CBA's $5.13B Profit Party Lights Up ASX

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Welcome to Equity Espresso’s Market Recap.

Aussie shares rose with the S&P/ASX 200 index gaining 0.61% to 8,535.3 points, steadily climbing as the day wore on, primarily driven by Commonwealth Bank's better-than-expected half-year earnings of $5.13 billion. The positive result helped lift banking stocks, with the Financial (+1.41%) sector being one of the day’s best performers.

The rally in CBA (+2.10%) shares had a positive ripple effect on other major banks, with NAB (+1.76%) and Westpac (+1.34%) gaining over 1% each, while ANZ advanced 0.7%. The broader market saw gains in six out of eleven sectors, though Technology (-1.05%) stocks remained subdued following the NASDAQ’s lacklustre performance in the U.S.

Oil prices rose as WTI crude gained 1.4% to over $US73 per barrel, with Russian oil supplies disrupted by U.S. sanctions. Several Pacific-based shipments are stranded, while Chinese refiners face increased discounts on Russian crude.

Company News

• AGL Energy (-0.26%) reported a 6.5% drop in half-year core profit to $373 million, with statutory profit falling 83% to $97 million, despite sales rising 15.3% to $7.13 billion. The company slightly upgraded its full-year guidance.

• Amotiv (-6.92%) reported a 36% drop in half-year profit to $33 million due to acquisition costs and higher freight expenses but expects an improvement in the second half. The company maintained its 18.5¢ dividend and continued its share buyback.

• Commonwealth Bank (+2.10%) reported a 2% rise in half-year profit to $5.13 billion, raising its interim dividend 5% to $2.25 per share. CEO Matt Comyn noted economic slowdown concerns but suggested interest rates may provide relief to households.

• Computershare (+15.49%) raised its interim dividend by 12.5% to 45¢ and upgraded FY2025 earnings guidance by 15% to $1.35 per share after reporting 6.4% revenue growth to $1.5 billion and 27.9% earnings growth to $171.2 million.

• Evolution Mining (+0.97%) posted record half-year profits of $365 million, up 277%, announcing a 250% increase in interim dividend to 7.0 cents per share. The company remains on track for FY25 gold and copper production targets.

• Santos (+1.00%) experienced mixed reserves results in 2024, with organic oil reserves rising by 15 million barrels, while proved plus probable reserves fell to 1.6 billion barrels after a PNG LNG stake sale reduced reserves by 30 million barrels.

• Bravura Solutions (+18.18%) raised its FY2025 earnings guidance to $46-49 million, up from $41-44 million, after posting $23.8 million in first-half earnings. The company announced special and interim dividends totalling 10.52¢, both unfranked.

• St. Barbara (-6.36%) plans to divest its Atlantic gold operations in Canada, holding 1.4 million ounces in reserves and 2 million in resources, through sale or demerger, transforming into a PNG-focused gold producer at Simberi.

• Suncorp's (+1.52%) half-year profit rose to $1.1 billion, driven by a $252 million gain from its bank sale and improved insurance performance. The company announced a $3 per share capital return and combined dividends of 63¢.

Wall Street

A mixed session on Wall Street during Tuesday’s session, with the NASDAQ (-0.36%) finishing lower after sharp declines from Tesla (-6.34%) and Super Micro Computer (-9.47%). Both the Dow Jones (+0.28%) and S&P500 (+0.03%) closed higher, helped by gains in Coca-Cola (+4.73%), Apple (+2.18%), and Intel (+6.07%). Consumer Staples (+0.91%) led eight advancing S&P 500 sectors, while Consumer Discretionary (-1.23%) was the worst performer.

Investors focused on Fed Chair Powell's Senate testimony, where he indicated no urgency for rate cuts given the strong economy and above-target inflation. Traders are now pricing in at least one 25-basis-point cut this year, with a 44% chance of a second reduction, according to LSEG data.​​​​​​​​​​​​​​​​

Coca-Cola's (+4.73%) shares rose after exceeding Q4 expectations, with revenue reaching $11.54 billion versus $10.68 billion forecast. Net income increased to $2.20 billion, or 51 cents per share, while adjusted earnings hit 55 cents per share, beating analysts' estimates. Fluence Energy (-46.44%) shares plummeted 46.4% after reporting significant misses in its fiscal first quarter, with a loss of 32 cents per share versus the expected 19 cents and revenue of $186.8 million falling well short of the $362.5 million forecast.

S&P500 Sector Performance

Economic Data

• Australian Loan commitments for owner-occupied homes rose by 2.2% quarter-on-quarter to 83,206 approvals in Q4 of 2024, sharply accelerating from a 0.5% gain in Q3.

• Brazil’s Annual Inflation rate softened to 4.56% in January of 2025 from 4.83% in the previous month, which is in line with market expectations, to mark the lowest inflation rate since September of last year.

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🌎️ Around The Globe

• The U.S. and UK abstained from signing an A.I. safety declaration at the Paris summit attended by 60 nations. U.S. Vice President Vance emphasised maintaining U.S. AI dominance, while Europe announced plans to invest in A.I. infrastructure to reduce dependence on American and Chinese technology.​​​​​​​​​​​​​​​​

• Apple has reportedly partnered with Alibaba to introduce AI features for Chinese iPhone users, addressing recent market share losses to competitors like Huawei, which already offers smartphone AI capabilities.​​​​​​​​​​​​​​​​

• Hyatt Hotels announced a $2.6 billion acquisition of Playa Hotels & Resorts, offering $13.50 per share to gain 24 all-inclusive resorts across Mexico, Jamaica, and the Dominican Republic.

• President Trump announced plans to halt penny production following recommendations from the Department of Governmental Efficiency, citing wasteful spending as each penny costs 3.69 cents to produce.

• Stripe is discussing a private stock sale of employee shares that would value the payments company at over $85 billion.

• Workday has introduced a new Agent System of Record platform, allowing enterprises to manage and monitor their own and third-party AI agents from a centralised control centre.​​​​​​​​​​​​​​​​

• YouTube has achieved a milestone of 1 billion daily television viewing hours, exceeding mobile usage. CEO Neal Mohan credits the platform's TV app improvements and new features for maintaining U.S. streaming leadership.

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Geared

*1-year, 3-year and 5-year returns are calculated as of December 31, 2024.

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