Investor attention was dedicated to the flood of company profit results in the busiest week of reporting season so far, with the index finishing the week flat.
The S&P/ASX 200 index closed Friday up 19 points or 0.3 per cent to 5526.7, but down less than 0.1 per cent for the week. The All Ordinaries finished Friday up 18 points or 0.3 per cent to 5625.4, and flat for the week.
“Bank earnings were far from spectacular and a fairly pessimistic view of the future ensured bank stocks and hence the ASX 200 finished [the week] in the red,” Suncorp head of treasury research Darryl Conroy said.
National Bank of Australia on Monday capped results and trading updates from the big four.
“Ratings agency Moody’s put the cat amongst the pigeons by confirming that the sovereign rating as stable, whilst putting the nation’s banking sector on negative watch,” Mr Conroy said.
The health index was the weakest performing sector of the week, down 3.2 per cent as results – from the likes of Primary Healthcare and CSL – failed to live up to the expectations set by their high price-to-earnings ratios, Mr Conroy said.
The materials and energy sectors stood out in an otherwise muted week for the overall index, benefiting from a shift in sentiment on commodity prices.
“After an awful five years, commodity prices are stabilising, which will likely provide the broader Aussie economy with a reprieve for an uncertain length of time,” Mr Conroy said.
BHP Billiton helped lead the index on Friday to a gain, lifting 3 per cent for the week while the materials index added 1.7 per cent, behind energy, up 2.9 per cent as oil prices charged to a bull market, and consumer staples, up 2.1 per cent.
Santos and Woodside Petroleum both reported their earnings on Friday, with the former booking a $1.1 billion loss. Its shares ended 2 per cent lower while Woodside shares added 1.2 per cent.
Other companies that reported on Friday included Medibank Private, which fell 4.7 per cent on its weaker than expected result, and Bellamy’s, one of the market’s more highly valued stocks, which trebled its profit in the 2016 financial year. Bellamy’s shares finished 1 per cent higher.
Oil’s bull market
Speculation that oil producers, including from OPEC, would finally act to curb supply and a fall in stockpiles in the US helped propel oil prices towards its biggest weekly gain in five months. Brent crude oil crossed above $US51 a barrel for the first time since early June, capping a 20 per cent rise this month that has officially placed the commodity in a bull market.
Blue chips miss
Investors were less than impressed with the performance of some of Australia’s tightly held blue chip companies. AMP slid 4.7 per cent on its result, while CSL tumbed 5.1 per cent and QBE slid 8.3 per cent. BHP Billiton was cheered despite its $8.3 billion loss, climbed to its highest point this year as investors applauded its cost cutting efforts and optimism on stabilising commodity prices.
The Australian dollar fluctuated around the US77¢ mark this week as it continues its post-rate cut strength. Employment data on Thursday which reported a 26,200 new jobs in July, and a fall in the unemployment rate to 5.7 per cent pushed the dollar higher, helped by a weaker US dollar on divisive US Federal Reserve minutes. By Friday the currency lost steam, trading at US76.4¢.
Banks on watch
On Friday ratings agency Moody’s placed the big four banks on credit watch negative, the week after Commonwealth Bank of Australia provided its full year profit result and the other three trading updates. It’s been a rough month for the banks after earlier being criticised by politicians for not passing on the full interest rate cut from the RBA to customers, and the financials sector finished the week down 0.8 per cent.
Stock watch: Cleanaway
Cleanaway Waste Management emerged as the week’s best performing stock on the S&P/ASX 200, rocketing 15.6 per cent to $1.04 after reporting its full year results on Friday. The company reported a rise in net underlying profit to $63.3 million, and a statutory profit after tax of $44.8 million for the year ended 30 June, a swing from the previous year’s $23.6 million statutory loss. Cleanaway CEO Vik Bansal attributed the profit growth to its focus on improving free cash flow and simplifying its operating structure. The company announced a final dividend of 9¢ a share.