Market wrap: tech pushes market higher after monster Apple share buyback
WEEKLY MARKET REPORT
A surprisingly strong result from iPhone maker Apple which included a $167 billion buyback helped to put a rocket under local technology shares and end the week on a very positive tone.
The rocket under the technology sector helped to push the ASX 200 up 0.6% on Friday or 42 points to 7629 points, which led to a 0.7% rise for the week as investors overcame worries about the likelihood that official interest rates will stay higher for longer.
Powell hints rate falls will come but may be delayed
Helping that sanguine approach was the Federal Reserve chair Jerome Powell who said they were likely to delay official interest rate cuts but were not planning to hike them, although the Australian Reserve Bank may be a different story as it prepares for the arrival of big tax cuts from the end of the financial year.
Either way, we will find out whether Australia faces a similar lack of interest rate rises in the future when the new Reserve Bank (RBA) Board meets on Tuesday, with governor Michele Bullock set to hold a press conference that should indicate whether a rate rise is a possibility and whether the RBA expects inflation to return to the sweet spot target of between 2 to 3% by the end of this year.
The emerging consensus on US rates is that two rate cuts this year are still a distinct possibility.
Technology stocks enjoy a day in the sun
Whatever the rationale, the local technology sector had a great day in the sun, rising 1.2% on the back of a wave of buyback cash being paid by Apple, despite the fact the company had revealed the steepest quarterly decline in iPhone sales since the start of the pandemic.
It seems like the market just loves the cash, even if critics think Apple should be spending big to remain at the forefront of technology and artificial intelligence rather than massaging investor’s wallets.
One of the biggest local beneficiaries of the technology boom was Afterpay owner Block (ASX: SQ2), with shares in the buy now pay later company flying up 9.8% or $10.42 to $116.44 after it reported sales and user growth that comfortably beat expectations.
Quarterly figures for Block showed a 22% rise in gross profits to $3.2 billion, which surprised even the more bullish analysts.
In line with the technology bounce, shares in local tech darling Pro Medicus (ASX: PME) hit a record high of $113.93 while shares in enterprise software group WiseTech Global (ASX: WTC) also rose 1.2% to $92.27.
Macquarie heads south
Heading in the other direction were shares in investment bank Macquarie (ASX: MQG) which fell 2.2% to $183.83 after it revealed that profits fell 32% in financial year 2024.
It was also a stronger day for lithium players as they surfed higher prices for the battery metal.
Pilbara Minerals (ASX: PLS) shares added 2.3% while shares in fellow miner IGO (ASX: IGO) was up 1.5% and shares in Mineral Resources (ASX: MIN) rose a healthy 1.90%.
Gains by the big banks and miners were more muted but all sectors enjoyed a rare “green day” of synchronised rises with the consumer discretionary (up 2%) and real estate (up 1.6%) two of the other strongest sectors.
Small cap stock action
The Small Ords index rallied 1.25% for the week to close at 3001.9 points.
ASX 200 vs Small Ords
Small cap companies making headlines this week were:
Rent.com.au (ASX: RNT)
Rent.com.au has seen substantial growth in payments on its rental platform RentPay, totalling $250 million since its relaunch last January.
The company reports accelerating payment growth, with $100 million recently processed at double the speed of previous equivalents.
Chief executive officer Greg Bader attributes this success to tenant and agency support, emphasising RentPay’s value in providing an annuity revenue stream and serving a broader renting population beyond just ‘movers’.
The platform continues to evolve with new features like alternative payment methods and savings initiatives, including a partnership with Paylab offering discounts on everyday spending.
Rent.com.au experienced a record quarter of activity, indicating increasing market awareness and demand for payment choice, rewards and flexibility among renters.
Peppermint Innovation (ASX: PIL)
Peppermint Innovation started 2024 with remarkable momentum, reporting a 360% increase in overall revenues for the March quarter, totalling $317,000 in cash receipts.
Managing director and chief executive officer Chris Kain attributes this success to strategic acquisitions and breakthroughs in product expansion, particularly in the artificial intelligence (AI) and customer experience (CX) business division.
