Australia Stock Market Report - RIO, Magellan, IGA shares & more
Market Commentary and Stock Tips - 8th December 2017
Economic activity abuzz – Child care business is not child’s play – RIO commentary upbeat but the market can’t find the drum - Magellan was a worldwide mariner but now invests around the world – IGA its more than a grocer - Retail sales surprise on the upside - ASX goes for a block chain.
Economic Activity On the Up and Up
…But not quite Up Up and Away yet. However the economy seems to be tracking very nicely indeed at the moment. The broad measure of how are going (Gross Domestic Product) is increasing by close to 3% a year – that’s the best result we have had since the onset of the GFC in 2008. Together with the expansion in the numbers of people employed (300,000 plus this year), a continuing fall in the unemployment rate and improving economic activity around the world, all this must augur well for share market over the medium term.
6,000 might be a target, but the arrows are sprayed around.
One never ceases to be surprised by the shenanigans in Canberra. Hot on the heels of a letter from all four major banks to the Treasurer about recommending a “properly constituted inquiry into the financial services sector” was the surprise packet delivered just 2 hours later when PM Turnbull announced a Royal Commission into the finance sector. The only good thing about this monumental expenditure of around one hundred million dollars is that it will put an end to the serial uncertainty that surrounds our banking industry in particular.
IGA - The community grocer gets the crowd going.
Metcash’s (IGA’s) recent report shot the lights out in terms of its profit increase and it share price responded in like measure, and rose almost 10% after the announcement. While this was largely due to its increasing presence in the hardware arena, its outlook for next year gave comfort to investors. Given that Amazon may not be immersed in the hardware area, this underlines a positive future for IGA.
Childcare company G8's sharemarket code is GEM - but it's no sparkling diamond
G8 delivered a most underwhelming report this week, profit growth significantly less than its advice to the market a little over two months ago. When you disappoint the market like that, you will get metaphorically belted. In this case GEM’s share price fell 23% on the day of the announcement. The bottom line - move on and look elsewhere.
RIO delivers upbeat report - but market says it's no Rio Grande
Harvey Norman & JB-HiFi – not fazed by the Amazon tide.
Steadfast - announces a takeover likely to boost future profitability.
ASX – announces a successor to the CHESS system which looks like a winner.
Reserve Bank – still happy with the economy and enjoy their lunches.
The market continues to wobble around 6,000 points while world markets continue to reach new highs. We have now only 2 weeks before the Christmas break and the market still has further to go if it is going to register the usual Santa Claus rally of around about 2% share price rises in the month. As I have said before I don’t see any black clouds on the horizon which could adversely affect our share market in the short term (after all I do live in Melbourne which is enjoying a seasonally adjusted wonderful summer).
Stock Tips – reserved for clients
Monday: Home sale figures
Tuesday: National bank business confidence and business surveys
Wednesday: Westpac Consumer Confidence
Thursday: Employment and unemployment figures
In the U.S.
A veritable avalanche of important economic data- Inflation; jobless figures; central banks decision to likely raise interest rates; retail sales; and industrial production.
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