The Australian market struggled for direction for much of its day after a volatile session on Wall Street, while bitcoin surged above $US52,000 — a new record high.
The benchmark ASX 200 index finished trading flat at 6,885 points, after dipping in and out of negative territory several times.
The broader All Ordinaries index was largely unchanged, falling 3 points to close at 7,152.
The Australian dollar was steady at 77.55 US cents.
Overall, the market was unfazed by the latest job figures, which showed Australia’s official unemployment rate fell to 6.4 per cent in January.
It was a slight decrease compared to December’s unemployment figure of 6.6 per cent.
The ABS also said 29,000 people started a new job that month, which was the “peak holiday period”.
Several major companies have reported their earnings today, including ANZ, CSL, Fortescue Metals and Wesfarmers, which saw their profits surge.
Meanwhile, Crown Resorts and Woodside Petroleum announced huge losses, while Origin Energy, South32 reported much weaker profits.
Some of today’s best performers were IPH (+9.8pc), Tabcorp (+5.7pc), Domino’s Pizza (+5.6pc) and Orora (+5.5pc).
However, Treasury Wine Estates experienced the biggest gains. Its shares jumped (+17.5pc) despite yesterday’s 43 per cent slump in half-year profit.
The company, which makes Penfold’s and Wolf Blass wine, said it would restructure into three internal divisions and likely sell its low-priority brands.
Investment bank Morgan Stanley said the winemaker’s earnings (outside of Asia) were 20 per cent higher than its low expectations. UBS also said Treasury’s earnings were better than expected.
On the flip side, mining services contractor NRW Holdings reported its profit dropped (-13pc) to $29 million. That led to its shares plunging (-17.1pc) to $2.32.
GPT Group (-3.6pc), Perpetual (-6.2pc) Janus Henderson (-3.5pc), along with gold stocks like Resolute Mining (-3.1pc) and St Barbara (-4.6pc) also fell sharply.
They were weighed down gold prices, which fell heavily overnight (down more than 1 per cent).
However, the precious metal’s spot price has since recovered (+0.3pc) to $US1,782 an ounce.
Brent crude oil futures jumped (+1.3pc) to $US65.17 a barrel, its highest level in 13 months.
Fortescue Metals will pay its shareholders a higher-than-expected interim dividend of $1.47 per share (up from 76 cents last year) — joining peers BHP and Rio Tinto in feeding gains from strong iron ore prices back to investors.
The payout sent a $1.65 billion windfall to the company’s largest shareholder, Andrew Forrest, who is Australia’s second richest person with a net worth of $23 billion, according to Forbes.
The iron ore miner’s first-half profit was $US4.1 billion (up from $US2.45 billion a year earlier).
China’s focus on infrastructure last year has driven iron ore prices to a nine-year high.
Spot iron ore (at the 62 per cent iron index) is trading around $US167 a tonne, after nearly doubling in the past year.
Fortescue also provided an upbeat forecast, and expects iron ore shipments to be in the range of 178-182 million tonnes for the financial year (up from a prior range of 175-180 million tonnes).
The company also said it would allocate 10 per cent of its net profits after tax to fund renewable energy growth through its new unit, Fortescue Future Industries (FFI) and 10 per cent to fund other resource growth opportunities.
The miner’s share price climbed (+1.9pc) to $24.88.
Crown Resorts reported a loss of $120.9 million in the half-year ended December 31, as COVID-19 restrictions kept the beleaguered casino operator’s Melbourne site closed for most of the period.
It was a big downgrade, compared to its half-year profit of $218.2 million a year ago.
The Victorian government had imposed strict capacity rules at the site, and fewer people attended other venues as border restrictions separated Australia’s three most populous states NSW, Victoria and Queensland.
The James Packer-backed company said it logged costs of about $58.1 million relating to the mandated closures.
Crown is also beset by a growing a list of executive departures in the past fortnight.
The company said general counsel Mary Manos would step down and the role would be separated from company secretary to double-down focus on legal and governance compliance.
The changes represent a further improvement in governance for Crown, in compliance with the recent inquiry’s report recommendation of a board upheaval, said Helen Coonan, executive chairwoman.
Ms Coonan, who assumed the role earlier this week after the resignation of chief executive Ken Barton, would see her pay surge nearly fourfold to $2.5 million a year, the company revealed.
Crown’s bleak financial performance comes amid increased scrutiny from the NSW gaming regulator, which deemed the company unfit for a gambling licence at its Sydney resort after a year-long inquiry into allegations of money laundering and governance failures.
