The week that was… your weekly market wrap (27-31 August)

By Dale Gillham. Published at Aug 27, 2018, in Market Wrap

The corporate earnings season finish line is just around the corner. Following announcements last week, share prices of some Australian stocks are ‘worse for wear’, however, a number of these appear to have been oversold writes Dale Gillham.

Flight Centre Travel Group Ltd (FLT) shares dropped by around 13 per cent from Wednesday’s close, as profit reportedly fell short of expectations and news of over 200 employee complaints. This indicates it’s time to take some profits on this stock. Fortescue Metals Group (FMG) fell by around 3.5 per cent this week after falling short of earnings guidance and disappointing investors with a cut to the dividend. On a positive note, FMG announced it will blend with higher quality ore to boost sales.

It has been rough for the Materials sector, which has fallen by around 7 per cent (878 points) to approximately 11,510 points since 1 August. BHP Billiton Ltd (BHP) reported an underlying profit of US$8.9 billion, up 33 per cent, however, the write down of US shale assets valued at US$5.2 billion resulted in a net profit of US$3.7 billion. The good news for shareholders was the record final dividend of 63 US cents per share. With BHP down another 1 per cent, now’s the time to consider selling some holdings to lock in profit. Having impressed the market, Afterpay Touch Group Ltd (APT) rose an astonishing 16 per cent to over $20 per share. News of a UK expansion and successful capital raising campaign also supported the rise.

Other major companies that reported this past week include; Woolworths Group (WOW) which dropped swiftly on Monday and is currently down 2.7 per cent for the week. Amcor Ltd (AMC) fell marginally and Scentre group (SCG) is 4 per cent lower.

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?

Finally, this week, the Australian market began a much needed two or three week retreat. The All Ordinaries Index (XAO) traded back below 6,400 points on Tuesday, driven by a response to reporting season results and banks, as the Royal Commission turns its attention to superannuation.

Support for the market came from the Telecommunications Sector (XTJ), with a rise of around 9 per cent this week. TPG Telecom Ltd (TPM) shares rocketed up 24.6 per cent on Tuesday, following news of merger talks with Vodafone, which is good news for our market and both companies.

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.

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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