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Markets weekly: McMillan, Bellamy’s and Boral jump, as Speedcast crashes to a halt

Posted: 3 September 2018 9:32 am
News

Financial stocks led the ASX higher last week, while the Aussie dollar fell sharply.

Foreign trade angst influenced global markets last week, which did little to abate the momentum of the ASX, with both major indices recording strong gains. Despite additional tariffs looming on Chinese imports into the US, and US-Canada trade talks breaking down, the ASX 200 lifted 1.2% to 6,319.5 points. In comparison, the All Ordinaries added 1.1% to end the week at 6,427.8.

Major movers last week

Gains last week were broad-based, with multiple sectors posting returns in excess of one percent. Utilities and financials were the standouts, with the latter buoyed by a decision from Westpac (ASX: WBC) to lift variable interest rates by 14 basis points.

A week after its results showed underlying profit increased by 7.2%, McMillan Shakespeare (ASX: MMS) surged 12.1%. For the second week running, TPG Telecom (ASX: TPM) joined the ranks as one of the ASX’s best performing stocks, as a $15 billion merger agreement was reached with Vodafone Australia. While TPM shares slumped heavily on Friday, the stock still advanced 11.8% over the week.

Bellamy’s (ASX: BAL) endured a volatile week of trading following its annual report. A significant turnaround in profits and soft outlook divided traders. Shares initially dived but quickly turned around to increase 10.9% by Friday’s close. Another beneficiary of reporting season was Boral (ASX: BLD), with a large upturn in underlying profit helping the company jump 7.9%.

Speedcast International (ASX: SDA) collapsed 36.6% on an underwhelming set of results and outlook for FY19. It was a similar story for G8 Education (ASX: GEM), which tumbled 14.9% as it missed profit expectations and also maintained a subdued outlook for the next 12 months. Another stock that failed to meet forecast profit targets and set the scene for a quieter year ahead was Reliance Worldwide (ASX: RWC), losing 14.1% to $5.31.

Commodities and forex

The price of oil resumed its move upwards despite slipping on Friday as trade tension resurfaced and oil rig numbers rose. Nevertheless, WTI crude oil leaped 2% higher to US$69.88/bbl, spurred by expected output declines from Iran and Venezuela.

Gold traded in a relatively tight range last week, with prices settling flat at US$1202/oz. August was the fifth consecutive month that gold prices declined, something not seen since 2013. Copper tried to break higher earlier in the week as a reduction in supply and weakening USD were evident. However, it was subsequently offset by US trade uncertainty to finish down at US$2.63/lb. The late week slide in commodity prices also reached aluminium, which tripped from a multi-week high.

The Australian dollar was weighed down in response to Westpac’s home loan rate hike. Although the currency tried to rally, it came under heavy selling pressure due to a slump in business capital expenditure for the second quarter and an equally poor outlook for future capex. Furthermore, a larger than expected drop in building approvals for new homes hurt the AUD, which fell 1.8% to US71.9 cents.

What to watch this week

Locally, September’s Reserve Bank Board meeting will take place on Tuesday, while economic data for the June quarter will be released the day after. Other key indicators likely to be monitored include retail data, job advertisements, new car sales, the trade surplus and housing finance. Both the US and China will publish manufacturing and trade data, with the US also due to announce key employment indicators.

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.

Rene Anthony owns shares in ASX:BAL. 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.

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