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Tech sinks local market, Commonwealth Bank profit up, Bitcoin ETF launches

Daily Market Update

The technology sector all but sunk the local market today with the S&P/ASX200 sinking 1.8 per cent on the back of an 8.2 per cent fall in the sector.

Every other sector was lower, with energy and real estate down more than 2 per cent and financials outperforming by falling just 0.8 per cent.

Just 13 stocks finished higher led by Orica (ASX: ORI) and the Commonwealth Bank (ASX: CBA) which gained 4.7 and 0.6 per cent respectively.

CBA reported a $2.4 billion quarterly profit, ahead of expectations, and driven primarily by 8.5 per cent growth in residential lending, and 12.6 per cent growth in business lending.

The growth, however, came with a significant narrowing of margins with CEO Matt Comyn highlighting the discounting required to both maintain and grow market share.

Operating income was down 1 per cent and net interest income 2 per cent as the cost of capital increased and home loan rates remain low.

CBA now believes rate hike expectations are beyond what will likely be a lower cash rate realty.

Shares in CSL (ASX: CSL) lost 1.8 per cent after management confirmed they were still waiting on approvals for the group’s $16 billion acquisition of Vifor Pharma; the deal still looks set to go ahead.
Orica revenue jumps, Ampol refining strength returns, crypto sees $26 billion loss
The long-awaited launch of Australia’s first Bitcoin and Ethereum exchange-traded funds came at a difficult time for the sector, with Bitcoin down some 60 per cent from the 2021 high and falling significantly overnight.

Despite this, the ETF Securities 21 Shares Bitcoin ETF (CBOE: EBTC) saw more than $500,000 in volume. 

Tech darling Xero (ASX: XRO) was among the biggest detractors, with the company tanking more than 11.6 per cent after reporting 29 per cent revenue growth in the 12 months to March taking the group past NZ$1 billion in revenue.

The group remains unprofitable, losing another $8.3 million with investors no longer willing to hold on for long-term growth.

Explosives group Orica (ASX: ORI) is benefitting from underinvestment in the commodity and energy sectors, reporting 25 per cent growth in sales to $3.3 billion for the half, contributing to a 66 per cent jump in profit to $129 million.

Both higher volumes and better pricing in new contracts contributed to the result.

Oil refiners remain the biggest beneficiaries of the global energy crisis, on the ASX at least, as Ampol (ASX: ALD) and Viva Energy (ASX: VEA) announced strong improvements in profit margins.

The latter reported profit margins of $38 per barrel in April, up from $16.60 in March, which contributed to a 65 per cent improvement in earnings for companies that were struggling just a few years ago.
S&P500 nears bear market, wholesale inflation slows, Coinbase ‘not going bankrupt’
Thursday saw the sixth straight day of losses for the Dow Jones, which fell 0.3 per cent as earnings season moves into the rear view and economic data becomes the focus again.

The S&P500 fell 0.1 per cent with the Nasdaq finally delivering a positive result, albeit finishing just 0.06 per cent higher.

Wholesale inflation remained higher than expected, up 0.5 per cent taking the annual rate to 11 from 11.5 per cent.

Shares in Walt Disney (NYSE: DIS) fell another 1 per cent after management suggested subscriber growth may slow following another strong quarter.

Coinbase (NYSE: COIN) shares gained close to 9 per cent but are still down 75 per cent for the year with the recent IPO price of the trading platform a long way off.

Management was forced to confirm they were not at risk of going bankrupt as the selloff in all things crypto sends growing fear through the industry around custody.

Twitter (NYSE: TWTR) fell 2 per cent with management confirming two executives will step down and jobs put on hold ahead of Musk’s acquisition.

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