Macquarie Group closed 2.2 per cent lower after the financial services group revealed annual net profits dropped 32 per cent to $3.5 billion and slashed dividends.

The company’s top executives have had their pay packets shrink this financial year, with chief executive Shemara Wikramanayake’s pay falling from $32.8 million to $25.2 million. Former Macquarie rainmaker Nick O’Kane’s pay dropped dramatically from $57.6 million in 2023 to $1 million this year. O’Kane was not eligible for the hefty profit-share bonuses doled out by Macquarie after he resigned in March. Asset management boss Ben Way also took a cut, taking home an $11.3 million packet.

The lowdown

AMP chief economist Shane Oliver said Australian shares have stabilised since their April lows, but warned it was too early to say the correction was over, given “valuations remain stretched, sentiment is not at bearish extremes, uncertainty is high regarding the outlook for interest-rate cuts, and the risks regarding the Israel/Iran conflict remain high”.

“We are still inclined to see the April fall in shares as a correction rather than something deeper, though, and continue to see further gains in shares this year as disinflation resumes, central banks ultimately cut interest rates, and recession is avoided or proves mild,” he wrote in a note on Friday.

“That said, the gains in global and Australian shares over the remainder of the year are likely to be more constrained and more volatile than was the case in the first three months of the year.”

AMP expects the Reserve Bank to leave rates on hold next Tuesday.

On an economic note, it’s been slow progress getting Australia’s inflation back on target.

“The economy is still moving in the right direction for the RBA to achieve its inflation target, but taking longer than expected,” said HSBC Australia chief economist Paul Bloxham.

HSBC’s central forecast is that the Reserve Bank of Australia will remain on hold for the rest of the year and might start cutting rates early next year.

“That said, we see a 40 per cent chance that the RBA could raise its cash rate again in [the second half of 2024] and a risk that the cash rate is on hold for longer than our central case, partly depending on actions by the US Fed.”

Overnight, US stocks climbed to trim the majority of their losses for the week.

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The S&P 500 rose 0.9 per cent, which more than halved its drop for the week. The Dow Jones rose 0.9 per cent and the Nasdaq composite jumped 1.5 per cent.

After the close, Apple disclosed its steepest quarterly decline in iPhone sales since the pandemic’s outset, deepening a slump that’s increasing the pressure on the trendsetting company to spruce up its products with more artificial intelligence.

But the company committed to spending $US110 billion ($168 billion) buying back its own stock, a move investors cheered but may fuel criticism Apple is spending more money catering to Wall Street than creating more innovative products. Shares were up 6 per cent at 8.34am AEST in after-hours trading.

In the bond market, Treasury yields eased ahead of a report on Friday from the US government on how many jobs employers added last month. It’s one of the most highly anticipated economic reports each month, and economists expect it to show a slowdown in hiring.

“The markets will be hungry for any data suggesting the economy isn’t heating up any more than it did in [the first three months of 2024],” according to Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley. That would give the Fed more leeway to consider cutting rates.

Earnings reports from several big companies helped drive the market higher. Qualcomm rose 9.7 per cent after topping forecasts for profit and revenue in the latest quarter. The tech company also gave forecasted ranges for coming revenue and profit whose midpoints topped analysts’ expectations.

Stubbornly high readings on inflation this year are what pushed Federal Reserve Chair Jerome Powell to say on Wednesday it will likely take “longer than previously expected” to get enough confidence about inflation to cut interest rates.

The Fed’s main interest rate has been sitting at its highest level since 2001, and cuts would release some pressure on the economy and financial markets.

Tweet of the day

Quote of the day

“This is a tough industry. It’s not for the faint-hearted. You’ve got to constantly be reviewing what’s working and what’s not. Being agile and quick to change, and you’ve got to trial things. But if they don’t work, you’ve got to change strategies and stay really strong.”

That’s Jetstar boss Stephanie Tully reflecting on the budget airline model in which new entrant Bonza has slid suddenly into voluntary administration, at the same time Jetstar celebrates its 20th birthday.

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with AP