The Monday Report

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            [6] => ((MYX))
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This story features SUPER RETAIL GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: SUL
The company is included in ASX200, ASX300 and ALL-ORDS

By Greg Peel

Much to Absorb

The interesting point to note about Friday’s trade on the local market, aside from the ASX200 spending all session grafting back to a flat close following an initial drop of -20 points, was the bulk of the top ten winners & losers on the day were stocks that reported the day before.

Of the 300-odd stocks covered by FNArena database brokers that report in this cycle, throughout August, 46 reported on Thursday to mark by far the biggest day of the season. Half that number reported on Friday. Investors were clearly swamped with information that took time to assess, and on the following day there are stock analysts assessments to review.

Of the stocks that did report on Friday, Asaleo Care ((AHY)), Super Retail ((SUL)), Medibank Private ((MPL)), Sims Metal Management ((SGM)) and Qantas ((QAN)) all made the leaders’ board with moves ranging from 10% to 3%, in descending order. Automotive Holdings ((AHG)) was the only stock to make the losers’ board other than embattled Mayne Pharma ((MYX)) which had already pre-released its result earlier in the month. Auto Holdings fell -6% and Mayne -5%.

Otherwise, five of the top ten winners on Friday had reported on Thursday, including Nanosonics ((NAN)), which jumped 14%, and Platinum Asset Management ((PTM)), which jumped 11%. Four of the top losers reported on Thursday, with the likes of OZ Minerals ((OZL)) falling -5% and South32 ((S32)) falling -3%.

As at the end of Thursday, 231 stocks covered by FNArena database brokers had reported and by FNArena’s assessment, 28.6% posted beats and 26.8% posted misses. While the miss count is right on average with the previous eight reporting seasons tracked by the FNArena Reporting Season Monitor, the beat count is the lowest since the first Monitor was published in August 2013. The beat/miss ratio of 1.06 (so far) is the lowest ever recorded in that period, well below the average of around 1.4.

Reports have to date prompted 39 broker upgrades and 47 downgrades – a balance which is unremarkable and by historical terms, fairly even.

There’s still another week to go, but the number of companies reporting will quickly taper off. So far the general assessment from analysts is it has been a “good” season, but not a great one. And not as good as last February (beats 35%, misses 27%).

With Wall Street again relatively benign on Friday night and Jackson Hole proving a bit of a fizzer in terms of monetary policy revelations, it appears the last week of reporting season will play out in  similar vein to what we’ve seen for most of the month – an index driven entirely by result-related individual stock moves.

Empty Hole

I noted last week that central bankers are not obliged to turn up to Jackson Hole and if they do, they’re not obliged to say anything interesting. Ben Bernanke used the Hole to announce his various QE programs but in his final year, didn’t bother to show. There was much anticipation, nevertheless, that Janet Yellen would use the opportunity to talk up US interest rates and Mario Draghi would talk down the euro.

Neither was the case. Yellen said very little and Draghi took the chance to have a thinly veiled swipe at Trump and Brexit, by talking up productivity through multilateral trade and multilateral monetary and fiscal policy. But when it comes to central bank chiefs, what they don’t say is just as important as what they do.

Hence the market took Yellen’s speech to be dovish and Draghi’s to be hawkish. In isolation, the US dollar would thus have fallen against the euro and the euro would have risen against the dollar, but put them together and the euro soared and the US dollar index plunged -0.8%.

In US stock markets, volumes were very low and typical of a Friday in summer. Wall Street awaited the Jackson Hole speeches, with Draghi’s coming quite late in the session, and otherwise attention was on Texas and Hurricane Harvey.

The Dow was up over 120 points at its high but drifted off to close up 30 points or 0.1%. The S&P gained 0.2% to 2443 and the Nasdaq fell -0.1%.

The suggestion for the pullback over the session, albeit in very thin trade, was concern that while Wall Street pin-up boy Gary Cohn was not set to walk out, as was feared, following the president’s implicitly racist performance of late, he was still not very happy with the situation. He thus may not, as a result, end up being Trump’s choice to replace Janet Yellen as is widely assumed.

Commodities

The weaker greenback did nothing to support base metal prices on Friday night. All metals were down in London, including -2% falls for all of aluminium, nickel and zinc.

Iron ore was unchanged at US$76.50/t.

Gold did see some response to the dollar, in rising US$5.00 to US$$1290.80/oz.

Oil markets were fairly ambivalent regarding the impact of Harvey, given any disruption should prove short-lived and refineries were due to shut down for maintenance anyway. West Texas crude rose US26c to US$47.86/bbl.

The -0.8% fall in the dollar index took it to 92.52, while the Aussie rose 0.3% to US$0.7925.

The SPI Overnight closed up 6 points on Saturday morning.

The Week Ahead

Still a lot more earnings reports to come between today and Thursday.

Next week Australia’s June quarter GDP result is due, and this week we see the lead-in numbers for construction work done on Wednesday and private sector capex on Thursday. Monthly data this week include building approvals on Wednesday and private sector credit on Thursday. Friday is the first of the month so manufacturing PMIs from across the globe are due, including locally, while Beijing will release both PMIs on Thursday.

UK markets are closed tonight.

In the US, tonight brings trade numbers, Tuesday it’s consumer confidence and house prices, and Wednesday private sector jobs and another revision of the June quarter GDP. Thursday it’s pending home sales and personal income & spending and Friday it’s the biggie – non-farm payrolls.

I’ll also point out that in the local market, the ex-divs are starting to flow, so be warned of index handicapping.

Rudi will appear on Sky Business on Tuesday, via Skype, to discuss broker calls around 11.15am. He'll appear in the studio late on Wednesday to host Your Money, Your Call, 8-9pm. On Thursday he'll probably repeat the Skype connection sometime between midday and 2pm and on Friday he'll do it again, probably around 11.15am.
 

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