Market Wrap: Aussie shares end the week higher on amazing tech success

Market Wrap: Aussie shares end the week higher on amazing tech success

Somewhat surprisingly, the Australian share market closed the week higher as investors suddenly returned to risk assets after some incredible results from US tech stocks Nvidia and Salesforce.

The ASX 200 index rose 54.1 points, or 0.6%, to 9092.3 points amid broad advances, with seven of the 11 sectors higher.

For the week, that meant the index was up 0.4% as investors chewed over the final company profit results for the current season and also took on board stronger-than-expected inflation results and expectations that a further interest rate rise this year was now more likely than not.

Massive profits act like an AI tonic

The sheer size and scale of the numbers out of Nvidia and Salesforce acted like a tonic on world markets and also gave plenty of fuel to the much smaller Australian tech sector.

Technology was the strongest sector and took a leaf from Nvidia’s 7.5% share price rise overnight in America after the computer chip giant managed to outdo even the most bullish expectations of investors.

Salesforce shares were also up 21.6% after artificial intelligence helped it to deliver one of its best quarters in history.

Locally, Xero shares (ASX: XRO) jumped 4.8% to $85.64, WiseTech Global shares (ASX: WTC) added 2.7% to $40.61 and NextDC shares (ASX: NXT) rose 2.1% to $13.87.

Banks enjoy the AI bounce

Even banks were broadly higher with sector leader Commonwealth Bank (ASX: CBA) shares rising 1.5% to $157.26.

Shares in National Australia Bank (ASX: NAB) were up 0.8% to $38.29 while shares in ANZ (ASX: ANZ) were up 0.74% to $34.73 and Westpac shares (ASX: WBC) were also up 0.65% to $33.90.

The big miners were also broadly higher, led by BHP (ASX: BHP) shares, which were up 1.4% to $67.30; Rio Tinto shares (ASX: RIO), which were down 0.4% to $178.04; and Fortescue shares (ASX: FMG), up 2.1% to $18.07.

Gold miners were also mainly higher, led by Newmont (ASX: NEM) shares, up 0.3% to $182.80.

Energy stocks were also higher, led by a 0.74% rise to $8.12 for Santos shares (ASX: STO) and a 0.84% rise to $32.27 for Woodside (ASX: WDS).

Real estate was the weakest sector, with major players like Stockland (ASX: SGP) down 2.5% to $4.31, while Mirvac shares (ASX: MGR) fell by 1.4% to $1.79.

PEXA shares (ASX: PXA) lost a solid 17.4 per cent to a record low of $6.68 after the conveyancing software supplier warned revenue this financial year would be between $385 million and $415 million.

The EBITDA margin is also forecast to fall in addition to declining revenue.

Good profit but wary consumers for Harvey Norman

One of the more interesting results was consumer goods company Harvey Norman (ASX: HVN) with its shares down 1.8% to $4.42.

While the company met expectations with a $528.46 million profit, investors were looking forward and were worried about the weakening outlook for sales as consumers became more cautious.

It was a similar story for Virgin Australia (ASX: VGN) with shares falling 1.4% to $2.77 despite the airline beating market expectations with a 13.4% increase in underlying earnings before interest and tax to $753 million.

The critical factor in this case was that fuel hedging is beginning to roll off, which will expose the airline to increasing aviation fuel market volatility.

Heading in the opposite direction were shares in Dicker Data (ASX: DDR) which rose an impressive 20.7% to $15.30 as the technology distributor forecast gross revenue of $4.3 billion to $4.4 billion and net operating profit before tax of $162 million to $165 million for 2026.

Not so fortunate were shareholders in WAM Capital (ASX: WAM) as the stock fell 18.5% to $1.23 after it cut its full-year dividend target from 15.5¢ to 8¢ a share after working out that its profit reserve is no longer large enough to sustain a higher payout.

The week ahead

The final few companies finish reporting this week with Monash IVF and Michael Hill results on Monday, with the themes emerging from the profits a mixed one.

Healthcare has performed well as investors believed in the potential turnaround stories at CSL and Cochlear following their results.

Mining companies were also stronger as investors appreciated the benefits of a stronger push into copper by BHP and Rio Tinto which is already yielding results as spot copper prices rise.

Financials were not as lucky, with banks reaping double-digit declines in mortgage volumes since the federal government announced capital gains tax changes in May.

Property shares were also under pressure as the residential market slowed, while consumer stocks were also weaker amid softer trading trends in the new financial year and slowing consumer demand.

Dividends dropping off

On the share market the period after results is often a difficult one as many companies start to trade without their dividends and investors start to go back into their shells a bit.

Locally, inflation and second-quarter GDP numbers are the major economic releases while in the US, the earnings season continues with a few results to come from companies including Palo Alto Networks, Medtronic, Dell, Broadcom, Hewlett Packard, Brown-Forman, NetApp, Lululemon, and Campbell’s.

US labour force numbers are also set to be released on Friday, with the unemployment rate tipped to be 4.2%.