5-Week Market Win Streak | Macquarie Update

29 January 2019

Global markets were lower overnight, giving back gains made on Friday. While markets have been choppy, the major Dow and the Nasdaq US stock indices managed to notch their fifth straight weekly gains, while the S&P 500 posted its first weekly loss of the year last week, snapping a four-week run. The positive moves have been reflected in Australia & NZ.

Investors were heartened by news on Friday that Washington would move to temporarily end the longest US government shutdown in history. At the same time, investors continue to digest corporate earnings reports.

Overnight, weak forecasts from Caterpillar and Nvidia fuelled worries about a slowdown in China taking a bigger bite off corporate profits. We are only in the early stages of the US earnings season, and announcements have been mixed. We reiterate that the current US corporate earnings season is going to be the key near-term factor in terms of driving markets which we are watching closely.

          

Stock in Focus: Macquarie (MQG:ASX)

Shares in Macquarie continue to defy the negative sentiment facing the broader Australian financial sector, after delivering a positively received interim result for the 2019 financial year, with net profit after tax up +5% from the same corresponding period last year to A$1,310m.

While its annuity style business did not meet up to last year’s performance, its result was lifted by a strong performance from its capital markets facing businesses which nearly doubled their profit contribution from the same corresponding period – as merger and acquisition activity and trading fees improved over a period that saw more volatility in markets.

As well as this, Macquarie announced another profit upgrade for the 2019 financial year, expecting net profit to increase by +15% from the previous year, a significant jump from the “flat” profit guidance announced during their 2018 full year result.

Members can login to read our full reports on Macquarie.

 
Australia & New Zealand Market Movers

The Australian share market was higher on Friday (ASX 200 index +0.68%) hitting a ten-week high thanks to strong performances by the energy and financial sectors despite AMP's woes (the market was closed yesterday for Australia Day).
While most of the market was higher, shares in AMP plummeted again as the fallout from the scandals exposed by Australia’s royal commission into financial services and the costs of remediation hit AMP’s profits. AMP says it expects to report an underlying profit of about A$680 million for calendar 2018 but that net profit attributable to shareholders will be just A$30 million.
 

The New Zealand market was little changed yesterday (NZX 50 index +0.04%) with the markets quiet as investors prepare for the local earnings season. Holidays in Auckland and Australia also kept a lid on activity.
In stock news, Oceania Healthcare’s first-half net profit plummeted 97 percent, reflecting the demolition of a care facility in Tauranga, other property related costs and the impact of the pay equity deal for aged care workers on wages. In other news, the RBNZ has pushed out deadline for feedback on its controversial new bank capital proposals.

 

3 Things Markets Will be Watching this Week

  1. US corporate earnings season continues this week.
  2. The US Federal Reserve makes its first monetary policy decision for the year on Thursday morning (AU/NZ time).
  3. The UK parliament votes on a ne Brexit plan on Wednesday morning (AU/NZ time)

 

Have a Great Day,
 

Team

While markets have been choppy, the major Dow and the Nasdaq US stock indices managed to notch their fifth straight weekly gains, while the S&P 500 posted its first weekly loss of the year last week, snapping a four-week run

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