30-08-2019

The deemed improvement in trade negotiations spurred investors to action. Major European and US stock indices gained 1%-2%. Industrial commodities rallied, led by a 2% jump in crude oil. However safe haven assets only edged lower in an indication that there is no “all clear” on trade as yet.

The Australian corporate reporting season concludes today. Ship builder Austal pleased investors with a profit result around 10% ahead of forecasts. A 9% short sold position in Harvey Norman’s shares mean its report will receive particular attention. Heavily shorted stocks have featured this reporting season, regularly making large moves in both directions as their results confirmed or disproved short sellers’ views.

29-08-2019

In the absence of news on the trade dispute risk markets reverted overnight. European shares edged lower, US shares rose. Oil rose on surprising usage data, and the British Pound fell as the government sought to suspend Brexit debate. However bond markets and gold remained firm, a sign that sentiment is still fragile. A single announcement, headline or tweet could change the market mood in an instant.

On the second last day of reporting season Australian supermarket giant Woolworths delivered a 7.2% increase in profits and lifted its dividend. The headline result of a 56% profit lift was driven by the sale of its petrol business. Tech stocks may come under pressure after language tech group Appen missed forecasts, and data centre operator NextDC reported a larger loss than expected.

!* *!

28-08-2019

In ominous moves bonds and gold rallied again overnight, despite gains for European shares and oil. The market action indicate overall expectations of continuing central bank support due to lower growth. Futures point to a mixed day for Asia Pacific stocks.

High growth Australian stocks are in the reporting spotlight today. Market favourite Afterpay is expected record a loss of around 3.5 cents per share as its international expansion continues. Analysts will look to revenue and customer growth as key indicators of prospects. Former market darlings Bellamy’s and Bega Cheese come to shareholders with much reduced share prices, and a consequent potential for positive reactions.

27-08-2019

The overall performance of corporate Australia was lifted by a string of recent results. Sales growth moderated back towards 3% for the top 200 companies, but average earnings are now firmly positive. This is a significant surprise as pre-season expectations centred on a modest decline in profits. The growth could see analysts revising valuations upward.

Reports so far this morning echo the trend. The stand-out performance is conglomerate Wesfarmers’ quadrupling of profit following the spin-off of Coles supermarkets. Better than forecast results from Nanosonics, Caltex and Inghams may see the Australia 200 index add to the modest 19 point gain in overnight futures trading.

26-08-2019

Asia Pacific markets are set for a torrid day after the trade dispute intensified on Friday night. China imposed new tariffs on $75 billion of US goods prompting a tweet storm from President Trump. Shares tanked, and investors fled to the safety of gold, bonds and the Japanese Yen. Further 1%+ falls in US stock futures this morning mean regional shares may take a hit larger than the 2.4% Friday night fall in the Dow Jones Industrial Average.

The Australian reporting season enters its last week. Fortescue, Viva Energy and NZ’s telco infrastructure group Chorus all beat consensus forecasts and may face less selling pressure. However Resolute Gold, Ooh Media, G8 Education and Boral could be considered unlucky to have to disappoint on a day when market activity may be unforgiving.

23-08-2019

Market moves defied data releases, spotlighting investors’ central bank focus. French, German and Europe-wide activity indicators surprised investors with better than expected reads. Continental shares fell. In contrast, US PMI’s were softer than forecast, indicating a modest contraction in manufacturing. Tech shares fell, but the Dow and S&P500 finished flat.

Futures markets show a mixed start to Asia Pacific trading. Australian investors could once again focus on the micro as the company reporting season hits the three-quarter mark. Property group Goodman delivered a 48% lift in net profit on the back of a 10% lift in operating profit and revaluations. Software provider Bravura Solutions also beat analysts’ estimates.

However the broader market may come under pressure after disappointing reports from Sims Metal, Ardent Leisure and Mayne Pharma. Costa Food Group cited weaker mushroom and raspberry markets as contributors to its lower than forecast profit and guidance to the lower end of previous forecasts.

22-08-2019

The Australian PMIs released this morning showed expansion in manufacturing but contraction in services. Tonight German and French PMIs are expected to show the opposite as disrupted global trade weighs on European manufacturers. Perhaps surprisingly analysts forecast a modest pick-up in US manufacturing in August. Any disappointment in tonight’s data releases could dispel pro-growth investor sentiment.

Australian investors face a reporting peak today, with 23 top 200 companies releasing results. Nine Entertainment, Qube Logistics and Origin Energy may receive share price support after delivering higher than forecast profits. However higher fuel costs dragged on Qantas’ earnings, and Webjet also missed projections.

21-08-2019

As the US reporting season draws to a close corporate Australia hits full stride. More than 10% of the top 200 companies front shareholders today. The results so far are skewing negative, and accompanying commentary is generally less than inspiring.

