Australian Stock Market Report - Banks, Woolworths, Qantas Shares & more

Michael Heffs post 4may

Market Commentary and Stock Tips - 4 May 2018

Highlights

Banks get their breath back after getting mauled last week – Qantas flies higher with its Dreamliner – The share market delivers for its master the ASX – Retailers still can’t take a trick - except for the fresh food people.

 

Banks still alive after Right Royal Shellacking last week

After our major banks went a metaphorical 15 rounds with Mike Tyson last week due to the antics of cowboy Financial Planners and their executive masters, the market overall had a cold shower this week. It reflected that financial planners actually represent but a sliver off the banks’ body corporate, they’re not the corpus of the banks themselves. The result: - the banks’ share prices as a whole recovered quite significantly.

ANZ, National and Macquarie all saluted the judge this week and the results were quietly impressive- ANZ profits up 4% and dividend maintained, Macquarie got the gold medal –profits up more than expected and dividend up 14% compared with last yeah. The only laggard was the National Bank but even then its dividend was maintained - we await Westpac on Monday.

 

CBA goes into the Confessional Box

This week the CBA confessed it sins---- got its penance from APRA ---- and the share market gave it absolution ---the result CBA’s share price soared 2% on the day it left the confessional box. Quite incredible really!

The APRA report castigated the top levels of CBA, as being complacent; its senses dulled; lacking accountability and so it went on. All a little breath-taking really. But a genuinely contrite boss Matt Comyn responded that CBA will make the necessary changes to become a better bank. If this occurs CBA may well retain its premier poll position among Australia’s major banks.

 

The flying kangaroo just hopped a little higher

Qantas share price this week reached an all-time record high of $6.32. It’s all a far cry from that famous Melbourne’s Derby Day (28 October 2011) when the Chief Flight Controller Alan Joyce locked out his very own pilots, causing consequent airline mayhem! That day was a red letter day-a watershed- for Qantas when nothing could go right.

As if fighting with Virgin wasn’t enough, Alan Joyce got all gloves off with the government as well -and Qantas share price hit the canvas with a thud in 2012 at 96 cents! – But a chastened Qantas then regrouped, stopped fighting with all and sundry, made changes, got rid of old plans brought new ones, stopped the crazy war with Virgin and God smiled and oil prices fell—and time goes by ---- And so it was, by this week Qantas delivered a glowing set of numbers –It will buy 6 new Dreamliner planes which are 20% more fuel efficient than the old Jumbos – and that flows straight through to Qantas bottom line– In short Qantas looks a very attractive proposition.

 

Woolworths – fresh food people are back in town

Woolies is another stock that has been through the mill in recent years. But after a needed reassessment -- it shook itself up--- dusted itself off ---and got back in the race– apologies to Frank Sinatra. And this week its report showed that overall sales are up 4% over last year – no great shakes you say, but it beats Coles and its showing that it can cut the mustard with the likes of Aldi and Amazon. Moreover it’s not a bad stock to consider for the future given that its dividend yield is likely to be around 3-5%.

 

Stop Press

  • ResMed - A very impressive result and benefits from the weaker $A.
  • Seek - Another internationally exposed stock whose future also is positive.
  • Wisetech - This IT infrastructure stock has been on the Big Dipper lately but its recent report was a winner.
  • ASX - This grand master of the share market saw its share price spiral to a record this week. So long as the economy and share market continue to do well so should ASX.
  • Central Banks - Its interest rates Ahoy-- gradually increasing in the US, and Australia likely to get on board later this year with a 0.25% rise.

Stock Tips - reserved for clients

australian stock market weekly report

Next Week

In Australia:

  • Monday: Australian Industry group construction; NAB Business confidence
  • Tuesday: Morison’s budget and Retail Sales
  • Wednesday: Westpac consumer confidence
  • Friday: Home loans

In the U.S.A:

  • Usual range of data: Inflation, Jobless figures, and consumer sentiment.

 

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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