The company said it would work with the Independent Liquor and Gaming Authority to advance reforms necessary to allow for a restricted gaming licence in Sydney.
The casino operator’s share price lifted (+0.4pc) to $9.73.
Wesfarmers has reported that its statutory profit lifted (+14.9pc) to $1.39 billion, driven by a pandemic-driven surge to buy home office equipment and renovation gear.
“Bunnings, Kmart Group and Officeworks delivered strong trading results for the half, reflecting their ability to adapt to changing customer preferences and provide a safe environment for the customers and team members,” said Wesfarmers managing director Rob Scott.
Mr Scott also said profits at the company’s struggling Target stores had “improved significantly, supported by strong demand and the ongoing simplification of the business”.
In the six months to December 31, Wesfarmers converted 19 of its Target retailers into the more lucrative Kmart stores.
During that period, combined earnings at Kmart and Target hit record levels, the company said.
However, the company expects its retail sales growth to slow down from March as its “businesses begin to cycle the initial impacts of COVID-19 in the prior year, particularly in Bunnings and Officeworks”.
Wesfarmers will pay an interim dividend of 88 cents per share, fully franked. It was a 17 per cent upgrade compared to last year’s dividend.
Shares in the Perth-based conglomerate rose (+0.6pc) to $54.49.
ANZ has reported a stronger first-quarter profit, driven by growth in home lending as the domestic economy recovers from the COVID-19 pandemic.
“All our major businesses performed well through the quarter with market share gains in our key home loan market in Australia as well as record home loan volumes in New Zealand,” the ANZ chief executive Shayne Elliott said in a statement.
The bank said its cash profit from continuing operations came in at $1.8 billion for the three months ended December 2020. It was significantly higher (+54pc) than the average from the last two quarters.
However, ANZ did not provide a comparable figure from the same quarter from the previous year.
The Melbourne-based lender also said that about 84 per cent of deferred home loans in Australia have been rolled off — of which 98 per cent returned to repayments.
Lenders across the world are still struggling with record low interest rates, aimed at supporting economies during the pandemic.
They were also forced to set aside billions of dollars to cover potential loan defaults.
Australian banks are now enjoying a relative period of calm as cheaper borrowing costs and massive amounts of government stimulus have led to a surge in demand for homes and driven loan volumes higher.
ANZ’s common equity tier 1 (CET1) ratio, a closely watched measure of its spare cash, rose to 11.7 per cent in the December quarter (compared to 11.3 per cent in the September quarter).
The bank’s share price jumped (+2.8pc) to $26.55.
Biotech firm CSL reported a 45 per cent rise in half-year profit, boosted by higher demand for its vaccines and blood plasma products. That helped to lift its share price (+2.8pc) to $289.
Net profit after tax came in at $1.8 billion for the six months ended December, up from $1.3 billion last year.
The company, which is also manufacturing the bulk of the local supply of the AstraZeneca COVID-19 vaccine, which got provisional approval on Tuesday, reiterated the first doses would be released in late March.
The key to CSL’s business is its ability to collect blood from donors and convert it into medical treatments, which has been hindered by the pandemic.
But strong demand for plasma and recombinant therapies, as well as its influenza vaccines, had prompted CSL to raise the lower end of its annual profit forecast last October.
It still expects a full-year profit between $2.17 billion to $2.27 billion, implying growth of 3 to 8 per cent.
CSL, one of Australia’s largest listed companies with operations from Germany to the United States, declared an interim dividend of $1.04 per share, up from last year’s 95 cents.
Woodside Petroleum has suffered a massive full-year statutory loss of $US4.03 billion ($5.2 billion).
This was mainly due to Woodside’s huge asset write-downs as a result of lower demand for oil and gas because of the COVID-19 pandemic.
But when the company’s result is measured in a different way and excludes one-off charges, its underlying net profit is $US447 million.
It was still a big fall compared to last year’s $US1.06 billion underlying annual profit.
Nevertheless, the nation’s biggest gas producer declared a final dividend of 12 US cents cents per share, bringing its full-year dividend to 38 US cents.
Chief executive Peter Coleman said the potential strength of Woodside’s recovery was “already being signalled by the recent increase in oil price and record spot LNG prices achieved in Asia over the northern hemisphere winter”.
Woodside posted a big loss despite the company producing 100.3 million barrels of oil, its best production figure on record.
The company’s share price fell (-2.4pc) to $25.34.
Origin Energy has blamed “subdued economic conditions”, the “ongoing impacts” of COVID-19 and “lower commodity prices” for its half-year profit slumping 98 per cent.
