The ASX will start a touch weaker today – around 17 points – after trading on the overnight futures market that was again at odds with what was happening on Wall Street on Friday night when there was another solid sell-off, led by tech stocks and a 2% slump in the Nasdaq.
The falls on Wall Street were all 1% plus and yet overnight traders in the ASX 200 market didn’t follow suit.
The ASX 200 index fell 274.3 points, or 4.6% last week to end at 5665.2, as local shares entered a technical correction on Thursday.
The fate of the AMP will again take center stage early in the week until two big banks report. AMP shares lost a further 4.8% on Friday to end at a record low of $2.38. That left them down 26.5% for the week and more than 54% year to date.
While the quarterly report for Apple later this week holds a lot of interest for offshore markets it will be the full year reports from two of the four banking majors – the ANZ and the NAB – that will go a long way to deciding what sort of condition the ASX ends the week in.
The ANZ reports on Wednesday, the NAB the day after and Macquarie Group produces its interim first thing Friday morning.
Points coming from the two big bank reports – the damage to earnings actual and forecast from the impact of the Hayne royal commission and the remediation and refunds due to customers – already the two banks have released estimates totaling more than $700 million (over $400 million for the ANZ and more than $300 million for the NAB)
On top of this there are the continuing legal costs with the two CEOs (and those from Westpac and the Commonwealth) fronting the royal commission next month for a grilling).
And then there’s the impact of the slowdown in home lending, and higher interest rates the banks have introduced during the year for investors, interest only and variable mortgage loans. It could be the banks actually (on an underlying basis) report solid results.
The other point to be noted is the impact on final and full year dividends from the two banks. The NAB paid a steady interim of 88 cents earlier this year and the final for 2017-18 was an unchanged 88 cents. The ANZ paid a steady 80 cents interim this year and a final last year of an unchanged 80 cents a share.
Will, those dividends be cut to show that shareholders in the banks are also to share in the pain executives are feeling from some of the dud practices revealed at the inquiry? After all, shareholders have benefited to an extent over the years from the income and profits generated by these practices.
All markets sold off and while the finish was better than the steep early falls – there was no upside for investors to cling to. They are all worried about the selling pressures and the looming report from Apple later in the week which could make or break investor sentiment and trigger another sell-off.
Facebook reports the day before, but it is no so tainted so far as investors are concerned it no longer has the capacity to change sentiment – only Apple can.
Also reporting this week will be building products group, CSR on Thursday and explosives and mining products multinational, Orica.
The major banks lost ground last week. Commonwealth Bank closed 3.1% down at $65.81, Westpac fell 3.3% to $25.96, ANZ shed 4.3% to $24.91 and NAB lost 3.8% to $24.70.
CSL was also among the index’s biggest losers, dropping 5.9% to $176.90 and 25% of its value since the start of September.
Despite the strength in iron ore prices BHP shares fell 5.7% to $31.20, Rio Tinto fell 4.2% to $74.16 and South32 closed 6.6% lower at $3.51.
Weakening oil prices saw Woodside Petroleum drop 8% to $33.26, Origin Energy 12% to $6.95 and WorleyParsons 15.8% lower at $14.24 after the huge fundraising to help pay for its $A3.3 billion takeover of a US chemical plant group.
