10 May 2021 | Weekly Snapshot

Did you know?

That Wall Street is really named after a wall. It was a wooden barrier built in 1653 to protect the Dutch colonists who then ruled Manhattan from the British and Native Americans.

Market Movements

Australian Share Market (ASX200) – up 0.8% last week, leaving Year to Date performance at +8.7%. At the sector level, Materials (+3.9%) gained the most followed by Energy (1.8%), while Information Technology (-10.5%) was the largest underperformer.

US Share Market (S&P 500) – up 1.23% last week. Like Australia, the US market pushed higher from recent price consolidation. U.S earnings reporting season continued to drive markets as strong earnings continued to be printed.

Portfolio Movements

ANZ (ANZ.ASX) – ANZ said its interim net profit rose by 90% to A$2.94B (for the 6 months) as improving credit conditions resulted in the release of almost $500M (around 25% of the additional credit provisions). There is still $4.3B in reserves if conditions deteriorate. The result was helped by customer deposits +1.6%, gross lending +3.5%, expenses -8%, NIMs (Net Interest Margin) increasing from 1.57% to 1.63% which all improved the capital ratio to 15.9% from 14.4% as at Sept 20. The result includes the recent announcement that the cash profit would take a $817M hit due to restructuring charges. The dividend was increased to 70c per share up from 25c a year ago.

Linde (LIN.ETR) – Linde reported a large hike in their earnings outlook and now expect earnings per share to rise 17-19% year-on-year from its previous 11-13% growth expectations. The company reported Q1 earnings of $2.49 per share well above $2.26 expectations with revenue at $7.24B against $7.04B estimates. Next quarter EPS is expected to jump 32 -34% off the back of continued growing demand and higher prices for oxygen, nitrogen and hydrogen used in hospitals. Teams in India are now producing over 3,000 tonnes of medical oxygen daily, nearly ten-fold the figure 4 weeks ago and are looking to ramp up production to over 9,000 tonnes per day by mid-May. Similar demand is being seen in Mexico, Brazil and other Latin American countries.

Amcor (AMC.ASX) – Amcor reported year to date (9 months) adjusted earnings of $1.005B, 9% higher than the prior period which comprises 4% organic growth (from higher volumes and lowering operating costs) and 5% growth reflecting the $45M cost synergy benefits related to the Bemis acquisition. Net sales were 1% higher across a broad range of markets with food items more than offsetting healthcare markets which were disrupted by fewer elective surgeries. Dividends were increased to 11.75c or 15.12c in AUD terms and share buybacks have reached $308M over the last 9 months. Strong annual Free Cash Flows above $1B is growing thanks to ongoing innovation and helped AMC increase their EPS growth outlook for the full year by a very healthy 14-15%.

The week ahead

Tuesday’s FY22 Budget is shaping to be an important catalyst for the economy and markets – intent to stimulate was clear in 2020 but resolve and execution are increasingly in focus. We expect a stronger economy and commodity prices to drive smaller deficit forecasts. It appears the economic and political incentives are still for further fiscal stimulus.

US CPI numbers and European Industrial production numbers will provide the first important economic markers for the week. Friday night will provide important economic data points in the U.S with April retail sales numbers, industrial production and consumer confidence all being released on the night.