Coles Cashes In | Virgin's Qatar Deal

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Welcome to Equity Espresso’s Market Recap.

The Aussie share market rebounded on Thursday, snapping a two-day losing streak as the S&P/ASX 200 index climbed 0.3% to 8,268.20 points. The positive session saw eight of eleven sectors finish higher, with sentiment lifted by strong corporate earnings reports and a better-than-expected result from U.S. chipmaker Nvidia.

Consumer Staples (+1.55%) was the best performing sector. Coles (+3.50%) shares jumped after the supermarket giant increased its interim dividend to 37¢, noting that earnings had benefited from December strikes at rival Woolworths.

Materials (+0.98%) was the other top performer, with Rio Tinto (+1.45%), Fortescue (+1.72%) and BHP Group (+0.78%).

The Industrials (+0.92%) sector gained after Qantas advanced 5.6% to $9.39 following its $1.4 billion interim profit announcement and decision to return money to shareholders via a special dividend.

In other airline news, Federal Treasurer Jim Chalmers has approved Qatar Airways’s buying a 25% stake in Virgin Australia, allowing the airline to start flying under a wet lease agreement in June. The proposal, under which Virgin will fly Qatar Airways’ planes using the Middle Eastern airline’s crews and pilots for five years, was supported by tourism operators, airports and unions.

ASX Company News

• Coles (+3.50%) outperformed market expectations in the first half, with sales increasing 3.7% to $23.03 billion, significantly ahead of rival Woolworths's 2.7% growth. The supermarket chain benefited substantially from Woolworths's pre-Christmas industrial action, gaining approximately $120 million in additional sales and $20 million in earnings.

• IDP Education (-7.55%) reported a sharp 40% plunge in first-half earnings to $92.7 million, while revenue fell 16% to $475.4 million as the international student market contracted.

• Heartland Group (-0.61%) reported a steep 79.8% drop in interim profit to NZ$10.7 million ($9.7 million), hammered by higher impairment expenses and restructuring costs in its New Zealand banking operations.

• Medibank Private (+9.95%) expects slowing policyholder growth in 2024 due to cost-of-living pressures increasing customer lapses and switches. Despite reporting a 0.8% fall in first-half profit to $340.3 million, the health insurer raised its interim dividend by 8.3% to 7.8¢.

• Qantas (+5.62%) posted a $1.4 billion interim profit and announced plans to return cash to shareholders through dividends rather than expanding its buyback program. The airline will pay a fully franked 26.5¢ per share total dividend, including a $150 million special dividend on top of a $250 million base dividend.

• Perpetual (-9.22%) reported a dramatic 65% plunge in interim net profit to $12 million from $34.5 million, despite a 4% increase in revenue to $686.2 million and a 6% rise in underlying profit before tax to $143.1 million.

• PointsBet (+0.91%) rejected rival BlueBet's $1.14-per-share counteroffer in favour of Japanese entertainment giant Mixi's $353 million takeover bid. The Australian bookmaker cited concerns about BlueBet's ability to fund the acquisition through its proposed $160 million capital raising.

Wall Street

Wall Street finished relatively unchanged on Wednesday as investors awaited Nvidia's highly anticipated earnings report. The S&P 500 (+0.01%) ended virtually flat, the Nasdaq (+0.26%) posted a modest gain, while the Dow Jones (-0.43%) slipped. Technology (+0.89%) was the best-performing sector, with Nvidia (+3.67%) shares climbing ahead of its after-hours announcement.

After markets closed, A.I. chip leader Nvidia delivered stronger-than-expected first-quarter revenue guidance. However, the company's share price fell by 1.49% in extended trading. The outlook for gross margins came in slightly below expectations due to costs associated with ramping up production of its premium Blackwell chips.

Market sentiment was dampened in afternoon trading as investors processed Donald Trump's latest tariff comments. The president announced plans for a 25% tariff on European Union imports while suggesting a month-long delay for new tariffs on Mexican and Canadian goods, pushing implementation to April 2.

Super Micro Computer (+12.23%) shares surged 12% after the server manufacturer filed its delayed financial documents with the SEC, avoiding potential delisting from the Nasdaq. General Motors (+3.75%) shares jumped 4% after the automaker announced a 25% increase in its quarterly dividend to 15 cents per share, matching rival Ford's payout. GM also launched a new $6 billion share repurchase program, with $2 billion in buybacks planned for the second quarter.

S&P 500 Sector Performance

Economic Data

• Australia’s New Capital Expenditure unexpectedly contracted by 0.2% quarter-on-quarter in the fourth quarter of 2024, missing market expectations of 0.8% growth.

• New Zealand Business Confidence climbed to 58.4 in February 2025 from January's 5-month low of 54.4, marking the first rise in four months as the economy recovered.

• U.S. new single-family home sales dropped 10.5% from the previous month to a seasonally adjusted annualised rate of 657,000 in January 2025, falling short of market expectations of 680,000.

• U.S. Building Permits fell by 0.6% to a seasonally adjusted annualised rate of 1.473 million in January of 2025, against preliminary estimates that they would increase 0.1% to 1.483 million.

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🌎️ Around The Globe

• America has launched the Gold Card Visa, a new immigration fast track that sells green cards for $5 million. Donald Trump made the announcement on Wednesday, hoping to raise money to pay down some of the country’s $36.5 trillion debt.

• Aston Martin has cut 170 jobs, representing 5% of its workforce, after a challenging year saw pre-tax losses surge 21% while wholesale volumes fell 9% to 6,030 cars.

• Amazon has unveiled Alexa+, a generative AI-powered overhaul of its digital assistant. The service will cost users a $19.99 monthly subscription fee, though Prime members can access it for free. Devices SVP Panos Panay announced the revamped service at a New York event. It will launch in early access next month.

• Eli Lilly has released higher-dose single vials of its weight loss drug Zepbound at up to half the monthly list price. The company aims to reach patients without insurance coverage, including Medicare recipients, while combating demand for unregulated compounded versions.

• The FBI has identified North Korean hackers as responsible for stealing approximately $1.5 billion in virtual assets from the cryptocurrency exchange ByBit. The agency refers to this specific North Korean cyber operation as "TraderTraitor."

• Perplexity AI is preparing to launch a $50 million venture fund for early-stage AI startups. While it will serve as the anchor investor, most of the capital will come from external limited partners.

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*1-year, 3-year and 5-year returns are calculated as of January 31, 2025.

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