AU Morning Wrap: ASX Rises; Megaport, Bubs Tumble

The January rally took a breather as investors braced for earnings from the market's biggest companies and the first Federal Reserve policy meeting of 2023. Energy and tech led a retreat that lowered all but one sector.

"The market has had a big run and the trading is a bit more cautious heading into a week which likely will be an inflection point for the overall market," Keith Lerner, co-chief investment officer at Truist Advisory Services, told Reuters.

Megacaps Apple, Amazon and Google parent company Alphabet all lost at least 1.65 per cent ahead of trading updates later this week. This is arguably the biggest week of the current reporting season, with 107 S&P 500 companies scheduled to release updates, as well as six Dow component companies.

Bubs Australia fell 10 per cent after announcing second quarter China revenue fell 66 per cent as prolonged COVID lockdowns caused significant disruption.

Management blamed poor consumer sentiment in the US and weak stock levels for the downgrade in total sales guidance to between $170 million and $190 million, versus a previous forecast of up to $230 million. Its adjusted EBITDA guidance also got chopped.

First-half revenue fell 1 per cent to $37.9 million and second-quarter revenue fell 28 per cent to $14.3 million.

The company booked a net profile of $591 million for the half-year ending 31 December, up from $91 in the first half, reflecting growth in its share of net profit in Tianqi Lithium.

• Iron ore rallied 2 per cent in China as trade resumed after the week-long Lunar New Year holiday. Buyers were encouraged by a pledge from the State Council to support consumption and by reports the holiday had not fuelled an uptick in Covid cases.

• Oil fell ahead of likely rate hikes in the US and Europe this week. The Organization of the Petroleum Exporting Countries and allies hold a committee meeting on Wednesday. A European Union ban on Russian oil imports starts on Sunday.

Brent crude settled US$1.76 or 2.03 per cent lower at US$84.90 a barrel.

• Gold trimmed its longest run of weekly advances since 2020. Gold for April delivery settled US$6.40 or 0.3 per cent lower at US$1,939.20 an ounce. The NYSE Arca Gold Bugs Index dropped 1.08 per cent.