The Australian stock market recovered last week from a very volatile past couple of weeks as US markets come to grips with potentially higher inflation and higher rates quicker than previously expected. The benchmark S&P/ASX 200 index gained 1.3% for the week still well below the magic 6000 points and despite a relatively solid week. Most major industry groups finished the week in positive territory with the exception of the Telecommunications, Consumer Discretionary and Property Trusts sectors. With reporting season in full swing, Origin Energy improved its half year underlying profit and increased its full year earnings guidance, CSL delivered a strong result on flu vaccine demand, Building materials supplier Boral posted a 13 per cent lift in first-half profit, with a positive outlook and Bendigo and Adelaide Bank was off 23 cents, or 2.1 per cent, at $11.00 after it lifted first-half cash profit 10.7 per cent to $225.3 million, boosted by mortgage rate rises and an increase in residential lending. Telstra’s first-half profit dipped by 5%, while Suncorp delivered its first-half profit which dropped 16% due to costs associated with Melbourne’s December hailstorm. Domino’s Pizza disappointed after it lowered its full year sales growth forecast for its Australian and New Zealand stores. Insurance Australia Group benefitted from higher insurance premiums which contributed to its 24% rise in its half-year profit. Cochlear’s first-half profit fell 1% due to the timing of a large Chinese tender and US tax changes. In retail land, JB Hi-Fi’s first-half profit lifted but the company warned of margin pressures and issued lower-than-expected guidance, while Myer hit a fresh all-time low, dropping to 58.5 cents after the department store chain warned of more write-downs, poor holiday sales and dire trading conditions. Woodside Petroleum, announced the acquisition of and a $2.5bn capital raising primarily to acquire ExxonMobil’s 50% interest in Scarborough for US$444m. One of the themes arising out of earnings season is the US tax cuts which will have a positive impact on a number of companies as well as confidence building domestically given continued jobs growth in January. Global equity markets were also better after two volatile weeks as investors focus on continued synchronised growth across the globe, positive manufacturing data and low rates of unemployment.

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