Markets weekly: Magellan, Suncorp, Crown and Tabcorp jump

Rene Anthony 13 August 2018 NEWS

Financial stocks received a boost amid local reporting season, while the RBA maintained interest rates.

Last week saw reporting season ramp up, with a long list of stocks releasing results to watchful investors. Traders were also cautious in the midst of deepening economic uncertainty in Turkey, with metals tariffs weighing on US relations and leading to a currency plunge. By Friday’s close, the ASX 200 was up 0.7% to 6,278.4, while the All Ordinaries gained 0.6% to reach 6,366.8 points.

Major movers last week

The financial sector underlined last week’s market advance courtesy of a 2.2% increase. Commonwealth Bank (ASX: CBA) was one of the primary contributors, climbing 3.5% to $75.39 despite reporting declining cash profits for the first time since the GFC.

Magellan Financial Group (ASX: MFG) leaped 17.7% on an 8% rise in net profits and commentary indicating higher distributions for shareholders. Another contributor was Suncorp (ASX: SUN), spurred 5% higher on results showing $1.1 billion annual net profit, as well as a positive outlook and possible divestment of its life insurance business.

In other sectors, top performing stocks included Crown Resorts (ASX: CWN) up 6.1%, Lynas Corporation (ASX: LYC) surging 7.9%, and Tabcorp (ASX: TAH) jumping 5.9% notwithstanding below-expected earnings.

At the other end of the scale, the owner of Grays Online, Eclipx Group (ASX: ECX), dived 37.5% after a large cut to its profit guidance and the looming threat of a class action.

Elsewhere, Seek (ASX: SEK) fell 6.7% on write-downs of $178 million connected to its Brazil and Mexico businesses, while Amcor (ASX: AMC) slumped the same amount on news it would acquire a major US competitor for $6.8 billion and list overseas. Finally, AGL (ASX: AGL) dropped 5.3% on an underwhelming forecast for the year head, even though its profits tripled.

Commodities and Forex

Oil prices fell as the US imposed sanctions on Iran, plus China indicated it would increase its output and implement tariffs on certain US petroleum imports. WTI crude ended the week 1.3% lower at US$67.70/bbl.

Among the major metals, gold was largely steady near its yearly lows, sitting at US$1210/oz. Base metals dropped on US/China tariff repercussions, however iron ore was supported by strong steel rebar prices fuelling demand for the metal. The price of copper was also steady at US$2.73/lb.

The RBA held rates for the 22nd consecutive time, with accompanying statements leading some analysts to believe the next eventual move in interest rates will be an increase. A decline in housing finance for June, which extended the yearly slide, weighed on the Aussie dollar, as did emerging market currency issues. The AUD tumbled 1.4% to close at a 19-month low of US72.99 cents.

What to watch this week

This week, forex traders will be observing local employment data for July, which comes out on Thursday, as well as the wage price index for the second quarter.

China and the US will both publish data on key retail, housing and production indicators.

A long list of blue-chip heavyweights are set to report, including: CSL (ASX: CSL), Telstra (ASX: TLS), QBE (ASX: QBE), Woodside Petroleum (ASX: WPL), Wesfarmers (ASX: WES), Insurance Australia Group (ASX: IAG), Origin Energy (ASX: ORG), Cochlear (ASX: COH), Aurizon Holdings (ASX: AZJ), and BlueScope Steel (ASX: BSL).

Rene Anthony owns shares in ASX:SEK. He does not own shares in the other companies referred to in this article. This article may contain general advice. Consider your own circumstances, and obtain professional advice, before acting on any of the information contained in this article.

Markets weekly is a weekly summary of what happened with ASX-listed shares last week as well as key commodity price movements and updates on the Australian dollar. Check back every Monday for the latest round-up.

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