9.86
- Pilbara Minerals: -7.3% to $4.20
- Fortescue Metals: -7.3% to $20.81
- Imugene: -7.1% to $0.13
Five biggest gains:
- TPG Telecom: +5.9% to $5.00
- Computershare: +2.5% to $24.99
- Amcor: +2.2% to $16.92
- Qantas: +2% to $6.28
- Virgin Money: +$3.15
And that's me done for today. Steph Chalmers will be in the chair tomorrow to guide you through another day of market action.
It'll be interesting to see what US markets get up to tonight after a weekend of reflection on an economy that's stubbornly defying high interest rates. S&P 500 futures were pretty flat, but it's a long time until trade starts on the main market.
ABS data shows wages climbing, but profits surging
By Michael Janda
The Australian Bureau of Statistics put out its latest Business Indicators report for the December quarter of 2022 today.
It confirmed that wages were growing reasonably strongly in the final few months of last year — 2.6 per cent — but that is a broad measure that also captures increased employment, more hours worked and any promotions or changes in the jobs people are doing (i.e. promotions).
At the same time, profits jumped 10.6 per cent, which means that the share of national income going to corporations will likely climb again when the December quarter National Accounts (GDP data) are released on Wednesday.
My colleague David Taylor has had a look at today's numbers for ABC News Online and for tonight's episode of The Drum.
InvoCare posts loss despite jump in funerals
By Michael Janda
A surge in deaths has not been enough to keep InvoCare in profit, with mounting costs and investment losses dragging down the funeral operator's profit.
The ASX-listed funeral director lost $1.8 million across 2022, down $82 million from the previous year.
The company said its pre-tax operating earnings were up 9 per cent to $84.6 million, however share market falls forced the company to write-down the value of the portfolio where it parks money received for pre-paid funerals, resulting in the net loss.
InvoCare said funeral volumes were up 8 per cent (7 per cent in Australia), due to excess deaths of up to 20 per cent in some months, notably January, June, July and August, as COVID cases and then the flu peaked.
"With a growing and ageing population, the long-term fundamentals of our business remain positive," said CEO Oliver Chretien.
One problem faced by the funeral operator was staff shortages during the periods of excess deaths, which corresponded to waves of COVID and flu in the general community.
InvoCare said these labour constraints and the "frictional cost of servicing excessive demand" put pressure on profit margins in some areas of the business.
Another COVID hit for the business was a fall in pre-paid funeral sales, which the company said "relies heavily on our team's ability to speak directly to customers in locations such as aged care homes". It also said an "increased mortality rate has resulted in higher redemptions".
Wet weather was also a handicap to earnings by preventing and delaying construction of memorials.
InvoCare said it is continuing to grow its pet cremations business strongly, with a 14 per cent rise and close to 100,000 animals cremated last year.
The company experienced one of the biggest losses on the market, down 10.6 per cent to $9.89.
Kogan doubles loss but shares jump on claims of 'ruthless efficiency'
By Michael Janda
Online electronics retailer Kogan has doubled its half-year loss to $23.8 million, but told investors it returned to underlying profitability in January.
The company said its gross profit dived 41.8 per cent because of "unprecedented discounting" needed to shift excess inventory.
Kogan said inventory dropped from $159.9 million at the end of June last year to $98.3 million by December 31.
However, it also saw gross sales fall by a third to $471.1 million having lost the benefit of COVID lock-down inspired sales the year before.
"We're pleased to be emerging from a turbulent few years," said the company's founder and CEO Ruslan Kogan.
"The ship has steadied, we have a renewed focus on the ruthless efficiency that's underpinned our entire existence, and we have doubled down on delivering great value for customers."
RBC Capital Markets analyst Wei-Weng Chen said a lot of detail in the result had been flagged in market updates beforehand.
"Inventory levels are back to around the pre-COVID prior corresponding period with management noting that excess stock has been substantially cleared — paving the way to stronger gross margins in 2H23.
