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Finance week ahead: CBA, Telstra headline busy week
Sunday, 7 Aug 2016 12:58:05 | Stephen Letts
Results come this week from the blue-chip stocks CBA and Telstra. (ABC News: Nic MacBean/ABC News: Nic MacBean)
The reporting season kicks up another gear this week with full-year results from two of the "bluest" blue-chips, the Commonwealth Bank and Telstra, likely to play a key role in setting the sentiment for the market.
The week should start positively on the ASX SPI200 futures, up 0.6 per cent after a solid gain on Wall Street drove both the broad-based S&P 500 and tech-centric NASDAQ indexes to record levels at Friday's close.
The US markets were buoyed by another strong set of employment numbers, with another 255,000 jobs added last month on top of the almost 300,000 in June.
Markets on Friday's close:
- ASX SPI 200 futures +0.6pc at 5,457
- AUD: 76.18 US cents, 68.69 euro cents, 58.3 British pence, 77.5 Japanese yen $NZ1.066
- US: Dow Jones +1pc at 18,544, S&P500 +0.9pc at 2183, NASDAQ +1pc 4,791
- Europe: FTSE +0.8pc at 6,793, DAX +1.4pc at 10,367 Eurostoxx50 +1.4pc at 2,973
- Commodities: Brent oil flat at $US44.27/barrel, Gold -1.7pc at $US1,335/ounce, Iron ore +3.4pc at $US60.90/tonne
Commodity action was mixed.
Iron ore jumped more than 3 per cent to end the week above $60 per tonne, which kicked BHP Billiton and Rio Tinto respectively 3.2 per cent and 2.6 per cent higher in London trade.
Oil is still in the doldrums at three-month lows; US petroleum prices are in bear market territory, down 25 per cent from their recent highs in June; and gold also edged down.
Commonwealth Bank and Telstra to produce multi-billion-dollar profits
The Commonwealth Bank trots out the biggest and most significant result this week with a consensus forecast of a $9.5 billion profit on Wednesday.
However, the real interest may well be in chief executive Ian Narev's commentary, which — as the analysts say — is expected to provide some colour around the bank's decision not to pass on the full RBA rate cut.
The actual results are expected to show on-going pressure from narrowing margins and rising bad debts in high risk areas such as mining communities and New Zealand dairy farming, as well as intense competition for new home loans.
The risk is a disappointing result and falling earnings into FY2017 will cast a pall over the entire sector, hitting all the banks' valuations.
Bendigo and Adelaide Bank is expected to produce a more modest $440 million profit on Monday and will fly a bit more under the media and political radar.
The ANZ puts out a third quarter trading update on Tuesday.
Telstra is expected to produce a flat to slightly lower full year profit of $4.2 billion.
The smaller, aggressive players such as TPG and Vocus — as well as the mid-sized Optus and Vodafone — are all battling for market share by cutting prices and boosting data offers, and that should keep a lid on profits.
Telstra is holding its own in the fight for new NBN customers, with recent ACCC data showing it had increased its market in the last quarter.
However, investors will be keen to hear from Telstra boss Andy Penn about his plans to address the much discussed $3 billion revenue black hole that opens up once the NBN roll out is complete, and perhaps importantly whether their cherished dividends are safe.
Other significant full-year results include Transurban (Tuesday), AGL (Wednesday) and Fairfax Media (Thursday).
Business confidence and conditions feature in quiet week
Macro-policy wonks are in for a sadly quiet week.
There's little top shelf data being released, with the NAB's respected business survey being the pick of the bunch.
Conditions are rolling along at above average pace and even strengthened in June, despite anxieties over the federal election and Brexit vote.
The other highlight will be what is most likely to be Glenn Stevens' last public speaking engagement as Reserve Bank Governor, which might well strike a reflective tone before he hands over the reins to his deputy Phillip Lowe after the September board meeting.
China monthly data deluge likely to show little improvement
Chinese statisticians are flat out this week coming up with mountains of keenly observed numbers including trade data (Monday) and inflation (Tuesday) as well as the monthly dump of fixed asset investment, industrial production and retail sales (Wednesday).
The sugar hit from a big fiscal splurge earlier this year seems to be wearing off, and these figures are expected to show things are slowing down once again.
Europe will produce its second reading of second quarter GDP growth (Friday) and things there are expected to be slowing as well.
The US is very quiet data-wise.
Across the Tasman the New Zealand Reserve Bank is expected to rejoin the rate-cutting party and lop another 25 basis point off official interest rates, taking them down to 2 per cent.
Given NZ banking is basically a subsidiary of Australia's "Big Four", mortgage holders across the ditch could reasonably expect only about half of that cut will be passed on.
Australia
| Date | Event | Notes |
| Monday 8/8/16 | Job ads | Jul: ANZ series |
| Tuesday 9/8/16 | Business conditions and confidence | Jul: Conditions have been solid outside mining |
| Wednesday 10/8/16 | Consumer confidence Home loans RBA speech | Aug: Westpac series, down 3pc in July Jun: Owner occupier loans down and investor loans up in May Glenn Stevens' last speech as RBA Governor |
| Thursday 11/8/16 | ||
| Friday 12/8/16 |
Corporate
| Date | Event | Notes |
| Monday 8/8/16 | Bendigo & Adelaide Bank News Corporation | FY $415m profit forecast Q4 earnings release |
| Tuesday 9/8/16 | Cochlear IOOF Transurban ANZ | FY $190m profit forecast FY $180m profit forecast FY $320m profit forecast Q3 trading update |
| Wednesday 10/8/16 | AGL CBA Computershare | FY $730m profit forecast FY $9.5bn profit forecast FY $300m profit forecast |
| Thursday 11/8/16 | Fairfax Goodman Group Telstra | FY $140m profit forecast FY $710m profit forecast FY $4.2bn profit forecast |
| Friday 12/8/16 | James Hardie | Q1 earnings release |
(Note: profit forecasts are underlying earnings)
Overseas
| Date | Event | Notes |
| Monday 8/8/16 | CH: Balance of trade | July: Imports and exports fell again in June |
| Tuesday 9/8/16 | CH: Inflation UK: Industrial production | July: Negative last month and around 2pc YoY June: Forecast of a post-Brexit fall |
| Wednesday 10/8/16 | US: Budget statement CH: Foreign direct investment | July: $US35bn deficit forecast August: Was up 5pc in July |
| Thursday 11/8/16 | NZ: Interest rate decision US: jobless claims CH: Fixed asset investment CH: Industrial production CH: Retail sales CH: New loans | 25bp cut tipped July: A proxy for property and infrastructure spending
July: Growing at around 6pc YoY July: Surprisingly soft in June July: Expected to rise sharply |
| Friday 12/8/16 | CH: Fixed asset investment CH: Industrial production CH: Retail sales US: Retail sales US: Business inventories EU: GDP growth EU: Industrial production | July: A proxy for property and infrastructure spending July: Growing at around 6pc YoY July: Surprisingly soft in June July: Expected to rise sharply July: Forecast to be up 3pc YoY June: Marginal rise forecast Q2: Second estimate around 3pc YoY June: Forecast to fall again |
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