Australian Stock Market Report – ANZ, NAB, BHP, Dulux shares & more

Australian Stock Market Report ANZ NAB BHP Dulux shares more

Market Brief and Stock Tips - 21 December 2018

Christmas and New Year

David and I would like to wish everyone a Merry Christmas and Prosperous New Year, and after a short break, the weekly commentary will resume around mid-January.

 

Highlights

Winding down for Christmas? – U.S. Interest rates are winding up – Australian economy – walking along a steady path – ANZ and NAB - it’s thebosses’ dollars, but not much sense – Dulux – painting a rosy picture – BHP – Share Buy-Back done – so now you can buy them back!

 

U.S market - its “toga in a knot” over ¼ per cent rise in rates

The U.S. Federal Reserve has raised interest rates by 0.25 per cent (the fourth increase this year) to a range of 2.25 percent to 2.5 percent. Furthermore, 2 additional rate hikes are expected in 2019 instead of 3 – and that’s pretty positive. But the sharemarket, true to its inscrutable contrarian tilt, slides down following the decision. - Volatility continues! 

 

Economy not going “gang busters” – But Reserve Bank says it’s ok

Economic growth is across the board, employment expanding apace, and unemployment trending  down. But the softness in house prices across Sydney and Melbourne remain of concern.

As far as the labour market in particular is concerned, employee numbers rose by 37,000 in November, and over the year as a whole up by a whopping 295,700 - above the average annual growth rate over the last 20 years. The unemployment rate remains at a low of 5.1 per cent of the labour force.

 

ANZ Bank – Bonuses in the gun

At this week’s AGM, 34 per cent of shareholders voted against ANZ’s remuneration report.

In addition the tone of the AGM commentary was pretty downbeat, so no surprises there. But this year has been exceptionally difficult for the banks, hampered by regulatory belt tightening and the Royal Commission. But not only that, a slowdown in house lending and softer home prices are also likely to constrain future revenue growth meaning that managing costs will be essential for future profitability.

 

National Australia Bank – So you thought 34 per cent was bad -- but NAB shoots the lights out

An unbelievable 80 per cent plus of NAB shareholders voted against NAB’s remuneration report!  But one interesting vignette that has reverberated through each of the banks AGM comments – which has now become almost a bank mantra - is that “the year ahead will be challenging”– well tell me something I didn’t know. But looking ahead on the positive front for NAB is that it plans to migrate to new technologies that should ultimately lower cost by $1 billion by 2020. And business banking is NAB’s key differentiator and it continues to gain market share.

 

Dulux – “keeps on keeping on – or was that Berger paints”

At this week’s AGM, reference was made to the fact that the past year was quietly impressive with net profit after tax increasing by 5.4 per cent to $150.7 million. And future profit growth is expected to be firm as its paints are largely concentrated on the renovation market, and the renovation market constitutes about 67% of Dulux’s business. However it also said that next year’s results will be skewed to the 2nd half!

 

Stop press

BHP Buyback – Santa delivers on Christmas Eve

BHP completed its buyback program on the 14th December, and a fully franked dividend of $27.26 per share will to be paid on Christmas Eve for shares that were successfully tendered. This dividend embodies a massive $11.68 in franking credits.

 

A beautiful set of numbers – but Paul Keating is nowhere in sight

In a nutshell, the Australian economy has delivered record numbers of jobs, with the unemployment rate falling to around its lowest level in six years. The outlook looks promising, with the budget on track to return to surplus in 2019-20. Moreover, the economy is forecast to grow by 2 ¾ per cent in 2018-19, then strengthening to 3 per cent in 2019-20. The international economic outlook remains bright, but uncertainty around tariffs between the U.S. and China remain.

Stock tips please contact Michael on 03 8633 9925

australian stock market weekly report 

Next week

In Australia:

No important economic data being released.

In the U.S.A:

Usual range of data: Consumer Confidence and Central bank boss Powell will testify.

 

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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