"A key negative from today's result was KGN's escalating equity based compensation which is rising both as a % of sales and of overall people costs. A key outcome of higher equity based compensation is that a higher proportion of costs are taken out of Adjusted earnings."
Kogan shares were up 5 per cent to $3.59 by 1:36pm AEDT.
Market snapshot at 12:30pm AEDT
By Michael Janda
ASX 200: -1.1% at 7,224 points
All Ords: -1.2% to 7,421 points
Australian dollar: +0.2% to 67.35 US cents
Nikkei: -0.3% to 27,369 points
Dow Jones (Friday close): -1% to 32,817 points
S&P 500 (Friday close): -1.1% to 3,970 points
Nasdaq (Friday close): -1.7% to 11,395 points
FTSE (Friday close): -0.4% to 7,879 points
EuroStoxx 600 (Friday close): -1% to 458 points
Brent crude: -0.2% to $US83.02/barrel
Spot gold: +0.1% to $US1,813/ounce
Iron ore: -4.6% to $US123.90/tonne
Bitcoin: +1.5% to $US23,470
ASX losses intensify as trading session continues
By Michael Janda
After initial losses of less than 1 per cent shortly after the open, the ASX 200 is now down 1.2 per cent at 7,222 points (12:19pm AEDT).
The broader All Ords, which includes smaller firms, is slightly worse, off 1.3 per cent to 7,419 points.
All sectors, and 161 of the top 200 companies, are lower.
The biggest losses have been in mining, where iron ore giants BHP (-2.8%), Rio Tinto (-2.4%) and Fortescue (-5.9%) have been a major drag, after the price of that commodity dropped sharply at the end of last week.
Five biggest losers:
- Downer EDI: -20.2% to $3.16
- InvoCare: -8.3% to $10.13
- Sandfire Resources: -7.2% to $5.775
- Imugene: -7.1% to 13 cents
- Mineral Resources: -6.7% to $79.27
Five biggest winners:
- TPG Telecom: +4.8% to $4.945
- Computershare: +2.5% to $25
- Virgin Money: +2.4% to $3.175
- Amcor: +1.8% to $16.85
- Orica: +1.8% to $16.18
Downer EDI lives up to its name with a share price slump on results
By Michael Janda
Engineering firm Downer EDI is the worst performing stock on the ASX 200 today, after releasing both its latest profit results and an investigation into previous misreporting of its earnings.
The company reported a half-year net profit after tax of $68.1 million, down more than 20 per cent from the same period a year before.
If that wasn't bad enough, it also confirmed that post-tax earnings were overstated by a total of $22.2 million over the previous three financial years.
The overstatement was $1.7 million in financial year (FY) 2020, $8.8 million in FY 2021 and $11.7 million in FY 2022.
The misstatements resulted from a contract with a "long-term power utilities customer" for the "supply of maintenance, new connections, faults and capital works services".
It seems that the way revenue and costs were being reported were misaligned, leading Downer to think it was making money on the work under the contract, when it was in fact bleeding losses.
Downer revealed that it made an after-tax loss of $12 million under the contract over the last six months of 2022.
The company says it has agreed a commercial reset of the contract with the customer and made operational improvements, these changes indicate the contract is not onerous.
It also noted "the utilities management team responsible for the contract has been replaced" and that new measures have been put in place to try and prevent similar issues arising again.
Downer said, aside from loses from that contract, it suffered from wet weather disrupting work, labour shortages and weak productivity.
The company is paying investors a 5 cent per share interim dividend, down from 12 cents for the same period last year.
Downer shares had slumped 17.4 per cent to $3.27 by midday AEDT.
Woodside trebles profit on BHP petroleum merger, surging energy prices
By Michael Janda
Perth-based oil and gas producer Woodside has more than trebled its full-year profit to $US6.5 billion ($9.7 billion) after taking over BHP's petroleum business.
The company's preferred measure of underlying profit had a similar gain to $US5.23 billion ($7.8 billion).
The company's revenue was up 142 per cent to $US16.8 billion ($25 billion), with sales of 168.9 million barrels of oil equivalent, and a realised price of $US98.4 per barrel of oil equivalent.
