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FIVE at FIVE AU: ASX hits new high before paring back gains

Published 30/01/2024, 04:03 pm
© Reuters.  FIVE at FIVE AU: ASX hits new high before paring back gains
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The ASX briefly reached an all-time high today, momentarily peaking above its previous record of 7,628.9 (set in August 2021) to reach 7,630 just before midday.

Those dizzying heights were not to last, however, and the ASX has since fallen back to more modest gains at 7,596.10 points, adding 0.23% or 17.70 points for a sixth day of upward progress.

The Tech and Biotech sectors led the bourse up – Xero added a modest 0.92% to its share price, while IT cloud service company Megaport Ltd (ASX:MP1) gained 27.51% after strong financials including a 31% year-on-year revenue uptick turned investors’ heads.

Health stocks were slightly more subdued with some large movements at the bigger end of town; CSL Ltd gained 1.24%, Resmed Inc 1.76% and Sonic Healthcare Ltd gained 1.29%.

On the other side of the balance sheet, the Industrials sector shed 0.31%, Consumer Staples 0.24% and Financials 0.29%.

Oil arrested some of its recent gains, pulling back 1.60% although still up 7.92% for the past month of trading.

Base metals followed suit, losing between 0.01% and 1.4% even as silver (+1.6%), palladium (+2.96%) and platinum (+1.94%) advanced – gold experienced little movement.

The top-performing stocks in the ASX200 today were Megaport Ltd (ASX:MP1), up 27.51% as stated, and Nickel Industries Ltd, up 20.83%.

Over the last five days, the ASX has gained 1.08% and currently sits 0.48% off its 52-week high.

Are Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) overbought?

Capital.com senior market analyst Kyle Rodda explores the outlook for Alphabet (GOOGL) and Microsoft (MFST) as brokers recommend a ‘buy’ for both stocks.

“Alphabet stock (GOOGL) is on an uptrend, and heading into quarterly results, testing fresh all-time highs,” Rodda wrote.

“Alphabet is expected to benefit from resilient ad spending and adjustments to the company’s product offering, particularly the execution of a subscription model for YouTube.

“Expectations are for earnings to rise 64% from the corresponding period last year. The jump in earnings is forecast to come from a 12% lift in revenues to $71.05 billion and an improvement in operating margins over the year.

“The strength of Alphabet’s YouTube and advertising revenue streams is expected to offset disappointing growth in the company’s cloud offering.

“However, Alphabet lags behind its peers in marketing its cloud product and optimising it for AI, driving underperformance compared to other mega-tech giants.

“The broker community remains bullish on Alphabet’s stock, boasting a consensus buy rating. However, it is worth noting that the consensus target price is at a premium to the market value of $157.64.

“Investors will search for signs Microsoft is monetising AI hype.

“Meanwhile, Microsoft (MFST) regained the title of 'Wall Street’s most valuable company’, as its share price rose to all-time highs and its market capitalisation exceeded $US3 trillion.

“The move comes as investors back the company as the market’s leader in artificial intelligence, courtesy - in large part - due to its acquisition of a significant share of OpenAI.

“Investors will watch Microsoft’s Q2 results for signs that it is executing its AI strategy and monetising the hype surrounding the burgeoning technology.

“Analysts forecast a nearly 20% rise in earnings from a year earlier. The markets will focus on Microsoft's Azure cloud business as its primary growth engine and barometer for the success of its AI offering.

“Revenue for the segment is tipped to rise 17.5% to $US25.29 billion, with operating margins expected to expand as the company rolls through its cost optimisation program.

“The analyst community is almost universally bullish on Microsoft shares but the consensus price target, at $429.84, is a premium to current market valuations.”

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