The S&P/ASX 200 (ASX: XJO) is set to slide when the market opens this morning according to the latest ASX futures. Here’s a recap of the big ASX reports on Tuesday.
ASX hits 11-month high, BHP delivers record dividend
The ASX 200 reached an 11-month high on Tuesday and is now nearing 7,000 points once again, with the energy and materials sectors powering the recovery.
Zip Co Ltd (ASX: Z1P) continued its stellar 2021 run, adding 10.0% for the day and taking the year-to-date gain to 160%. The company received a ‘speeding ticket’ from the ASX but stated it had no knowledge as to why the share price keeps running.
BHP Group Ltd (ASX: BHP), which represents over 6% of the ASX 200, smashed expectations to deliver a 55% increase in the interim dividend of US$1.01 per share. Near-record iron ore prices dominated the first-half results, with underlying profit 16% higher to US$6.03 billion, or US$3.87 billion after the previously flagged write-downs on its coal operations were included. Iron ore prices were 33% higher than in 2019, due to surging Chinese demand and weakening Brazilian supply, and when combined with record shipments of 144.1 million tonnes, it was a perfect storm for shareholders.
BHP’s management continues to highlight its diversification into electric vehicle-related commodities including nickel and copper, but this remains an iron ore play. The company is clearly travelling well but is unlikely to see current conditions continue in the longer term. BHP shares increased 2.7% to finish the day at $47.
Fortescue Metals Group Limited (ASX: FMG) fell 3.0% during the session after announcing a number of high profile executive departures on the basis of ‘cultural issues’ flagged by its CEO.
Reporting season round-up
Redbubble share price sold off despite growth
Online marketplace Redbubble Ltd (ASX: RBL) delivered a 118% increase in gross profit to $144 million for the half on the back of a 96% increase in marketplace revenue to $353 million. Marketplace revenue represents the difference between the sale price of apparel and similar products and the costs of paying the artists who create them.
Despite the strong report, the Redbubble share price fell 18.1% with traders clearly concerned about the slowing growth rate after management announced that mask sales, a key portion of recent growth, has fallen to just 7% in the quarter. With cash of $130 million and free cash flow hitting $80 million, the company is well placed to invest for another leg of growth.
Ansell riding the COVID wave
Glovemaker and industrial product manufacturer Ansell Limited (ASX: ANN) has been a key beneficiary of the pandemic and the associated demand for better hygiene. The stalwart of the ASX delivered a 61.9% increase in profit in the half to $US$106.5 million, on the back of a 24.5% increase in revenue to US$937.8 million. Of this, 59% is sourced from healthcare products which saw sales increase 37.3% in the first half alone.
Being in the right place at the right time meant investors were rewarded with a 52.6% increase in the dividend to 33.2 cents per share. With the Ansell share price increasing 1.8% on the news, the company appears to be pricing in a continuation of current sales growth for an extended period, which is likely difficult to deliver.
NAB poised for recovery
The highlight of the National Australia Bank Ltd (ASX: NAB) first-quarter report was the fall in deferred residential home loans from a peak of $38 billion to just $1 billion today.
The headline numbers continue to reflect a company in transition, with cash earnings 1% higher to $1.65 billion, but low interest rates having a clear impact on profit margins. Management flagged further cost reductions after cutting expenses by 1% as a key driver of long-term growth and differentiation.
Global markets lower, Twitter & Starbucks rally
US markets were broadly lower overnight, the S&P 500 falling 0.1% and the Nasdaq 0.3% as both bond yields and oil prices continued to spike. Oil prices have been impacted by a ‘deep freeze’ in Texas where a large number of production wells are located, with blackouts and skyrocketing energy prices spreading across the state.
With little in the way of company-specific news, investors remain focuses on the outlook and sector-wide opportunities, particularly now that bond rates have hit 12-month highs above 1.30% in the US.
Twitter (NASDAQ: TWTR) is close to an all-time high after last week reporting strong growth in active users and a continued recovery in digital advertising spending. Similarly, Starbucks (NASDAQ: SBUX). a long-term holding of the Magellan Financial (ASX: MFG) group of funds, has rallied after its Chinese competitor Luckin Coffee filed for bankruptcy.
Back home on the ASX, expect reports today from the likes of Westpac Banking Corp (ASX: WBC), Rio Tinto Limited (ASX: RIO), Coles Group Ltd (ASX: COL), Webjet Limited (ASX: WEB) and Treasury Wine Estates Ltd (ASX: TWE), among many others, as per Rask Media’s ASX reporting season calendar.