The company's unit production cost was just $US8.1 per barrel of oil equivalent.
The company's chief executive Meg O'Neil said the prices received for its oil and gas had risen an average of 63 per cent last year which, along with the merger of BHP's petroleum business, had underpinned the result.
"Woodside is now a larger, geographically diverse energy company with the financial and operational strength to grow our portfolio of higher-quality assets while continuing to deliver returns to shareholders," she noted.
The company is paying out a final dividend of 144 US cents (214 cents) per share, fully-franked.
RBC Capital Markets analyst Gordon Ramsay agrees it's a strong result.
"Woodside's 2022 result has highlighted the operational and financial strength of the newly incorporated BHP assets," he wrote.
"Overall, Woodside has attractive 2023 production growth driven by the integration of the new BHP assets, high level of LNG exposure with hub pricing, strong balance sheet (very low gearing), and dividend (80% of underlying NPAT). We like the pure oil exposure Woodside has from high equity in the Sangomar field (now 82%) plus Mad Dog Phase 2 and Trion add further high margin GOM oil production."
Investors were lukewarm though, with Woodside shares down 0.3 per cent to $34.49 by 11:22am AEDT.
Winners and losers
By Michael Janda
With the market in a negative mood overall, today wasn't a good one for breaking bad news or disappointing with a profit result.
Five biggest losers:
- Downer EDI -13.1% to $3.44
- Invocare: -7.8% to $10.20
- Sandfire Resources: -6.9% to $5.79
- Fortescue: -5.7% to $21.17
- Imugene: -5.4% to $0.1325
Five biggest winners:
- Virgin Money: +3.2% to $3.20
- New Hope: +3% to $5.54
- TPG Telecom: +2.8% to $4.85
- Whitehaven Coal: +2.1% to $7.45
- Adbri: +2% to $1.8775
Australian coal miners benefitting from resumed China trade
By Michael Janda
CBA commodity analyst Vivek Dhar with an update on the Australia-China coal trade situation:
"Ship tracking data shows that Australia's coal exports to China resumed in February. Shipments have lifted to 0.8-0.9Mt in the week ending 17 February 2023. That is the highest weekly level, and the first time that shipments have been recorded for four consecutive weeks, since October 2020. China's unofficial ban on Australian coal began in Q4 [fourth quarter] 2020 as Sino-Australian tensions heated up. Tensions have since eased under the Federal Labor government which was elected in May 2022.
"China and Australia's trade ministers met virtually on 6 February 2023. It was the first such meeting since 2019. Australia's trade minister, Don Farrell, said his Chinese counterpart told him that 'the freeze is over and we're now moving to a warm spring.'
"A number of coal miners, including New Hope and Coronado, have confirmed they have received inquiries from China for imports. To be clear, Australia's coal shipments to China still remain well below levels before China's unofficial ban went into effect. In 2019 and the first nine months of 2020, Australia's coal shipments to China averaged 1.7 1.8Mt/week. This was a step higher than the 1.5 1.6Mt/week exported in 2017 and 2018.
"We expect Australia's coal exports to China to lift, but think it is unlikely to settle back at levels before China's unofficial ban came into effect."
New Hope Corporation is one of today's biggest gainers (+3.1% to $5.545) along with Whitehaven Coal (+2.6% to $7.49).
Market snapshot at 10:20am AEDT
By Michael Janda
ASX 200: -0.8% at 7,248 points
All Ords: -0.9% to 7,444 points
Australian dollar: +0.2% to 67.35 US cents
Dow Jones (Friday close): -1% to 32,817 points
S&P 500 (Friday close): -1.1% to 3,970 points
Nasdaq (Friday close): -1.7% to 11,395 points
FTSE (Friday close): -0.4% to 7,879 points
EuroStoxx 600 (Friday close): -1% to 458 points
Brent crude: +0.2% to $US83.36/barrel
Spot gold: +0.1% to $US1,811/ounce
Iron ore: -4.6% to $US123.90/tonne
Bitcoin: +1.7% to $US23,518
ASX down close to 1 per cent on Wall Street slide
By Michael Janda
The prospect of higher interest rates in the US means the possibility of higher interest rates here too.
