Australian shares have recovered some of Wednesday’s losses, while bitcoin hit another record high and US markets took a breather after rising sharply for several days.
- Bitcoin climbed as high as $US48,216, after surging (+371pc) in the past year
- Consumer sentiment has risen to 109.1 points (back to pre-COVID levels)
- CBA’s half-year profit dropped (-21pc), but it will pay an interim dividend of $1.50
By 11:50am AEDT, the benchmark ASX 200 was up (+0.2pc) to 6,838. The broader All Ordinaries index had risen by a similar level to 7,114 points.
Some of today’s best performing stocks were Challenger (+4.2pc), Boral (+1.3pc), Megaport (+3.9pc) and Evolution Mining (+1.9pc).
At the other end of the spectrum, LendLease (-3.5pc), Bravura Solutions (-2.8pc) and Clinuvel Pharmaceuticals (-1.6pc) were some of the weakest performers.
CIMIC Group shares plunged (-17pc) after the company reported its underlying full-year profit was $372 million (a big fall compared to last year’s $595.6 million).
The engineering contractor also revealed its revenue from continuing operations fell (-20.3pc) to $10.5 billion.
Crown Resorts shares have resumed trading with a hefty fall (-3.7pc), after spending all of yesterday in a trading halt.
The James Packer-controlled casino group has been deemed unsuitable to operate a new Sydney casino at Barangaroo after a months-long public inquiry that exposed allegations of money laundering.
A final report from the Crown probe, commissioned by NSW’s Independent Liquor and Gaming Authority (ILGA), was tabled in State Parliament yesterday.
Two of Crown’s directors, Guy Jalland and Michael Johnston, resigned this morning.
The Australian dollar rose (+0.4pc) to 77.32 US cents, as the US greenback weakened slightly.
CBA and IAG profits slump
Commonwealth Bank shares dropped (-1.2pc) after the bank reported a 21 per cent drop in its half-year profit, in the wake of Australia’s first recession in almost three decades.
CBA will pay shareholders an interim dividend of $1.50 per share, which is a moderate drop (-25pc) compared to last year.
Despite Insurance Australia Group cutting its interim dividend to 7 cents (unfranked) — down from last year’s 10 cents (70 per cent franked) — its share price jumped (+4.9pc).
IAG announced a $460 million half-year loss, mainly due to a $1.15 billion expense that it flagged in November, relating to potential COVID-19 business interruption claims.
One bitcoin can almost buy a Tesla car
Bitcoin, the infamously volatile cryptocurrency, has climbed (+7.1pc) to $US47,204.
Since Monday evening, it has surged by around 20 per cent (Australian time) and briefly hit a record high of $US48,216.
This was after Tesla disclosed that it had invested $US1.5 billion in the digital currency and its plans to offer bitcoin as a payment method in the “near future”.
Its value has surged more than 1,000 per cent since March last year, at the start of the pandemic. Some analysts have said that forecasts of bitcoin hitting $US100,000 this year didn’t seem far-fetched.
Glassnode, which provides insight on blockchain data, said in its latest report that bitcoin’s limited supply suggested further gains for the virtual asset.
Bitcoin’s liquid supply is continuing to decrease, as investors increasingly acquire and “hodl” the asset for the long term.
“Hodl” is crypto slang for the act of an investor holding the asset instead of selling it. It’s a misspelling of the word “hold”.
Currently, around 78 per cent of issued bitcoin are either lost or being “hodled”.
This leaves less than 4 million bitcoins to be shared among future market entrants — including large institutional investors such as PayPal, Square, S&P 500 companies, and exchange traded funds, Glassnode said.
Bitcoin has ‘no intrinsic value’
Billionaire Elon Musk’s bet on cryptocurrency being accepted a payment method for Tesla cars has led to analysts betting this will be a major shift — as companies and big investment houses follow small traders into the asset.
Marc Chandler, chief market strategist at Bannockburn Global Forex, remained unconvinced, saying bitcoin remained a speculative vehicle.
“The fact that it draws some institutional investors or even some companies does not change this fact,” he said.
Bitcoin’s volatility has also been a hindrance for some serious investors and a sticking point in using it for transactions.
Realised volatility, or daily price swings measured in terms of closing prices for bitcoin over the past 90 days, was at 72 per cent.
This was much higher compared with 16 per cent for the S&P 500 stocks index, and 6 per cent for the euro currency.
What’s more, with bitcoin’s value tripling in the past three months, analysts raised questions over how its volatility would affect someone buying a Tesla car in bitcoin.
“Unless the price of bitcoin stabilises, either bitcoin’s price falls drastically and you end up having won a Tesla in a lottery, or its price triples and you end up paying your Tesla far too expensive,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Consumers are getting ‘extraordinarily confident’
Australian consumers are now feeling as optimistic as they did a decade ago, largely thanks to the containment of COVID outbreaks in several cities, according to the latest consumer confidence results published today.
The Westpac-Melbourne Institute index of consumer sentiment rose (+1.9pc) in February, to 109.1 points — which indicates the number of optimists clearly outnumber pessimists.
This month’s result clawed back some of January’s drop (-4.5pc) caused when partial lockdowns spooked consumers.
The results suggest consumers are even more upbeat (by about 14 per cent) than they were exactly a year ago, before the coronavirus battered the global economy.
The survey measure of the outlook for the economy over the next 12 months rebounded (+6.9pc) in February, while that for the next five years edged up (+0.5pc).
Family finances compared with a year ago dipped (-0.6pc), but the index for finances over the next 12 months gained (+2.6pc).
A measure of whether it was a “good time to buy a major household item” firmed (+0.4pc).
The housing market remained a hot topic, with the survey’s index of house price expectations jumping (+6.5pc) to a seven-year high.
At the same time, the rebound in prices was making housing less affordable, with the measure of whether it was the “right time to buy a dwelling” down sharply (-3.1pc).
Nasdaq hits new record, as market rally slows
On Wall Street, the benchmark S&P 500 snapped its six-day winning streak, closing slightly lower (-0.1pc) at 3,911.
The tech-heavy Nasdaq climbed (+0.1pc) to finish at 14,008 points, its fifth record high in a row.
The industrial-skewed Dow Jones index lost 10 points (flat) at 31,376.
Optimism about further stimulus, strong quarterly results from America’s major companies, and the prospect that coronavirus vaccines could hasten a return to normality in the US, and other countries have recently boosted the risk appetite of investors.
But concern remained over the pace of vaccination, its efficacy against new variants of the novel coronavirus and the damage being done to economies, including the impact of the $US1.9 trillion stimulus package on the US dollar.
“We’ve come a long way in a short time,” said Josh Wein, portfolio manager with Hennessy Funds.
“It won’t take a lot for the market to pause … whether it’s deliberations over fiscal stimulus, or the occasional talk of inflation or interest rates getting some lift.”
In Europe, Britain’s FTSE was steady (+0.1pc) at 6,532 points, and Germany’s DAX fell (-0.3pc) to 14,012.
Spot gold was up (+0.4pc) to $US1,836.69 an ounce.
Oil prices extended their rally for a seventh session to hit fresh 13-month highs. Brent crude had lifted (+0.9pc) to $US61.12 a barrel.
Iron ore jumped (+2.2pc) to $US164.10 a tonne.