It was another positive day for the local sharemarket with retreating bond yields and more positive stock specific news sending the S&P/ASX 200 (ASX: XJO) another 0.3% higher.
In a surprising turn, both the materials and technology sectors underperformed, down 2.6% and 1.6%, respectively, while the real estate and industrial sectors added over 2%.
Challenger, Brambles surges on upgrades
The highlight was annuity seller and fund manager Challenger Ltd (ASX: CGF) which gained 9.8% after delivering a rosy earnings update.
Real profit, not earnings, are set to be at the upper end of the forecast $430 to $480 million range, with another 10% jump in lifetime annuity sales to $2.7 billion a key trigger, benefitting from higher bond rates.
It was a similar story for Brambles Limited (ASX: BXB), owner of CHEP pallets, who confirmed that the global pallet shortage is showing no signs of slowing down.
Higher input costs are generally being passed onto customers, boosting revenue to what will be 8 to 9% growth, a 30% upgrade, and now expected profit and free cash to follow sales higher.
Ramsay Foundation backs sale
Ramsay Health Care Limited (ASX: RHC) gained another 3.4% but remains $5 below the $88 price offered by KKR, with many suggesting it is still undervalued given the limited operating ability it has had during the pandemic.
This is a serious offer and may well bring other buyers out of the shadows.
Megaport share price tanks
Smaller cap technology favourite Megaport Ltd (ASX: MP1), which supports onboarding to cloud servers and private networks, fell by more than 20% after delivering a weak earnings update.
Revenue grew by just 5% in the third quarter to $27.9 million with the market clearly concerned about the pandemic bringing forward the technology spend.
Monthly recurring revenue was similarly 6% higher but clearly well below expectations of at least double digits.
BHP’s underwhelming production
BHP Group Ltd (ASX: BHP) fell 3% after an underwhelming quarterly production update. Management flagged lower production of nickel and copper than anticipated, hit by workforce and COVID-19 issues in South America, whilst coal and iron ore remain on track.
It was the opposite story at Santos Ltd (ASX: STO), which gained 1.7% after reporting a doubling of sales for the March quarter despite volume growth of just 3%; higher oil prices were the sole driver.
ASX 200 today
Looking ahead, the ASX 200 is expected to open lower this morning, following a negative lead from US stock markets overnight. To find out more, check out my US stock market report.