The energy retailer said it earned $13 million in statutory profit in the six months to December 2020.
It was a massive drop compared to the $599 million that it earned in the second half of 2019.
Nevertheless, the company resolved to pay an unfranked interim dividend of 12.5 cents per share, a 17 per cent downgrade compared to last year’s payout.
“The recent rally in oil and gas markets is expected to have a positive impact on Australia Pacific LNG’s earnings in the second half, given the lag in contract LNG prices,” Origin’s chief executive Frank Calabria said.
“However, as flagged in our recent earnings update, the near-term outlook for Energy Markets is more challenging.
“A mild summer has compounded already weaker demand and reduced volatility, gas supply costs are expected to increase, and wholesale electricity prices remain depressed, particularly as renewable supply continues to come online.”
Origin Energy’s share price dropped (-2.2pc) to $4.50.
Mining company South32 reported that its half-year net profit fell (-46pc) to $US53 million.
Prices of South32’s top three commodities — metallurgical coal, aluminium and manganese — had slumped in 2019 amid a trade war between China and the United States.
Their prices remained weak through the first half of 2020 as the pandemic disrupted businesses and hit production.
However, South32 said a strong recovery in demand for key commodities outside China early this year, helped to raise its half-year underlying earnings (+4pc) to $US136 million.
“We are off to a strong start in 2021, as we continue to build on our recent operating performance,” the diversified miner said.
The Perth-based firm declared an interim dividend of 1.4 US cents per share (up from 1.1 US cents) a year ago.
Its share price edged marginally lower (-0.4pc) to $2.70.
Bitcoin soared to yet another record high, a day after vaulting the $US50,000 hurdle, even as analysts warned against the sustainability of such prices amid elevated volatility.
The world’s biggest digital currency soared to a record $US52,621 on Thursday morning, fuelled by signs that it is winning acceptance among mainstream investors and companies like Tesla, Mastercard and BNY Mellon.
Despite the flurry of mainstream acceptance this year, some analysts warn bitcoin is still far from becoming a widely used form of payment.
“Bitcoin presently is not an efficient manner for high-volume transacting, and it is certainly not a store of value as its price volatility at 80 per cent is a dozen times higher than the euro and sevenfold of the Russian rouble,” said Harley Bassman, managing partner at Simplify Asset Management.
“That said, it is a perfectly legitimate speculative asset, quite similar to Dutch tulips in 1636.
“Will it meet the same fate? That is unclear. As such, size your risk appropriately.”
Dutch tulips in the 1600s reached extraordinarily high levels before dramatically collapsing in 1637.
Bitcoin has risen eightfold since last March and has added more than $US700 billion in market value since September.
JP Morgan questioned the “magnitude” of the jump on the back of a total flow of just $US11 billion from institutional investors.
Bitcoin’s limited supply, based on “miners” producing a set number of new coins, has led to holders charging a premium on bitcoin coming to market, JPMorgan analysts said in a note.
Retail flows may have also magnified institutional flows, they said.
However, the investment bank has previously forecast that the price of bitcoin could hit $US146,000 in the long-term.
Interestingly, JP Morgan’s chief executive Jamie Dimon has called bitcoin a “fraud” that would eventually “blow up”, and that he would fire his traders “in a second” if he discovered they were trading bitcoin.
On Wall Street, technology-related companies fell sharply as investors rotated out of growth stocks.
Shares in Apple (-1.8pc) and PayPal (-2.5pc) weighed on the tech-heavy Nasdaq , which weighed heavily on the tech-heavy index.
The Nasdaq Composite finished moderately lower (-0.6pc) at 13,966 points, while the S&P 500 was flat at 3,931.
The industrial-skewed Dow Jones index rose (+0.3pc) to a fresh record high of 31,613 points.
The Dow was boosted by shares of Verizon Communications (+4.3pc) and Chevron (+1.8pc) after Warren Buffett’s Berkshire Hathaway disclosed major investments in the companies on Tuesday (local time).
“Investors are just refocusing their attention back on to inflationary worries and perhaps the valuation aspect of the market, especially as it relates to the more technologically-related companies,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
The US Federal Reserve has pledged to pin interest rates near zero until inflation rises to 2 per cent and looks set to exceed that goal.
That stance, coupled with the Biden administration’s proposed $US1.9 trillion spending bill for pandemic relief, has some analysts warning of a coming surge in inflation.
Meanwhile, data showed US retail sales rebounded sharply in January after households received additional pandemic relief money from the government, suggesting a pick-up in economic activity after being restrained by a fresh wave of COVID-19 infections late last year.