The S&P/ASX 200 (ASX: XJO) strengthened throughout the day to ultimately finish 0.4% higher on Tuesday following a positive lead from Wall Street.
Quality remains the key as bond rates continue to fall with industrials and tech leading the market higher, up 1.2% and 1.9%. Energy and utilities continuing to weaken as the Delta variant closes borders.
Harvey Norman’s profits booming
Harvey Norman Holdings Limited (ASX: HVN) waited until the final day of reporting season to deliver its FY21 report, and it was a blockbuster.
Profit jumped 78% to a record $1.18 billion, benefitting from less discounting and the removal of support to franchisees that are now booming. The group’s underappreciated property portfolio was revalued $291 million higher and now exceeds $3 billion.
Management confirmed it had repaid the company’s JobKeeper receipts given the strong year and also cut the dividend to 15 cents from 18 in 2020, sending shares down 3.2%.
As has been the case across retail, sales in Australia are down 19% in July and August from 2020 levels.
Cettire quadruples sales
It was a positive day for small-cap retailer Cettire Ltd (ASX: CTT) with shares 2.8% higher after reporting a quadrupling of revenue to $124 million and narrowing its loss to $300,000.
The company was under pressure from brokers in recent months concerned about the sustainability of sales.
Australian GDP downgraded, Chinese activity slows
June quarter GDP is due out this week, with both AMP Ltd (ASX: AMP) and Commonwealth Bank of Australia (ASX: CBA) economists now predicting a positive quarter or 0.3% despite the lingering impact of lockdowns and closed borders.
They cite strong government spending and construction as keys behind the recovery; only time will tell if these forecasters are proven right or wrong again.
China’s services sector has contracted in August with manufacturing growth also slowing as another round of lockdowns hit the economy; this does not bode well for Australian GDP in the September quarter.
Two sides of the boom
Evidence of the two-speed economy is on show with non-bank lender Resimac Group Ltd (ASX: RMC) reporting an 87% increase in profit to $104 million on the back of a 29% increase in interest income.
The growth is coming from a boom in home loans as the residential construction sector continues to drive the economy, in the short-term at least.
Sandfire breaks records
Copper producer Sandfire Resources Ltd (ASX: SFR) also reported a record profit, up 132% to $170 million with physical production and inflated copper prices creating the perfect storm. Shares were flat despite the record dividend.
ASX 200 today
As we enter a new month (and season!), the ASX 200 is set to open lower today following a negative lead from US markets overnight. For all the latest, check out Rask Media’s US stock market report.
