ASX weekly: Stock market close to smashing boom-time record

After a dramatic week in financial news, the Australian stock exchange is back in near-record territory, just shy of the record heights it hit in 2007. The big four banks felt the aftershocks of another cash rate cut, and only one made a full recovery.
A row of ATMs, from NAB, CommBank and ANZ
Source: TK Kurikawa (Shutterstock)

When it closed on Friday afternoon, the All Ordinaries Index was at 6,832 points – up 1.98% on where it finished the previous week. The S&P/ASX 200 was up 2.01% to 6,751 points. This was during a week that saw the Reserve Bank of Australia cut the official cash rate – the second time in as many months – to just 1%, the Federal Government pass its tax cuts through Parliament, and the banking regulator throw out the 7% “stress test” on home loan applications.

AMP Capital chief economist Shane Oliver said the “All Ords index is now just 0.3% below its resources boom high reached on 1 November 2007”. He said it was a sign the market was hopeful of an economic recovery for Australia.

“The share market is looking through short term uncertainties around the economy and focussing on lower interest rates and bond yields making shares relatively cheaper and the likelihood that monetary and fiscal stimulus will ultimately boost economic growth,” Mr Oliver said.

Mr Oliver warned that the market may slip back slightly in the coming weeks, noting that “…after such a huge run – the market is up 19% year to date – it is getting vulnerable to a short-term correction.”

However, he believed the longer-term market outlook was fairly healthy, as he predicted that “the combination of low bond yields, easing central banks and a likely pick up in global growth in the second half and Australian growth next year point to even higher share prices on a 6-12 month horizon.”

How did the big four bank shares fare this week?

Soon after the RBA announced the cash rate cut last Tuesday at 2.30pm AEST, the share price of all the big four banks – Commonwealth Bank, National Australia Bank (NAB), Westpac and ANZ Bank – dipped.

However, the only one to fully recover was the NAB, which went from $26.90 a share at 10am on Monday, 1 July, to $26.40 at noon on Wednesday, 3 July, before closing the week at $26.97. The weekly gain of 0.9 percentage points added $2.634 billion to the bank’s value, putting it on the biggest winners list for market capitalisation. After the June cash rate cut, the bank’s shares increased as well, from $26.33 on Monday, 3 June, to $26.90 on Friday, 7 June.

Over at the Commonwealth Bank, it was a different story. Uncertainty surrounding the RBA meeting saw CommBank shares lose 0.6 percentage points in value, earning the bank second place on the biggest market cap losers list for the week. The fall decreased the company’s value by more than $920m. Shares started at $83.50 on Monday, 1 July, at 10am, falling to $80.49 by Wednesday, 3 July at noon, and then partially recovering, reaching $82.26 at Friday’s close. After the June cash rate cut, the share price actually went up, from $77.91 on Monday, 3 June, to around $80 a share on Friday, June 7. CommBank’s share price has been trending up since the beginning of the year, when it was $70.97 a share on January 2.

Westpac’s share price was at $28.46 on Monday, 1 July at 10am, before sliding down to $27.70 at noon on Wednesday, 3 July and climbing back up to $28.35 at Friday’s close. Before the first cash rate cut, Westpac shares had been trading at $27.08 on Monday, 3 June, and went up to $27.98 by Friday, 7 June.

ANZ followed the same pattern: $28.50 on Monday, 1 July at 10am, down to $27.61 on Wednesday, 3 July, then back up again to $28.24 on Thursday, 4 July, before closing on Friday at $28.15 a share. After the first cash rate cut, ANZ’s shares rose from $27.54 on Monday, 3 June, to $28.37 on Friday, 7 June.

