Australian Stock Market Report – AMP, Westpac, RIO, BHP shares & more

Australian Stock Market Report - AMP, Westpac, RIO, BHP shares

Market Commentary and Stock Tips - 20 April 2018

Highlights

A Royal Commission or a right Royal Inquisition? – Tariffs and sanctions, what are they good for? - Miners that who – Believe it not employment has increase by 367,000 over the past year – The Reserve Bank –didn’t get a Guernsey in the Royal Commission, as it waxes lyrical about the economy.

 

A Royal Commission – but no real Queen – so a Queens Counsel will have to do

And have we got the jackpot here? – His name is Michael Hodges –and he’s like a dog with a bone as he goes after wayward bankers. This interrogator par excellence relentlessly peruses the hapless bankers from AMP, Westpac, NAB, ANZ and CBA who have owned up to misdemeanors by themselves and employees in their financial planning business over recent times.  Overall the headlines in the media have shown no mercy to the banks. 

But, and without trying to be a devil’s advocate, the banks and the AMP admitted their profound failings and in a number of cases have already provided compensation to victims who have been financially harmed.  But let’s get a little perspective on all this. CBA advised that they have already paid out $135 million in compensation to victims of bad financial advice. However financial planning is but a small part of the overall business of the bank. For instance the total business of CBA has assets of almost $1trillion ($967billion)!

Bottom line, where there have been wrong doings by banks and the AMP, they must be dealt with according to the law – but let’s not throw the baby out with the bath water.  The banks provide a fundamentally important role in our economy and the for the most part have done it well.  The provide jobs for about 170,000 Australians and dividends for about 4 million shareholders.

As a footnote to the above, it’s interesting Roy Morgan’s recent research shows that each of the major bank’s customer satisfaction ratings are over 77% --- more than twice the approval ratings of both Malcolm Turnbull and Bill Shorten combined!

 

Tariffs and Trade Wars–What are they good for?–With apologies to Edward Starr

Well for RIO it’s like all its Christmases have come all at once.  Trump’s Tactics with his Tweets and Tariffs and sanctions on Russian bauxite producer Rusal has led to bauxite alumina and aluminum prices soaring. And as RIO is a major miner of bauxite and aluminum producer RIO share price lifted off the last week- from $76 to almost $82.  Not a bad week in the office.  

 

Our Resource Twins enjoy some Salad Days

Both BHP and RIO are continuing to put their foot on the mining accelerator by extracting more iron ore, copper, nickel and alumina than before, according to their production reports this week.  And these minerals are key inputs to making steel and other products that are used in almost all aspects of our daily lives from roads, hospitals, bridges, houses and even your kitchen sink.  With the world now growing economically faster than it has been in previous years, this is positive for our resource twins.

 

International Monetary Fund looks happier now

This august world economic body, even if it tends to be ‘a bit behind the curve’ when it comes to economic forecasts 9and not unpredictably lifted its forecasts for world economies. And improving world economies are good for Australian companies with international exposure and these include: CSL; Resmed; Cochlear; Reliance World Wide; and Computershare among others.

 

Kogan - once an online upstart, now it’s a stellar share market performer

This company has not even been on the lists for two years, but its share price has rocketed into the share market stratosphere from an issue price of $1.50 to its recent levels of $9.00 per share.  Kogan’s latest addition to its online offering is Pet Insurance on top of NBN and health insurance and mobile phone, (all white labelled as it’s called). It clips the tickets!

 

Reserve Bank – how’s this for an end of March report

Highlights of their recent monthly meeting are as follows:

  • Local economy expected to exceed growth potential in 2018.
  • Local employment growth remains strong;
  • Global economies have strengthened over previous years;
  • Inflation likely to increase gradually to be over 2% per annum;
  • Household assets far exceed borrowings;
  • Indicators of household stress do not indicate a high level of stress; and
  • Interest rates on hold (but may increase slightly towards the end of the year).

Stock Tips- Reserved for clients

australian stock market weekly report 

Next Week

In Australia:

  • Tuesday: Consumer Price Index
  • Wednesday: ANZAC Day- will you be up for the dawn service?
  • Friday: Producer Price Index

In the U.S.A:

A range of data scheduled --- most importantly there are: - consumer confidence; durable goods orders; and gross domestic product.

 

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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