Market darling A2 Milk reported a 47% lift in profit as baby formula sales jumped. However the stock is closer to all-time highs and the result was slightly below analysts’ forecasts. Fellow Kiwi Fletcher Building may face less friendly reactions from shareholders after both reported well below expectations.

Mineral sand miner Iluka provided a highlight with a 41% lift in earnings. Auto parts distributor Bapcor and telco Spark NZ also delivered results above consensus estimates.

20-08-2019

The Reserve Bank of Australia releases the minutes from the most recent meeting today. Interest rate markets reflect little chance of a cut in September after back-to-back cuts in June and July. However two cuts by year end is the majority view, and the minutes will be scrutinised for further clues on timing.

The world’s biggest mining company, BHP, narrowly missed underlying profit forecasts. Although headline profits more than doubled and the dividend was lifted to 78 US cents, the shares may come under pressure today after the miss and management’s estimate that cost will rise this year.

Other reports so far include better than forecast profits from Tassal Group and Sonic Healthcare. Industrial services group Monadelphous disappointed with a 29% drop in earnings, and intellectual services group IPH also missed analysts’ estimates.

 

19-08-2019

 

Seven of Australia’s top two hundred companies report today as the season approaches the half way mark. Beach Energy, Lend Lease and GWA Group missed estimates by small margins and investors may not punish them too severely. BlueScope Steel shareholders could celebrate a 17% lift in underlying profit despite a 35% drop in headline earnings. A lack of one-off benefits meant the headline number suffered in comparison to last year’s result.

16-08-2019

As the Australian reporting season clears the one-third point, sales growth across the top 200 companies is running at a healthy 8.5%. However earnings pressure in telcos, utilities and energy stocks has profits in the red for the half year.

Record highs for gold in Australian dollar terms brings a particular focus to Newcrest Mining’s full year result today. Consensus forecasts are centred around a 50% increase in profits. Star entertainment reports today, and analyst will look for details of strategy to deal with competition from the imminent Crown casino in Sydney. Surprisingly good results in property so far puts Abacus and Charter Hall in the spotlight, and healthcare is represented by pathology group Healius and hearing device manufacturer Cochlear.

15-08-2019

European and US shares were thumped in overnight trading after the US bond curve signalled an imminent recession in the US. Bonds rallied everywhere. Oil and base metals tumbled and gold rose as investors fled growth exposures. Financials and energy stocks fell furthest as traders factored a weaker demand scenario and lower for longer interest rates. Currency markets remained relatively calm.

The sell-off comes despite a better than forecast US earnings season. More than 90% of SPX500 companies have reported. Aggregate earnings are up around 2%, beating forecasts of a negative quarter. However The Asia Pacific futures markets indicate opening losses around 2% for major markets.

Australian company results could add to market pressures. Telstra reported a 40% drop in profit, worse than forecast. Optimistic messages around the introduction of the 5G spectrum may not be enough to stem investor displeasure. Other misses include Blackmore’s, Cleanaway, Treasury Wine Estates and Super Retail. Both Sydney Airports and QBE Insurance delivered earnings above expectations, and funeral group Invocare surprised with a 7.5% lift.

14-08-2019

Australian company reporting hits full stride today with nine Australia 200 index releases. Dexus property group may see unit price pressure after reporting a 26% fall in profits on lower revaluations. Packager Pact Group also reported a profit decline as write-downs pushed the bottom line to negative. On the other hand, Computershare and CSL both beat consensus forecasts. However analysts are waiting on Australia’s largest telco Telstra to reveal its result and flesh out its evolving strategy.

13-08-2019

Companies reporting today include Hong Kong listed Tencent Holdings and Australian fund managers Magellan (MFG) and Challenger (CGF). The contrasting fortunes in the wealth management space are on display. MFG is trading near all-time highs, and is in suspense due to a capital raising this morning. CGF is trading at 4-year lows. It reported a 5% fall in net profit and $2.4 billion lower FUM after a 9% reduction in advisers. Management spelled out an ongoing growth strategy and a positive outlook.

12-08-2019

The US corporate reporting season is close to done. Growth in Healthcare and Telco earnings is offset by weakness in Materials, Technology and Consumer Goods, and it’s Iikely this will be the second quarter in a row of negative earnings for the S&P500.

JB HiFi (JBH) has once again confounded the short sellers, delivering 7.1% profit growth and $1.42 dividend for the full year. Day traders are on alert for a short squeeze. Property Group GPT saw earnings drop 52%, slightly better than expected. Ansell and Bendigo Banks also saw bottom line pressures. However Ansell management posted a positive outlook that could find shareholder support.

