Australian shares are set to climb on Wednesday, as CBA reports a jump in profit and Wall Street investors shake off a bad start to the week.
- Local shares are set to climb when the ASX opens on Wednesday, as CBA announces a $2 billion share buyback
- The tech-heavy Nasdaq Composite gained 1.28 per cent to 14,194.45.
- Iron ore was up 55 US cents, or 0.4 per cent, to $US149.95 per tonne
ASX futures were up by a quarter of per cent to 7,102 by 8:15am AEDT.
The Australian dollar gained 0.25 per cent, to 71.43 US cents.
In New York, investors continued to be influenced by mixed corporate earnings results.
The Dow Jones Industrial Average gained 1 per cent, to 35,462.78. The S&P 500 added 0.8 per cent to 4,521.54, while the Nasdaq Composite rose 1.28 per cent to 14,194.45.
Banking stocks also did well as the benchmark 10-year US Treasury yield hit its highest level since November 2019, on expectations US monetary policy would soon tighten.
Pfizer Inc lost 2.8 per cent after reporting full-year sales forecast for its COVID-19 vaccine and antiviral pills had fallen short of estimates.
Facebook owner Meta Platforms had a fourth day of losses, down 2.1 per cent, after billionaire investor Peter Thiel decided to step down from the company’s board. Last week a gloomy company forecast wiped out billions of dollars in market value.
CBA profit up
Commonwealth Bank of Australia reported an interim jump in profit, but signalled intense competition for a share of the home loan market was putting pressure on margins.
CBA’s half-year cash profit rose 23 per cent to $4.75 billion, thanks to growth in mortgage and business loans.
The bank also announced a $2 billion on-market buyback of shares.
CBA’s warning about margins follows similar ones from rivals such as Westpac as the banks’ bid to protect market share by offering more attractive home loan rates is hitting profits.
“Looking ahead, we expect home loan price competition and switching to continue to weigh on margins in the second half,” CBA said in a statement
The pressure has also been worsened by a customer shift towards fixed-rate loans, which tend to be priced lower than variable rates.
The bank also said it expected the Australian economy to have a strong year, despite the early challenges from the Omicron strain of COVID-19. It pointed to the low unemployment rate and high participation rate as positive signs for the economy.
CBA also reported a net interest margin of 1.92 per cent, which was lower than the 2.06 per cent it reported a year ago and 17 basis points below the second half of the financial year.
It declared an interim dividend of $1.75 per share, higher than the $1.5 a share it paid to shareholders a year earlier.
Oil markets cooled as concerns about supply issues diminish ahead of more talks between US and Iran about a nuclear deal, which could see sanctions on oil sales lifted.
Brent crude was down 2 per cent to $US90.73 cents.
West Texas crude was also down 2 per cent, to $US89.30 per barrel.
Spot gold rose 0.3 per cent, to $US1,828.00 per ounce as inflation risks boost demand for the precious metal.
Iron ore was up 55 US cents or 0.4 per cent overnight to $US149.95 per tonne.
In Europe, the pan-European STOXX 600 index and Britain’s FTSE were flat, while Germany’s DAX rose by a quarter of a per cent.