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WHAT TO WATCH THIS WEEK:
Economists will be watching financial news that is likely to affect market movements this week, including yesterday’s announcement by the Federal Government that it would reduce the deeming rate. This is the rate used to help determine how much of the aged pension some retirees can receive.
The Reserve Bank’s minutes from its July meeting will be published tomorrow and economists will be closely monitoring the central bank’s justification for cutting the cash rate again earlier this month.
The Australian unemployment rate for June will be released on Thursday and there seems to be a consensus that financial markets believe it will remain steady at 5.2%.
HOW DID THE MARKET PERFORM LAST WEEK?
The blue chip S&P/ASX200 closed last week at 6697, down 0.8%, while the broader All Ordinaries hit 6788, down 0.62%. Despite the dip, the Australian share market is nearly 20% higher so far this year, and the benchmark S&P/ASX200 is just short of its previous high of 6851, recorded in November 2007.
The Australian dollar closed the week at US70.01c, up from its 2019 low of around US68c, which it reached mid-last month.
In the US, Wall Street markets hit record highs at the end of the week after the Federal Reserve governor Jerome Powell indicated the central bank may cut interest rates when it meets later this month.
Australian analysts say the Reserve Bank’s consecutive rate cuts in June and July, which took the official cash rate to 1%, may have prompted investors to turn to the stock market to chase higher returns.
BIG FOUR BANKS: NAB UP BUT OTHERS SLIDE
In Australia, the National Australia Bank (NAB) added $3.2 billion to its market capitalisation as its share price rose 1.7% in the past week. The gains came even after it was revealed NAB was facing a new class action which could cost it up to $100 million. The bank’s wealth management arm, MLC, has been accused of overcharging superannuation customers.
Meanwhile, NAB’s three largest rivals in ANZ, Westpac and Commonwealth Bank (CBA) all lost ground during the week.
The banking regulator, Australian Prudential Regulation Authority (APRA), announced during the week that Westpac, ANZ and NAB would need to hold an extra $500 million in capital on their balance sheets to help safeguard the banks against future bad news. The higher capital requirements, which had already been put in place at CBA, will apply from September 30 and remain in place for each bank until it adequately improves its risk management practices.
Morgan Stanley analysts said the news could prompt ANZ and the CBA to reduce and potentially delay their share buy backs.
SUPER WEEK FOR RETAIL GROUP
Super Retail Group recorded the largest share price increase on the ASX200, according to figures compiled by Canstar.
The stock rose 14.5% during the week, after Citigroup reiterated its buy rating on the company and said it believed the stock was worth $10.
Super Retail, which owns Supercheap Auto, Rebel Sport and outdoor brands Rays and BCF, closed the week at $9.42. Likewise, a2Milk shares increased 14.4%, after UBS stockbrokers put a buy recommendation on the company and said the stock could increase by at least 10% in the next year because of rising demand from China.
MARKET MOVEMENTS – 6-12 July, 2019
| Weekly Index Movements (6-12 July, 2019) | ||
| Closing Point | % Change | |
| S&P/ASX 200 (XJO) | 6,697 | -0.81% |
| All Ordinaries (XAO) | 6,789 | -0.62% |
| Prepared by Canstar. Points taken as of Monday open to Friday close. | ||
| Weekly Sector Movements (6-12 July, 2019) | ||
| Closing Point | % Change | |
| Consumer Discretionary (XDJ) | 2,511 | -1.41% |
| Consumer Staples (XSJ) | 11,944 | -1.60% |
| Energy (XEJ) | 11,042 | -0.31% |
| Financials (XFJ) | 6,342 | 1.16% |
| Health Care (XHJ) | 34,542 | 1.01% |
| Industrials (XNJ) | 6,835 | 1.42% |
| Information Technology (XIJ) | 1,383 | 0.21% |
| Materials (XMJ) | 13,999 | 1.15% |
| Telecommunication Service (XTJ) | 1,342 | -0.05% |
| Utilities (XUJ) | 8,333 | 2.29% |
| Prepared by Canstar. Points taken as of Monday open to Friday close. | ||
ASX 200 Listed companies – Biggest gains
(Prepared by Canstar. Prices taken as of week to week close.)
| Biggest Share Price Gains (6-12 July, 2019) | |||
| Rank | Company | Closing Share Price | % Change |
| 1 | Super Retail Group (Super Ret Rep Ltd) (SUL) | $9.42 | 14.5% |
| 2 | The a2 Milk Company (A2B) | $15.85 | 14.4% |
| 3 | Eclipx Group Ltd (ECX) | $1.49 | 13.4% |
| 4 | Wisetech Global Ltd (WTC) | $31.19 | 12.6% |
| 5 | Resolute Mining (RSG) | $1.50 | 12.4% |
Prepared by Canstar. Points taken as of Monday open to Friday close.
| Top 5 Biggest Market Cap Gains (6-12 July, 2019) | ||||
| Rank | Company | $ Change in Market Cap | Closing Share Price | % Change in Share Price |
| 1 | National Aust. Bank (NAB) | $3,211,019,951 | $27.17 | 1.7% |
| 2 | CSL Ltd (CSL) | $2,718,831,792 | $221.00 | 2.8% |
| 3 | Wesfarmers Ltd (Wes) | $1,814,144,387 | $37.76 | 4.4% |
| 4 | The a2 Milk Company (A2B) | $1,472,189,656 | $15.85 | 14.4% |
| 5 | Transurban Group (TCL) | $1,364,402,156 | $15.25 | 3.5% |
| Prepared by Canstar. Prices taken as of week to week close. | ||||
ASX 200 Listed companies – Biggest losses
| Top 5 Biggest Share Price Losses (6-12 July, 2019) | |||
| Rank | Company | Closing Share Price | % Change |
| 1 | Speedcast Int Ltd (SDA) | $1.95 | -44.0% |
| 2 | Nearmap Ltd (NEA) | $3.34 | -11.6% |
| 3 | Pilbara Minerals Ltd (PLS) | $0.49 | -11.0% |
| 4 | G8 Education Ltd (GEM) | $2.74 | -9.6% |
| 5 | NRW Holdings Ltd (NWH) | $2.32 | -7.6% |
| Prepared by Canstar. Prices taken as of week to week close. | |||
| Top 5 Biggest Market Cap Losses (6-12 July, 2019) | ||||
| Rank | Company | $ Change in Market Cap | Closing Share Price | % Change in Share Price |
| 1 | ANZ Banking Group Ltd (ANZ) | -$2,624,752,234 | $27.27 | -3.3% |
| 2 | Commonwealth Bank (CBA) | -$2,230,501,778 | $81.52 | -1.5% |
| 3 | Westpac Banking Corp (WBC) | -$1,186,575,783 | $28.02 | -1.2% |
| 4 | Brambles Ltd (BXB) | -$1,094,594,091 | $12.24 | -5.0% |
| 5 | Amcor (AMC) | -$906,312,921 | $15.80 | -2.4% |
| Prepared by Canstar. Prices taken as of week to week close. | ||||
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