Australian shares on track for third day of gains

Derek Rose | August 24, 2023

The local share market was on track for its third day of gains at midday, with tech stocks posting solid gains after AI chipmaker Nvidia overnight smashed quarterly earnings expectations.

At noon AEST on Thursday, the benchmark S&P/ASX200 index was up 17.2 points, or 0.24 per cent, to 7,165.5, while the broader All Ordinaries was up 14.1 points, or 0.19 per cent, to 7,381.7.

The gains came ahead of US Federal Reserve chairman Jerome Powell’s speech about structural shifts in the global economy, to be delivered on Friday at the Jackson Hole summit of central bankers.

GSFM investment strategist Stephen Miller said that as always, the Fed chairman’s speech would be “keenly parsed for clues” regarding the central bank’s thinking about the economy in general and inflation in particular.

After the US markets closed on Wednesday, Nvidia announced $US13.5 billion in June quarter sales and forecast $US16 billion for the current quarter, with both numbers far exceeding analysts’ predictions.   

“Nvidia becomes a new Wall Street legend with a jaw-dropping earnings beat,” said CMC Markets APAC and Canada analyst Tina Teng.

The ASX’s tech sector was its biggest gainer at midday, up 2.9 per cent.

AI dataset company Appen had grown 6.7 per cent while AI chip companies Brainchip and Weebit Nano were up 3.2 per cent and 4.9 per cent respectively.

The heavyweight financial sector was up 1.2 per cent, with Westpac climbing 1.5 per cent, NAB up 1.4 per cent, CBA adding 1.2 per cent and ANZ advancing 0.7 per cent.

Among the iron ore giants, BHP was down 0.6 per cent, Fortescue had dipped 0.2 per cent and Rio Tinto had edged 0.1 per cent higher. 

The local market was also reacting to a number of earnings announcements. 

Qantas was up 1.0 per cent to $6.225 after the flag carrier announced it had made a full-year profit of $2.5 billion, its first since the COVID-19 pandemic. 

It will spend $500 million buying back shares and has also ordered two dozen new widebody aircraft.

Ramsay Health Care plunged 10 per cent to $49.78 after the private hospital operator missed consensus estimates with $1.98 billion in full-year earnings. 

Telix Pharmaceuticals climbed 10 per cent to $10.77 after the radiopharmaceutical company announced nearly a ninefold increase in full-year revenues and an 80 per cent reduction in losses.

Nine Entertainment was flat at $2.03 after the media group reported a 38 per cent dive in profit to $195 million amid falling advertising revenue.

Tabcorp had advanced 9.0 per cent to $1.14 after announcing that new “level playing field” rules in Queensland had resulted in Tabcorp’s earnings from that state outperforming the rest of the group on almost every metric.   

Also dropping on earnings results were Lovisa, which fell 8.3 per cent to $20.76; Perpetual Group, down 6.3 per cent to $23.345; and South32, down 3.3 per cent to $3.625.

Costa Group had plunged 13.4 per cent to $2.88 after the fruit and veggie grower postponed the release of its first-half and flagged a deteriorating outlook across its citrus fruits and softening consumer demand for tomatoes.

The Australian dollar was buying 64.76 US cents, from 64.25 US cents at Wednesday’s ASX close.