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ASX extends rally with 0.5% gain

Daily Market Update (63)

ASX gains despite energy, Domino’s correction, higher costs bite

There were multiple forces at play on Thursday after an unexpected increase in US oil stockpiles sent the price tumbling.

The result was the energy sector falling 2 per cent driven lower by the likes of Beach (ASX: BPT) and Woodside (ASX: WPL) which fell 5.2 and 3.1 per cent respectively.

On the positive side was a continued rally in the financials and tech sectors, both gaining over 1 per cent after NIB (ASX: NIB) announced a stronger than expected quarter.

Yet all eyes were on market darling Domino’s Pizza (ASX: DMP) which fell by over 18 per cent after delivering a weaker than expected earnings update.

The company reported same stores sales growth of just 4.3 per cent since the beginning of the financial year, with network sales only 8 per cent higher than 2020 despite a massive expansion in the store network.

Japan sales turned negative following the end of lockdowns, in a sign that worst may still be to come.

Analysts were most concerned about the sign of higher food costs potentially impacting on already tight profit margins.

The result was delivered alongside the worst fall in retail sales on record, with quarterly spending down 4.4 per cent, driven by an 11 per cent fall in NSW.

Homebuilder boosts CSR, Ingham’s flags price increases, NIB profit expands

Building products supplier CSR (ASX: CSR) gained closer to 5 per cent after reporting a 30 per cent increase in profit for the six months to September, which reached $86.6 million.

The result was delivered on the back of a 6 per cent increase in revenue which management confirmed was boosted by the Federal Government’s HomeBuilder program.

They also highlighted growing delays and tightening labour supply as being a risk to growth in the coming months.

Regardless the dividend was increased 60 per cent to 13.5 cents per share.

Chicken producer Ingham’s (ASX: ING) shared a similar view, falling 5.0 per cent after flagging the potential for poultry price increases due to an increase in input costs.

They flagged droughts in the Northern Hemisphere, spiking global demand and higher transport costs as the reasons behind the weakness.

The news came as Australia’s trade surplus began to contract, easing to $12.2 billion due primarily to the falling iron ore price.

Healthcare insurer NIB Holdings (ASX: NIB) gained close to 5 per cent after reporting an 8.5 per cent increase in revenue, generated primarily through higher premiums.

The number of new policyholders was marginal, but lower claims have benefitted the bottom line.

Rally continues, UK central bank holds fire, Moderna misses, NVIDIA’s massive day

US markets continued their record run with the tech sector once again taking the mantle, gaining 0.8 per cent.

The Dow Jones weakened another 0.1 per cent after unit labour costs were seen moving 8 per cent higher in September due to a fall in productivity; the S&P500 gained 0.4 per cent.

The highlight by far was NVIDIA (NYSE: NVDA) with the seventh biggest company in the world gaining over 11 per cent, the largest such gain in nearly two years, after analysts highlights its role in powering the Metaverse that is now the focus of Facebook (NYSE: FB).

Shares in Moderna (NASDAQ: MRNA) weakened by close to 19 per cent despite revenue jumping from US$157 million to US$4.9 billion this year with analysts expecting significantly higher sales of their COVID-19 vaccine.

Shares in smartphone chip maker Qualcomm (NYSE: QCOM) also gained more than 12 per cent after reporting a 50 per cent increase in sales for the quarter despite facing a lack of supply suggesting they are running down inventories.

On a positive note, the UK central bank held off on increasing their cash rate despite growing pressure from market commentators.

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