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ASX 200 morning report – CBA, XRO & ORI shares in focus

The technology sector all but sunk the local market on Thursday with the S&P/ASX 200 (ASX: XJO) sinking 1.8% on the back of an 8.2% fall in the sector.

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

Only 13 stocks in the ASX 200 finished higher, led by Orica Ltd (ASX: ORI) and the Commonwealth Bank of Australia (ASX: CBA) which gained 4.7% and 0.6%, respectively.

Commonwealth Bank profit up

CBA released its third-quarter update, reporting a $2.4 billion quarterly profit, ahead of expectations, and driven primarily by 8.5% growth in residential lending, and 12.6% 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% and net interest income down 2% 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 reality.

CSL’s delay

Shares in CSL Limited (ASX: CSL) lost 1.8% after management confirmed it was still waiting on approvals for the group’s $16 billion acquisition of Vifor Pharma; the deal still looks set to go ahead.

Bitcoin ETF launches

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% from its 2021 high and falling significantly overnight.

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

Xero share price crunched

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

Orica revenue jumps

Explosives group Orica is benefitting from underinvestment in the commodity and energy sectors, reporting 25% growth in sales to $3.3 billion for the half, contributing to a 66% jump in profit to $129 million. Both higher volumes and better pricing in new contracts contributed to the result.

Refining strength returns

Oil refiners remain the biggest beneficiaries of the global energy crisis, on the ASX at least, as Ampol Ltd (ASX: ALD) and Viva Energy Group Ltd (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% improvement in earnings for companies that were struggling just a few years ago.

ASX 200 today

Looking ahead, the ASX 200 is expected to open broadly flat this morning, following a mixed lead from US markets overnight. To find out more, check out my US stock market report.

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Disclosure: At the time of publishing, Drew owns shares in CSL.