ASX weekly: AMP, CIMIC down, NAB, CSL up but market in neutral territory

After a week that left the Australian share market in neutral trading territory, financial markets are expected to look to the Reserve Bank for indications on the next cash rate move.

How did the ASX perform last week?

The two main stock market indices, the S&P/ASX200 and the All Ordinaries, remain close to record highs but closed the week virtually flat. 

The S&P/ASX200 gained just 0.06% to reach 6700 points, while the broader All Ordinaries declined 0.03% to 6786.

Reserve Bank governor Philip Lowe will deliver a speech on inflation in Sydney on Thursday, which economists will watch closely for signs the cash rate could be cut again shortly.

What stocks went down on the ASX last week? 

Canstar figures showed the performance of the Australian market last week was dragged back by major falls in major stocks like construction group CIMIC and wealth management giant AMP.

CIMIC reported its revenue for the six months to June 30 reached $6.95 billion, which was up 0.3% from $6.94 billion at the same time last year. Its net profit after tax for the half was $366.7 million. However, analysts had expected the company would report higher earnings and the stock fell by more than 18% as investors sold off their shares in the company. The fall wiped nearly $2.75 billion off CIMIC’s market capitalisation.

The trading week on the market got off to a sour note early, when AMP said on Monday that the planned $3.3 billion sale of its life insurance business to British group Resolution was not likely to proceed.

AMP said the Reserve Bank of New Zealand (RBNZ) would block the deal from going ahead because Resolution would not agree to separate AMP Life’s New Zealand assets to meet the RBNZ’s regulatory requirements. As a result of the deal being stalled, AMP’s board said a shareholder dividend for the first half of the current financial year most likely would not be paid. Investors reacted savagely and sold down AMP’s stock by 16%, which reduced its market capitalisation by $1.04 billion. The stock traded at its lowest level to date when it reached $1.74 on Monday.

What stocks went up on the ASX last week?

On the upside, global biotechnology company CSL recorded the largest market capitalisation on the market last week, having gained $1.71 billion following Goldman Sachs putting a buy recommendation on the stock.  Investors also reacted positively to CSL revealing that it would appoint executive Anjana Nairain to lead its Seqirus business, which specialises in influenza vaccinations and is one the largest businesses of its kind in the world.

The National Australia Bank (NAB) stock price also rallied late in the week after it appointed veteran banker Ross McEwan as its chief executive. NAB’s outgoing chairman, Ken Henry, and previous chief executive Andrew Thorburn both announced in February that they would quit NAB, after the Royal Commission’s final report heavily criticised the bank.

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