The week that was… your weekly market wrap (17-21 August)

Published at Aug 20, 2018, in Market Wrap

Corporate earnings season continued in Australia last week, with some companies disappointing the market, however, results were balanced, with a number of companies piquing investor interest writes Dale Gillham.

The good news for investors holding retail stocks, such as JB Hi-Fi (JBH) and Harvey Norman Holdings (HVN) is there’s no need to panic. Of note, following the release of JBH’s full year results on Monday, the stock had a fantastic week on the market. JBH’s share price rose by around 10 per cent to approximately $26. Following JBH’s all-time high of $31.21 in September 2016, this stock has been in decline, however, provided price continues to trade above $24.50 it is likely to trade up to challenge the prior high of $29.47.

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

While the outlook appears to have improved for the retailer, the landscape in the retail space has changed. Competition for retailers with physical stores, from online competitors, such as Amazon and Ali baba has intensified. This means higher volatility in share prices.

Looking briefly at other sectors this week, the Healthcare (XHJ) sector is up by around 5 per cent, largely due to a strong rise in CSL Limited’s (CSL) share price, Industrials (XNJ) are up 2 per cent, Information Technology (XTJ) rose approximately 4 per cent and Utilities (XUJ) lifted approximately 2 per cent. It was good to see the Telecommunications sector, which Telstra (TLS) dominates, finally demonstrating there is light at the end of the tunnel. TLS’s price rose by around 5 per cent this week, pushing the sector off its low. Although Telstra announced a fall in profit of 8.4 per cent to $3.6 billion, as competition for mobile customers intensifies, it was news of the plan to roll out 20 new 5G towers by December that the market liked, driving the price above $3.

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

What do we expect in the market?

The Australian market continued higher last week, which demonstrates confidence in the current corporate reporting season. The All Ordinaries Index (XAO) traded above 6,420 points cautiously, as most banks, excluding the Commonwealth Bank (CBA), moved higher.

Selling continued for Australian resources. The Energy (XEJ) sector fell by around 3 per cent and Materials (XMJ) was down by 1 per cent. Most commodity related stocks fell, including RIO Tinto (RIO), which recorded a decline of approximately 18 per cent from its May 2018 high of $87.09.

Dale Gillham is Chief Analyst of financial services company Wealth Within.

This article is General Information and contains only some information about some elements of one or more financial products. It may contain; (1) broker projections and price targets that are only estimates and may not be met, (2) historical data in terms of earnings performance and/or share trading patterns that should not be used as the basis for an investment as they may or may not be replicated. Those considering engaging with any financial product mentioned in this article should always seek independent financial advice from a licensed financial advisor before making any financial decisions.

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