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ASX 200 adds 0.4% as local inflation figures, earnings reports in focus

EditorOliver Gray
Published 26/02/2024, 08:40 am
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Investing.com - The S&P/ASX 200 was trading in a positive range at Monday's open as investors look towards earnings reports from major companies, including Coles Group Ltd (ASX:COL), Woodside Energy Ltd (ASX:WDS), Suncorp Group Ltd (ASX:SUN), and Harvey Norman Holdings Ltd (ASX:HVN). Meanwhile, Wall Street continues to break records, largely due to the historic surge of artificial intelligence leader NVIDIA Corporation (NASDAQ:NVDA), while a wave of impending inflation data is poised to put this optimism to the test.

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On Friday, the Stoxx 600, Europe's benchmark index, rose to a record 497.25 points with a 0.4% increase, while the Dow Jones Industrial Average also hit a new high of 39,131 points with a 0.2% gain.

Last week, traders scaled back their expectations for rate cuts to 88 basis points of Federal Reserve funds rate easing in 2024. This adjustment followed the release of minutes from the US central bank's January meeting, which highlighted apprehensions about the risks of cutting too quickly.

In New Zealand, there is a one-in-three probability that the RBNZ will raise its cash rate 25 basis points to a 15-year high of 5.75% on Wednesday. This decision comes at a time when Australia, Europe, Japan, and the US are all updating their inflation readings.

In Australia, consensus forecasts suggest a minor acceleration in monthly inflation to 3.5% year-on-year for January, up from 3.4% in December. However, Sherwood warns that month-on-month inflation can be challenging to predict.

The earnings season continues, with supermarket titan Coles set to release a profit report on Tuesday amidst an ongoing government investigation into shelf prices. Goldman Sachs (NYSE:GS) predicts that Coles' profit margin will remain stable as cost management measures balance out a rise in theft. The financial giant estimates that Coles' first-half earnings before interest and tax will drop 9.2% to $986 million, despite a 6.6% sales increase to $22.3 billion.

As the month comes to a close, approximately 80% of ASX companies have reported, with predictions suggesting an average profit decline of 5.5% over the financial year 2024, largely due to falling energy and metals prices impacting resource companies.

Woodside, Australia's largest energy company, is expected to report a 34.5% drop in earnings per share on revenue down by 10.8% from 2023. Other companies, including Suncorp Group Ltd (ASX:SUN) and NIB Holdings (ASX:NHF), are also due to release their interim numbers on Monday.

Meanwhile, Australian retail sales are predicted to bounce back in January after a 2.7% dip in December. CoreLogic's house price data for February, due on Friday, is forecasted to reveal a 0.6% increase in the median house price across the eight capital cities, marking the second consecutive month of price.

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