Despite a bad start to the month, global shares had a strong August rising 2%. In Australia though, the ASX200 fell 0.1% to 5625.9.
And that fall only happened because of last week’s drop of 0.4%. The ASX200 had a tiny rise of 1.5 points on Friday.
The All Ordinaries did a bit better – it was flat in August, down 0.3% for the week (which wiped out what would have been a modest gain) and up slightly on Friday.
The local market was much weaker in August than in the US and Europe, but like their peers offshore, local shares did recover from a very weak start to the month.
In fact the ASX200 is up 3.4% from the low in early August of just under 5,440 points. It ended August last Friday on 5626.
The rebound can be put down to the surprising strength of the June 30 reporting season which ended up being better than forecast.
In fact the two companies with the standout weak results – Qantas and Virgin Australia both saw their shares outperform the wider market as a result.
Higher dividends and the occasional buyback (Telstra and Wesfarmers, but not BHP Billiton or Rito Tinto) helped drive the market higher, although it eased over the last 10 days of August.
Despite reporting a solid result and the spin-off of low performing assets into a new company, BHP shares fell 5.8% in August to $36.67, while Rio dropped 6.1% to $62.63, despite reporting an interim profit that was rated better than BHP’s.
The culprit for the weakness for both resources giants was the 9% fall in the spot iron ore price to an end of month $US87 a tonne on Saturday morning, our time.
Smaller iron ore companies such as Atlas (down 12%) and Mount Gibson (down 6.4%) also lost ground.
Surprisingly, Arrium, which closed at 78.5 cents on friday, hardly lost any ground in August – a matter of a couple of cents.
But Fortescue, the purest of iron ore plays for investors, saw its shares lose 15% over August to end on $4.17 on Friday.
The Commonwealth Bank was the only bank of the big four to report full-year earnings in August – a record profit of $8.6 billion, but with definite signs of second half weakness.
The ANZ and National Australia Bank issued quarterly updates which were OK, but not really convincing.
CBA shares lost 2.9% over the month (it did trade ex-dividend). ANZ shares fell 1.6%, and the NAB lost 0.3%.
Telstra rewarded its 1.4 million shareholders by announcing not only an increased dividend, but also the $1 billion share buyback and a 14.3% rise in net profit
As a result Telstra shares hit a series of 12-year highs and rose 1.3% over the month to close at $5.56.
Wesfarmers announced the return of $1.1 billion to shareholders and a higher final dividend, but the shares fell 1.4% as the retailing sector remains in the doghouse so far as investors here and offshore are concerned.
Rival Woolworths also lost ground over August – 34c, to end on $36.16 on Friday after reporting a moderately encouraging annual profit, but no more.
But after reporting a surprisingly solid profit on Friday and seeing the shares jump 7.9% on the day to $3.55, Harvey Norman shares enjoyed a very buoyant August, with a gain of more than 16%.
Qantas dominated late last week after it reported that full-year net loss of $2.8 billion, and an underlying loss of $646 million. Despite that loss, the shares jumped 10.1% in August, ending on $1.47.
Virgin Australia joined the red ink club with a net loss of $355 million. And its shares rose 2.5% over the month to end at 41.5c.
