CSL shares fell 4.9 per cent to $185.00 despite raising its interim dividend and saying its earnings would be at the upper end of its guidance range set in August. Investors may have been hoping for an outright upgrade.
Telstra’s shares closed the week 1.9 per cent lower at $3.18 after its profits fell 28 per cent in the first six months of the fiscal year. The company also lowered its total interim dividend distribution to 8¢, down from 11¢ last year.
Suncorp Group fell 3.7 per cent to $13.10 this week after reporting a 44.7 per cent fall in half-year profits. Four major weather events meant the insurer exceeded its natural hazards allowance for the last six months of 2018.
The major resource stocks closed the week higher with some positive results lifting the sector. South32 rose 4.7 per cent to $3.81, Northern Star Resources climbed 15.5 per cent to $9.76, Newcrest Mining advanced 2.5 per cent to $24.88 and Woodside Petroleum lifted 5.6 per cent to $36.06 with all four reporting positive earnings.
Outside of those reporting, BHP Group rose 3.2 per cent to $36.47, Fortescue Metals Group advanced 3.8 per cent to $6.27 and Rio Tinto climbed 0.8 per cent to $91.30.
Breville Group was among the best performing stocks inside the benchmark index, climbing 21.7 per cent to $14.00. The group reported strong results for the first half and said it would be able to weather economic issues in the UK and European Union.
Morgan Stanley retained its ‘equal-weight’ rating on AMP but downgraded its price target from $2.50 to $2.15 on the back of its full year results. Analyst Daniel Toohey noted that rebuilding the financial services company would be challenging but also that the firm’s strategy beyond 2019 critical priorities seemed unclear. “AMP is committed to vertical integration, with ‘disintegration’ viewed as bringing inferior outcomes for customers,” he said. “However, without legislative certainty the optimal pathway is unclear.” Mr Toohey also noted the multiple challenges facing the company includes slowing wealth earnings, the high cost of customer retention and remediation, and falling bank earnings. He added the company was yet to say how it intends to recover $65 million of lost wealth earnings after the Life exit.
What moved the market
Aluminium product exports from China rose 25 per cent on an annual basis in January, reaching a record monthly high above 550,000 tonnes per month. Exports rose 21 per cent through 2018, with 5.8 million tonnes exported from China during the year. Producers in the country have been taking advantage of higher aluminium prices with the LME spot price at $US1,821 a tonne. “The lift in China’s aluminium exports also reflects increased demand for Chinese aluminium after US proposed sanctions against RUSAL earlier last year to target Russian oligarch Oleg Deripaska,” said CBA commodities analyst Vivek Dhar.
Gold has recovered most of its losses in the first half of 2018, climbing above $US1,300 in the past month. While market volatility has declined in the year-to-date, the price has continue to climb, a trend that could continue through the year. “The recent relative calm in gold markets and more normalised level of volatility generally, however, should not be interpreted as a sustained negative for gold in 2019, in our view at least,” said RBC Capital Markets commodity strategist Christopher Louney. “There are a number of catalysts that gold is eyeing in more of a ‘wait and see’ mode.”
The British pound weakened further overnight after the UK house of Commons voted against a motion to support Prime Minister Theresa May’s approach to resolving the country’s Withdrawal Agreement with the European Union. The Irish border backstop remains a key point of contention in the agreement. The latest vote increases the chance of a no-deal Brexit, with the UK on track to leave the European Union on March 29. “A so-called ‘hard Brexit’ will likely be very damaging to the UK economy, already weak, and push the British pound much lower,” said CBA senior currency strategist Joseph Capurso.
US retail figures announced on Thursday disappointed analyst expectations, falling 1.2 per cent in headline terms and leading the Atlanta Fed to slash their estimates of US December quarter GDP from 2.7 per cent to 1.5 per cent. “Many analysts were left dumbfounded by the release, it caught the attention of Fed Governor Brainard who was speaking, running counter to what’s been a still strong labour market,” said NAB director of economic and markets David de Garis. “The data though does open a risk the US economy might be slowing faster than commonly expected.” The US dollar slid heavily on the surprise print.