ASX 200 buoyed by news of fresh trade talks

9 September 2019
The Australian share market rose last week, despite a mixed bag of economic data and international political turmoil.

Home loan data, consumer confidence and credit card lending data out this week

International markets ended the week more buoyant, after the announcement of a plan for a fresh round of trade talks between the United States and China next month.

Locally, monthly home loan data is expected to be released today by the Australian Bureau of Statistics (ABS). Economists are tipping an increase in loans from June to July, following signs of improvement in many parts of the residential property market, notably in Sydney and Melbourne.

Other official figures due to be released this week include business and consumer confidence results, credit card lending data and tourist numbers.

Internationally, official Chinese import and export data will likely be of interest to any investors keeping an eye out for developments in the ongoing trade war between it and the US. The US will also release consumer credit, jobs and business confidence figures in the next few days.

Australia’s sluggish consumer economy

Australia dollar movement - ASX 200 September 2019
Source: jax10289 (Shutterstock)

There were mixed results from Australian economic data last week.

Australia’s current accounts trade figures showed a surplus of $5.9 billion, the first time this figure has been positive since the June quarter of 1975.

The lower Australian dollar and an iron ore price spike in recent times led to Australia’s export revenue exceeding its imports, but economists said the bounce could be short-lived, given the iron ore price has now dropped.

CoreLogic had earlier released monthly figures that showed the first monthly increase in median house prices in almost two years, since October 2017. In the three months to August, Sydney house prices increased 1.9%, a significant turnaround that included a 1.6% jump in August alone. Over the past 12 months, however, property in the Emerald City has lost 6.9% of its value. This past month, median prices were up in Melbourne (1.4%), Canberra (0.8%), Hobart (0.5%) and Brisbane (0.2%), but down in Darwin (1.2%), Perth (0.5%) and Adelaide (0.2%).

Later in the week, though, came a less positive story in the form of soft economic growth (GDP) numbers. Although Australia’s economy grew for a record 29th year straight, it was up by just 0.5% in the three months to June and 1.4% over the year, lower than the Reserve Bank’s earlier forecast of 1.8%.

The data showed that government spending and exports were up, but consumer spending was sluggish.

Over the weekend, Prime Minister Scott Morrison reiterated that he was committed to achieving a Budget surplus this financial year.

More international political turmoil creating economic upheaval

Brexit - ASX 200 September 2019
Source: lonndubh (Shutterstock)

There was more political turmoil affecting overseas economies this week, this time in the United Kingdom.

The pound crashed after Prime Minister Boris Johnson failed in his surprise attempt to force through a no-deal Brexit, then rebounded after the leader lost his majority in the House. There is expected to be more upheaval after the weekend’s political woes for Johnson.

At the end of the week, international markets rose after comments by the US Federal Reserve Chairman Jerome Powell that there would likely be “moderate growth” in the US and global economies.

“Our main expectation is not at all that there will be a recession,” Mr Powell said.

Meanwhile, a new iPhone will launch in the US on Tuesday, a product line that impacts retailers around the world.

ASX 200 up for the third week in a row

Amid all the international news, the Australian Securities Exchange (ASX) ended the week up. The ASX 200 gained 0.66%, to 6,647 points at close on Friday. It was the third week of consecutive rises.

Top stocks last week:

ASX 200 – Top 5 Share Price Gains (30/08/2019 to 06/09/2019)
Rank Company Closing Share Price % Change
1 Speedcast International (SDA) $1.26 61.9%
2 Western Areas (WSA) $3.08 24.2%
3 Bellamy’s Australia (BAL) $8.77 16.9%
4 Costa Group Holdings (CGC) $3.55 12.7%
5 Independence Group (IGO) $6.12 12.5%
Prepared by Canstar. Prices taken as of week to week close.
ASX 200 – Top 5 Market Capitalisation Gains (30/08/2019 to 06/09/2019)
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 Macquarie Group (MQG) $2,161,840,825 $127.08 2.6%
2 Westpac Banking Corp (WBC) $1,430,870,797 $28.63 1.5%
3 Fortescue Metals Group (FMG) $1,262,375,616 $8.41 5.1%
4 Coles Group (COL) $1,133,840,241 $14.69 6.1%
5 National Australia Bank (NAB) $1,124,375,170 $27.75 1.4%
Prepared by Canstar. Prices taken as of week to week close.

Biggest losses last week:

ASX 200 – Top 5 Share Price Losses (30/08/2019 to 06/09/2019)
Rank Company Closing Share Price % Change
1 CYBG PLC (CYB) $2.00 -21.8%
2 Sigma Health (SIG) $0.59 -7.8%
3 Spark Infrastructure Group (SKI) $2.15 -6.5%
4 Medibank Private (MPL) $3.41 -6.3%
5 Goodman Group (GMG) $13.68 -5.8%
Prepared by Canstar. Prices taken as of week to week close.
ASX 200 – Top 5 Market Capitalisation Losses (30/08/2019 to 06/09/2019)
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 Goodman Group (GMG) -$1,324,873,499 $13.68 -5.8%
2 Telstra Corporation (TLS) -$1,308,262,764 $3.61 -3.0%
3 Medibank Private (MPL) -$633,420,746 $3.41 -6.3%
4 Mirvac Group (MGR) -$472,073,225 $3.07 -3.8%
5 CYBG PLC (CYB) -$463,576,664 $2.00 -21.8%
Prepared by Canstar. Prices taken as of week to week close.

Satellite company Speedcast International, which in the previous week of trading had suffered a 54.8% drop in its value to $0.78 after some disappointing annual results, rebounded to notch up a 61.9% gain to end the week at $1.26. It remains well down on its all-time high of $6.71 recorded just over a year ago. Fresh produce giant Costa Group Holding’s fortunes also reversed from last week’s losses, as it gained 12.7% to finish at $3.55.

In its annual report to the ASX, department store Myer announced a profit for the first time in nine years. This came despite a drop in revenue of 3.5%, which accelerated in the second half of the year.

Chief Executive and Managing Director John King pointed to a renewed staffing model and reduced store footprint and said more could be done.

Blue-chip stocks Macquarie Group, Westpac, Fortescue Metals, Coles and the National Australia Bank amassed the biggest market capitalisation gains over the week, while Telstra, Medibank Private, property giants Goodman Group and Mirvac and bank CYBG all lost value.

A wrap-up of reporting season

More ASX 200 companies were profitable in the recent FY18-19 financial year compared to the 10-year average, CommSec found in its analysis of this year’s profit season.

According to CommSec 92% of companies reported a profit at their full year results, but only 52.2% of the reporting companies were able to lift profits compared to last year. This was by an average of 1.8%, once the mega-profits of miner BHP and retailer Wesfarmers were excluded.

However, CommSec also noted that it wasn’t all smooth sailing for Australia’s biggest corporations.

“Broadly, companies have struggled,” the economists said.

The CommSec analysts noted expenses continued to rise in the past 12 months, especially energy and wages.


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About Rosanne Barrett: 

 Photograph of Rosanne BarrettRosanne Barrett writes stories that inform, entertain and inspire. She has more than 15 years’ experience in daily news media in Australia and Hong Kong, including eight years as a staff reporter at The Australian. Ms Barrett produces journalism, content and copywriting across a range of industries.