Australia and New Zealand Market Movers is provided by: Australasian Trading Management.
The Australian share market was higher on Monday (ASX 200 index +0.36%) with BHP Billiton, Westpac and Macquarie some of the standout performers. BHP Billiton shares rose on the back of rising oil prices, reaching its highest level since March 2014. Miner Bluescope saw its shares advance after the company announced it would buy back shares.
The New Zealand market was in positive territory yesterday (NZX 50 index +0.45%) with gains experienced by Gentrack and Port of Tauranga, with Westpac Banking Corp gaining on its first-half result. In stock news, Briscoe Group gained as the retailer’s first-quarter sales rose 3.6% to $146.4 million with its Rebel Sport chain a swift starter in the year, outperforming the flagship homeware division. In other news, New Zealand regulators are putting local bank behaviour under greater scrutiny after the Royal Commission in Australia uncovered some dubious practices, with the Reserve Bank and Financial Markets Authority demanding local lenders demonstrate how their operations differ from their Australian parents.
Stock in Focus: Westpac (WBC:AX / WBC:NZ)
Westpac shares were higher yesterday following the release of their interim financial results. Wider profit margins and lower charges for bad debt helped Westpac notch a first-half cash profit of $4.25 billion, an increase of 6%. As with the rest of the big banks, the news came as relief given the sector has been under pressure following the royal commission into sector practices.
Looking at some of the other detail, Westpac finished the period with a cash return on equity of 14%, which is at the top end of its target range of 13% to 14%. The banks important net interest margin rose 7 basis points to 2.17%. The solid result appears to have been driven by strength in the consumer and business bank divisions, while the institutional division was weak.
While the banking sector is currently facing headwinds, as we touched on last week a lot of negativity is currently being reflected in bank share prices, in our view.
Global Markets Digest
Global markets started the week higher overnight, as Apple lifted its market value to a whopping $US920 billion (as it closes in on being the first company to reach a 1 trillion market cap). Energy stocks received a boost as US crude oil hit $US70 per barrel for the first time since late 2014.
Corporate earnings season is moving into its final stages in the US, and corporate profits have not failed to deliver. Nearly 80% of the 417 S&P 500 companies (the major US market index) that have reported so far have topped profit estimates, according to Thomson Reuters. This is well above the long-term average of 64% and the average of 75% over the past four quarters.
3 Things Markets Will be Watching this Week
1. Corporate earnings season enters its final stages in the US this week, with around 80% of stocks having released profit results.
2. The Reserve Bank of New Zealand is widely expected to keep interest rates on hold at 1.75% on Thursday.
3. This week sees the release of the Australian Federal Budget on Tuesday.
Australia and New Zealand Market Movers is provided by Australasian Trading Management. ATM is an independent research house covering stock analysis across major markets including the ASX, NZX and US markets. We make our research easy to understand and concise, taking complex issues and simplifying them so that you can make informed and accurate decisions. We have no conflicts of interest and our only goal is to generate positive returns for our members. We run transparent model portfolios to track performance and invest where we see the most value, in companies of all sizes across all industries, and often in smaller companies.
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