ASX 200 Listed Companies – Top 5 Biggest Share Price Gains and Losses (28/06/2019 to 05/07/2019)
Biggest Gains Biggest Losses
Rank Company Closing Share Price % Change Rank Company Closing Share Price % Change
1 Eclipx Group Ltd (ECX) $1.55 18.3% 1 Speedcast International Ltd (SDA) $1.80 -48.3%
2 Nufarm Ltd (NUF) $4.60 12.2% 2 Bravura Solutions Ltd (BVS) $4.45 -8.4%
3 CSR Ltd (CSR) $4.31 10.2% 3 Pilbara Minerals Ltd (PLS) $0.50 -8.3%
4 Vicinity Centres (VCX) $2.69 9.8% 4 Aristocrat Leisure (ALL) $29.14 -5.1%
5 Smartgroup Corp (SIQ) $9.11 9.2% 5 Brambles Ltd (BXB) $12.36 -4.0%
Prepared by Canstar. Prices taken as of week to week close.

What shares went up last week?

Global biotech company CSL’s recent dream run on the stock market continues. Last week, it topped the market capitalisation list of winners, with a share price gain of 4.5% (to finish at $224.65 at Friday’s close), which added $4.373 billion to its value. The company’s shares have been on the rise since June 6, when they were at $200.86, and trending up all year after beginning at $187.13 on 31 December, 2018. In August 2014, the shares were worth around $69.49.

Building products manufacturer CSR’s share price lifted by more than 10%, to end at $4.31 at Friday’s ASX close, after the company released its plans to boost revenue from its extensive property portfolio. The company told investors that it had a number of projects in the works that would turn surplus land into residential or industrial developments, and also plans to consolidate and upgrade a number of other manufacturing sites. Planned sales include a 450ha parcel of land at Western Sydney, valued at $600m, and possible developments include a 450-lot residential estate at Warner, north of Brisbane. The company also has long-term plans for a major manufacturing hub at Badgerys Creek in New South Wales that it says would transform its PGH Bricks business in the state.

Vehicle fleet leasing and online auction company Eclipx’s shares soared by more than 18%, after it announced it was selling online auction businesses GraysOnline and AreYouSelling to Quadrant Private Equity for $60 million. AreYouSelling is a car sales hub, while GraysOnline is used to auction off a more diverse range of goods including industrial equipment, wine, jewellery and home appliances. The deal also included an agreement that Eclipx’s end-of-lease vehicle sales would continue to go through GraysOnline.

ASX 200 Listed Companies – Top 5 Biggest Market Cap Gains and Losses (28/06/2019 to 05/07/2019)
Biggest Gains Biggest Losses
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 CSL Ltd (CSL) $4,372,787,799 $224.65 4.5% 1 Aristocrat Leisure (ALL) -$1,008,899,757 $29.14 -5.1%
2 National Aust. Bank (NAB) $2,634,418,557 $26.97 0.9% 2 Commonwealth Bank (CBA) -$920,524,543 $82.26 -0.6%
3 Goodman Group (GMG) $1,886,437,275 $16.07 6.9% 3 Brambles Ltd (BXB) -$903,942,606 $12.36 -4.0%
4 Transurban Group (TCL) $1,551,673,040 $15.32 3.9% 4 Fortescue Metals Group (FMG) -$677,372,282 $8.80 -2.4%
5 Scentre Group (SCG) $1,541,929,190 $4.13 7.6% 5 Speedcast International Ltd (SDA) -$402,765,314 $1.80 -48.3%
Prepared by Canstar. Prices taken as of week to week close.

What shares went down last week?

Satellite communication company Speedcast International’s shares dived by more than 48%, after the company downgraded its profit forecast. The company made the biggest market capitalisation losers list due to the fall, which saw more than $400 million wiped off its value. On Friday, the company issued a statement to the ASX correcting an article “implying” that it had been awarded a $3 billion, five-year contract with the US Homeland Security department. The statement said that while the company was honoured to be selected, it was, in fact, just one among a number of suppliers named in the contract.

Gaming system company Aristocrat Leisure’s shares took a 5% tumble (to close at $29.14 a share on Friday), which reduced its market capitalisation by just over $1 billion. News broke last week that Aristocrat was taking rival poker machine manufacturer Ainsworth Game Technology to the Federal Court, over an alleged intellectual property law issue. In a statement to the ASX, Ainsworth said it would be “vigorously defending the claims made by Aristocrat”. Last week, Ainsworth shares rose from a $0.66 start on Monday to a $0.69 close on Friday.

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