9-08-2019

Data could dominate the global trading session. Japanese preliminary Q2 GDP and July inflation numbers for China arrive today. If either come in above forecasts there is potential to add to the positive momentum. Tonight the focus turns to the UK for the release of GDP, trade, investment, production, manufacturing and construction data. Forex traders could re-position ahead of the numbers deluge.

Online real estate group REA reported a 58% decline in headline profit after booking a $173 million charge against its Asian operations. However underlying profits surprisingly rose, and both earnings and revenue lifted 8%. In an echo of yesterdays’ result from developer Mirvac Group, a decline in residential activity was offset by gains in industrial and office activity. Management issued a positive outlook, and REA investors will hope the share price follows Mirvac’s 6.5% post-result gain.

8-08-2019

Stock and commodity markets stabilised overnight, with a few key exceptions. Oil prices plummeted 4.5% after the US Department of Energy reported an unexpected 2.4 million weekly build in crude stockpiles. Gold traded to six-year highs above US $1,500 an ounce. Overall sentiment was modestly pro-growth lifting European shares, sparking an inter-session bounce in US equities, and pushing bond yields higher.

Asia Pacific shares are set for a mixed start, as futures traders pushed the Nikkei higher, left the Hang Seng flat, and the ASX200 lower.

The Australian company reporting season is in full swing. The situation at Australia’s former biggest wealth manager remains highly concerning. AMP revealed a $2.3 billion loss, a 38% drop in operating profit and a $650 million capital raising. The shares are in trading halt as the capital raising proceeds, but there is a stronger probability of a new share price low when they re-commence.

Profits were generally down. Property group Mirvac saw a 6% drop and IAG’s insurance profit fell 15%. IAG’s sale of a Thai business bolstered its headline number. AGL provided a cautious outlook, but provided a reporting bright spot with a 2.2% lift in underlying profit and a $650 million buyback.

7-08-2019

The full year result from the Commonwealth Bank of Australia released this morning may dominate local investor responses. Profits dropped 4.7% for the full year, driven by almost $1.3 billion in costs associated with the banking Royal Commission and customer compensation.

Operating income dropped 2%, but the bank held the dividend at $4.31 for the full year. The result is better than expected, but the market response could be tempered by the fact the $5 billion sale of its asset management business did not produce a special dividend. CEO Matt Comyn cited ongoing pressure on margins

The sale of Suncorp’s life insurance arm and the associated loss saw its full-year result down 84%. The yearly dividend is 70 cents, down from 81 cents. The acting CEO Steve Johnson spoke to organic improvement. A modest drop in net interest margin is impressive in light of the lower interest rate and lending environment.

6-08-2019

An escalation of trade hostilities roiled markets in overnight trading. Yesterday China devalued the Yuan to eleven-year lows and instructed state organisations to halt purchases of US agricultural goods. The White House responded by labelling the move “currency manipulation”. Shares dropped, bond prices hit fresh highs and gold continued its ascent as investors raced for the exits. In scenes reminiscent of the 2018 fourth quarter sell-off the S&P 500 index dropped 3%, extending the four day drop to 6.5%.

Australian top 200 companies reporting this morning offer some cold comfort to local investors against this distressing backdrop. Both Pinnacle Investments (PNI) and Bunnings Warehouse Trust (BWP) beat Bloomberg average full-year earnings estimates. A miss from Shopping Centres Australia appears to confirm ongoing weak consumer activity, and may better match the current market pulse.

Investors look forward to two key releases tomorrow. The Commonwealth Bank of Australia (CBA) is expected to unveil a 10% decline in earnings as remediation expenses continue to hit the bottom line. As it the only big four bank to report in this cycle analyst will look to the reported Net Interest Margin as an indicator for the sector. Transurban (TCL) could see an increase in toll revenues after recent acquisitions but lower economic growth and increased expenses may mean a significantly weaker bottom line.

5-08-2019

We are kicking off the ASX reporting season blog page for the August 2019.

The Reserve Banks of Australia and New Zealand deliver interest rate decisions on Tuesday and Wednesday. Analysts are forecasting a 0.25% cut for New Zealand, dropping the cash rate to 1.25%. In contrast, Australian interest rate markets indicate almost no chance of a change after two adjustments in the previous months. Both nations’ currencies are under pressure from weakening growth sentiment and a resurgent US dollar.

The weakness comes at a crucial time for Australian shares. The semi-annual reporting season will see reports from Commonwealth Bank, Transurban, AMP, AGL, IAG and James Hardie this week, among many others. Resource stocks are expected to feature given key commodity prices have surpassed consensus forecasts aver the last year. Lower growth rates and cautious consumers mean the outlook for industrial and financial stocks is less bright.