Australia Stock Market Report - RIO, Magellan, IGA shares & more

Australia Stock Market Report - Tabcorp, BHP, Telstra shares

Market Commentary and Stock Tips - 8th December 2017

Highlights

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

Stop Press

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.

Conclusion

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

australian stock market weekly report

Next Week

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.  

Disclaimer: This publication has been prepared solely for the information of the particular person to whom it was supplied by Phillip Capital Limited (“PhillipCapital”) AFSL 246827.  This publication contains general financial product advice.  In preparing the advice, PhillipCapital has not taken into account the investment objectives, financial situation and particular needs of any particular person.  Before making an investment decision on the basis of this advice, you need to consider, with or without the assistance of an adviser, whether the advice in this publication is appropriate in light of your particular investment needs, objectives and financial situation.  PhillipCapital and its associates within the meaning of the Corporations Act may hold securities in the companies referred to in this publication.  PhillipCapital believes that the advice and information herein is accurate and reliable, but no warranties of accuracy, reliability or completeness are given (except insofar as liability under any statute cannot be excluded). No responsibility for any errors or omissions or any negligence is accepted by PhillipCapital or any of its directors, employees or agents. This publication must not to be distributed to retail investors outside of Australia. 

 

About Michael Heffernan

+61 (3) 8633 9925 Email Profile

Michael Heffernan has over 30 years’ experience in the finance and securities industry and is currently a Senior Client Advisor and Economist with a leading Australian Sharebroker Phillip Capital after having been Chief Economist/Lawyer with the Australian Stock Exchange for 13 years, and an Economist with Commonwealth Department of Employment and Industrial Relations for 11 years.
Most recently Michael topped the poll of the Australian Newspaper's Criterion column of his expert tipsters for 2014 with an average increase of 26% over the year. Also Michael was named Stock Picker of the year 2013 and 2016 at the Australian Stockbrokers Foundation Annual Awards Charity Dinner.

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