And that's seen local stocks follow Wall Street's negative lead from Friday.
The benchmark ASX 200 index was down 0.8 per cent to 7,250 points within the first 15 minutes of trade, while the broader All Ordinaries index was off 0.9 per cent to 7,445.
Energy was the only sector on the market rising, following a positive profit result from Woodside, which was up 2.3 per cent (more in that in a little while), while mining stocks were the worst hit.
The index was overwhelmingly negative, with 167 companies out of the top 200 in the red and only 27 trading higher.
There's $16 billion of unclaimed money sitting with the ATO, do you own a share?
By Michael Janda
The Australian Taxation Office (ATO) is reminding people to log in to myGov to check for lost superannuation.
The agency says it is holding $16 billion in lost and unclaimed superannuation, which has grown by $2.1 billion just in the past year.
In addition to the billions held by the ATO, it says super funds hold $10.4 billion in lost super.
Super becomes 'lost' when it is still held by the fund but the member is uncontactable or the account is inactive.
"All lost member accounts with balances of $6,000 or less are transferred to the ATO, which means there are large sums of money waiting for people to claim," said ATO deputy commissioner Emma Rosenzweig.
The ATO also holds unclaimed super for members who are 65 years or older and for temporary residents who have left Australia for six months or more.
"People often lose contact with their super funds when they change jobs, move house, or simply forget to update their details," added Ms Rosenzweig
"This doesn't mean your super is lost forever – far from it. By accessing ATO online services through myGov, you can easily find your lost or unclaimed super."
Emma Rosenzweig spoke to the ABC's senior business correspondent Peter Ryan, and you can listen below.
US inflation, consumer spending remains hot and the Fed is likely to raise rates more
By Michael Janda
Just when the markets thought it might be safe to speculate on an interest rate peak…
US data out on Friday showed real personal spending up 1.1 per cent month-on-month in January, which was the strongest month since April 2021, when a range of government payments were made.
That spending growth was even bigger when price rises were taken into account — prices jumped a stronger-than-expected 0.6 per cent for the quarter.
That meant annual headline inflation of 5.4 per cent, while the number excluding food and energy was 4.7 per cent.
NAB's Rodrigo Catril said the annual increase was 0.4 of a percentage point above market expectations.
"The reality is that the US economy has started 2023 from a stronger position that many of us had expected and, when we look at the Fed's new preferred inflation reading that tries to exclude much of the noise in the data, the story doesn't change," he wrote.
"The PCE services ex-energy, rose 0.58%, the biggest increase since November 2021, service inflation is sticky and there is no clear evidence of a nascent downtrend. Thus, the conclusion must be that the US economy is running hot and there is a need/urgency for the Fed to do more.
"Unsurprisingly, reaction to the US data triggered an uptick in Fed rate hikes expectations over coming months. Cumulatively the market now sees 82bps [basis points] of hikes priced over coming months, suggesting three full 25bps hikes and a chance of a fourth, early in the second half. The Fed terminal rate is now seen at 5.40% with rate cut expectations by December 2023 reduced to 12bps to a funds rate of 5.28%."
Rising rates are kryptonite to tech stocks, with the Nasdaq off 1.7 per cent. The less speculative S&P 500 and Dow Jones Industrial Average were off just above 1 per cent.
The Australian dollar also got hit, dropping to 67.3 US cents, while the ASX SPI 200 futures dropped 0.7 per cent to 7,198 points.
Good morning, welcome to another week
By Michael Janda
Another week, more profit results and further evidence that rising interest rates have yet to sink the world's biggest economy (or inflation).
Later this week, Australia will also get its latest economic update when the December quarter National Accounts are released on Wednesday.
It's a look in the rear view mirror, but the detail is always interesting.
Follow the blog today and throughout the week to keep up to date.
