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ASX down as dividends rule the day

Daily Market Update

ASX down as dividends rule the day, retail sales recover but Myer (ASX:MYR) smashed

The ASX200 (ASX:XJO) fell another 0.8% on Thursday, dragged down by a flurry of major companies paying out dividends.

The likes of BHP Group (ASX:BHP), CSL (ASX:CSL), and Rio Tinto (ASX:RIO) fell 3.1%, 4.2%, and 6.2% respectively as they paid out billions of dollars in dividends to income starved investors.

Financials and real estate were the only sectors to finish higher, up 1.1% and 0.6%, with both potential beneficiaries of the much talked about ‘bond rate’ increases; the banks via their ability to charge higher interest rates, and property, potentially through inflation-linked rental payments.

Retail sales saw a modest improvement on December figures, growing 0.5%, which must be seen as a positive given the strength of that month’s results.

Myer Holdings (ASX:MYR) has been unable to benefit from the recovery, however, falling 10.6% despite announcing an 8.4% increase in underlying or operating profit to $42.9 million.

The company benefitted from some $67 million in rent waivers and JobKeeper subsidies, but the dividend remains on hold due to strict banking covenants.

Corporate activity continues to recover, Cleanaway (ASX:CWY), Xero Ltd (ASX:XRO) on the hunt

Cleanaway Waste (ASX:CWY), a company in which I hold shares, jumped 4.0% after responding to rumours in the Australian Financial Review that they were seeking to purchase major competitor Suez’s domestic operations. The deal was said to be in the vicinity of $2 billion, half of the current value of CWY.

The Australian Competition and Consumer Commission responded quickly suggesting any deal would be subject to a full inquiry on competition concerns.

Cloud accounting software firm Xero (ASX:XRO) announced its largest acquisition on record, buying Planday for $241.6 million; shares fell 2.6% on the news.

Planday is a workforce management platform that already partners with Xero but assists in scheduling employee ‘punch cards’.

XRO is clearly seeking to expand its product offering to small businesses around the world. The purchase will be funded 55% from cash and 45% from new equity being issued.

The key driver behind the strength of the AUD remains on track, with a $10.1 billion trade surplus in January driven by a 6% increase in exports.

However, with Independence Group (ASX:IGO) falling 7.9% after a rebound in nickel supply hit prices, the saying that ‘the solution to high prices is high prices’ remains apt.

Sell off hits 10%, Federal Reserve ‘concerned’ by disorderly markets, Splunk beats expectations

The market sell off hit 10% overnight, with all three US benchmarks falling as 10-year yields exceeded 1.5% once again.

This time the Federal Reserve didn’t offer explicit support to the market, indicating only that they would be ‘concerned’ with disorderly markets, but not outlining any further action.

The Nasdaq continues to feel the brunt of the sell off, down 2.1% as investors move away from big tech names, with COVID-winners remaining among the biggest losers, PayPal (NASDAQ:PYPL) falling 7.0%.

The Dow Jones and S&P500 fell 1.1% and 1.3% respectively, despite a rally in the oil price following further OPEC production cuts, meaning the ASX will open weaker to finish the week.

Machine learning and big data company Splunk (NYSE:SPLK) fell 2.7% despite reporting just a 6% fall in revenue on the back of an 83% increase in cloud based revenue.

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