More earnings for the June 30 period this week here and offshore, but the concentration will be on Australia as our reports start their heaviest period of the season. Leading the way, the banks, the biggest drivers of stockmarket activity and investor sentiment, both of which took a battering on Friday courtesy of the ANZ.
Around 40 major companies will be reporting results this week, several of which will influence the market, led by the Commonwealth Bank midweek, while Bendigo and Adelaide releases its full year figures later today while the National Australia Bank provides a third quarter trading up date this morning.
If the talk is right from the markets, the CBA could be joining the ANZ and NAB in some sort of capital raising on Wednesday.
In fact media reports this morning suggest the CBA could reveal a $5 billion capital raising on Wednesday – which would dominate the results if it happens.
It’s suggested the issue price could be at a discount to keep small shareholders happy. The reports suggest it will be a prorata entitlement issue, unlike the ANZ’s $3 billion raising last week which raised $2.5 billion from big shareholders and left only $15,000 worth of shares for small shareholders each (or a maximum of $500 million).
That left a bad taste among small shareholders, many of whom are self managed super funds.
Other influential stocks reporting will be consumer products retailer, JB Hi Fi this morning, Cochlear tomorrow and CSL on Thursday (and media groups News Corp and Fairfax Media Thursday morning).
Telstra also releases its full year figures on Thursday and investors will be looking for an increase in final dividend.
But most investor focus will be on the trio of banks reporting to the market.
After Friday’s nasty $37 billion sell off led by the ANZ, which dragged other banks and the wider market (down more than 2%), investors will be watching the CBA’s results and the quality of its report like a hawk.
The ANZ slipped a brief third quarter trading update out Thursday and it failed to convince investors, despite a reported 4% in cash profit for the quarter. That was less that many investors had been expecting.
As well, Bendigo and Adelaide Bank reports its full year figures later today and it will also be watched closely by investors for any further signs of a weakness in banking activities.
Both banks are likely to be very circumspect about the outlook for the new financial year, a point that will add to concerns among very nervy investors.
So far as the NAB is concerned, investors will be looking for more details of the final timing for the spin off of the Clydesdale bank in the UK, a move that will see the NAB freed of what is a financial millstone.
Friday’s drop in ANZ shares was the biggest for almost seven years and was sparked by the bank announcing a $3 billion capital raising on Thursday and that weak trading profit figures for the third quarter. The stock entered a trading halt on Thursday.
ANZ shares fell as much as 8.5% in early trading after the one day halt ended after the bigger part of the raising, $2.5 billion, was tucked away. They closed down 7.5% down for the day and 7.8% down for the week at $30.14.
Rival banks were sold off as investors raised funds for the ANZ offer. The Commonwealth fell 3.8% on the day and 7.1% for the week to $81.30,
The National Australia Bank lost 2.3% on the day and 5.6% for the week at $32.82, and Westpac shed 3.3% for the day and 7.2% for the week to finish at $32.35.
Readers might notice that all banks had lost 3% to 4% ahead of Friday’s big falls as investors started selling off their bank shares.
It’s likely the bank reports and the market reaction will overshadow most of the other June 30 reports out this week, such is the importance of bank shares to investors.
Today, earnings are expected from Ansell, JB Hi-Fi and Bendigo & Adelaide Bank. Tomorrow, Cochlear, Bradken (it won’t be pretty) and Transurban are down to report their June 30 figures earnings.
Wednesday is a busy day with results coming from the Commonwealth Bank, REA Group, CSL, AGL Energy, Echo Entertainment, Computershare, Primary Health Care, Carsales.com, Dexus Property and OZ Minerals (Interim). News Corp reports Wednesday night.
On Thursday, earnings are expected from Tabcorp, Telstra, Mirvac, Fairfax Media, James Hardie (June quarter) and Goodman Group. Friday will be a relatively quiet day.
The AMP’s chief economist, Dr Shane Oliver says profit growth for 2014-15 is likely to have been around -1% as resource sector profits slump 28% thanks to the hit from lower commodity prices (as we saw with the sharp fall in interim earnings from Rio Tinto), “but with the rest of the market seeing profit growth of around 9% as industrials ex financials benefit from low interest rates, the lower $A and cost cutting,” Dr Oliver wrote at the weekend.
“Key themes are likely to be: weak revenue growth, ongoing cost cutting, competitive pressures amongst consumer staples but tailwinds for building material companies and continued strength in dividend growth,” he added.
In the US, retailers will be the dominant theme for the week. Tonight is a public holiday in the US and most markets will be closed or on a limited trading basis.
Among those companies reporting will be a group of department store chains – Macys, Dillards, Kohl’s, JC Penny and JCPenny. Computer networking giant, Cisco is also down to report, along with Coty Inc.
Offshore, June 30 reports are expected from companies in Asia (China especially) and Europe. Addeco, the big Swiss labour hire firm will be one closely watched. Chinese web giants, Tencent and Weibo are also due to report results this week.