The acquisition of PINT has propelled Peppermint’s AI capabilities, securing new contracts and extensions totalling over $545,000 since its acquisition in December 2023.
Peppermint has a clear roadmap to become the most advanced AI-powered lender in the Philippines, leveraging strategic partnerships and technology development contracts with MASS-SPECC and CHMF.
Additionally, the company is focused on enhancing user experience and functionality through collaborations like the Pinoy Coop app rollout, while also implementing corporate changes such as appointing a new chief financial officer and initiating an organisational restructuring and cost reduction program.
Talisman Mining (ASX: TLM)
Talisman Mining has uncovered two new zones of significant copper-gold and base metals mineralisation at the Durnings prospect within its Lachlan project in central New South Wales.
The Base Metals Zone, measuring 25.2 meters, revealed thick intercepts with high-grade lead, zinc, silver, copper, and gold, including a standout intercept of 1.7 meters of massive sulphide.
The Copper-Gold Zone, measuring 28.3 meters, showcased extensive mineralization with impressive intercepts of gold, copper, lead, zinc and silver.
Managing director Andrew Munckton expressed excitement over the discovery, emphasising the potential of both zones and announcing plans for further exploration with Stage 3 drilling pending assay and survey results.
QMines (ASX: QML)
A pre-feasibility study conducted by QMines on the Mt Chalmers copper-gold deposit in Queensland indicates a robust opportunity with a proposed $191 million operation, including a three-stage open-pit mine and a standalone processing plant.
Supported by a maiden ore reserve of 9.5Mt and an inferred resource, the project forecasts significant metal production over an initial 10.4-year mine life.
Financially, the project is expected to generate $1.64 billion in revenue with a pre-tax net present value of $373.4 million and a 54% internal rate of return, showcasing the benefits of shallow open-pit mining.
QMines sees Mt Chalmers as a technically achievable and commercially viable venture, offering opportunities for expansion and long-term sustainability in the critical metals sector.
Chariot Corporation (ASX: CC9)
Chariot Corporation’s Phase 1 drill program at Wyoming’s Black Mountain project has confirmed high-grade spodumene mineralisation, showcasing the area’s exploration potential.
Despite initial weather delays, the company completed a successful maiden 9-hole drilling program, identifying a large pegmatite stock at shallow depths to the east.
While initial holes returned high-grade intercepts, subsequent drilling revealed broader intervals with lower lithium grades but promising geochemical anomalies.
A revised interpretation of surface data suggests the drilled pegmatites are offshoots from a larger, unexposed stock, prompting plans for further exploration 2km southeast of the initial area.
Environmental approval delays may necessitate a limited drill program, with further exploration contingent on proximity to the pegmatite stock.
The week ahead
As mentioned before, the Reserve Bank board meeting this week will dominate proceedings with the meeting on Tuesday only the third held so far this year.
It should leave market participants with no doubt about the future direction of interest rates with the board decision being followed up by a press conference by governor Michele Bullock along with the release of the Statement of monetary policy.
No change of rates is expected but the real interest will centre on any implied likelihood that the RBA is considering an interest rate rise to compensate for the stimulatory effect of the looming tax cuts or whether the RBA will mimic the US Fed message of rates staying higher for longer as inflation finally fades out.
Broadening the global interest rate picture will be the meeting of the Bank of England while local retail trade, payroll and business indicators are out.
D-Day for banking sector
In share market terms, it will be a really big week for the banking sector with Westpac (ASX: WBC) releasing its half-year accounts on Monday, ANZ (ASX: ANZ) on Tuesday while the Commonwealth Bank (ASX: CBA) releasing its third quarter trading update on Thursday.
The broad expectation is that lenders will have had a weaker first-half profit due to strong competition around mortgages and a consequent squeeze on margins as operating costs have also been rising.
Other than that, the main investor interest will be on some Chinese figures on trade and inflation and a continuation of the US reporting season which this week includes companies Beyond and Jones Lang LaSalle, BP, Walt Disney, UBS, Rivian Auto, Fox Corporation, Teva Pharma, Uber, Airbnb, Light & Wonder, News Corp and Warner Bros Discovery to name a few.