19 August 2024 | Weekly Snapshot

Did you know?

The below diagram shows the change in global equity values from 1900 to 2023, by country. The USA has been the big winner to the detriment, largely, of Europe. Over the past decade this trend has accelerated due to the growth from Nvidia, Microsoft, Amazon, etc.

Market Movements

The ASX bounced 2.5% this week after the strong sell-off the week prior. Computershare was one of the top performers, up 7% after strong profit results. Mineral Resources was among the worst performers, down 11.2%, being dragged down by the weaker iron ore and lithium price backdrop.
Aussie employment surged in July with 58.2K new jobs, double the 20K expected. A record participation rate of 67.1% meant the unemployment rate rose to 4.2% from 4.1%.

US equities were higher by 3.9%. Starbucks was among the top performers, up 26% having announced a change of CEO, which was strongly welcomed by the market. Lithium giant Albemarle was among the weaker stocks, down 2.6%, which is being driven by ongoing lithium oversupply coming from both China and Africa.
July CPI was in line with expectations with an annualized pace of 2.9%, below the 3% expected and the lowest since March 2021. Retail sales were also up 1% for the July month, well ahead of expectations.
90% of S&P 500 companies having now reported, the blended annual earnings growth rate for the S&P 500 is 10.8%, still a decent beat on the 8.9% annual earnings growth rate expected at the start of the quarter.

Portfolio Movements

Telstra reports FY results – Increases dividend ahead of price rises

• Telstra has reported full year results with a 3.7% rise in annual underlying earnings and increase in the dividend. FY revenue rose 1.0% to $22.93 billion. FY underlying NPAT of $2.3B looks to be ahead of the $2.02B expected
• The final dividend was raised to 9 cents per share, up from 8.5 cents last year.
• “A consistent and disciplined execution of our strategy has delivered our third consecutive year of underlying growth, and positive momentum across many of our key indicators,” CEO Vicki Brady said, with the company providing FY 2025 guidance for underlying EBITDA of A$8.6 billion, ahead of the $8.51B expected.
• On AI news and following a 12-month trial by 300 Telstra staff of Microsoft’s CoPilot AI app, Telstra employees are said to have saved between one and two hours a week. As a result, Telstra will be Microsoft’s first major Australian customer for the new CoPilot AI application with a purchase of 21,000 licenses.

NAB Q3 update – Profits up, asset quality down

• NAB, Our biggest business lender, has provided a Q3 update with unaudited net profit of $1.9 billion for the three months through June, up from a profit of $1.75 billion Q3 last year.
• Andrew Irvine NAB CEO said “the Q3 result reflects a more stable operating environment and benefits from the consistent execution of our strategy. Lending balances rose 1% over the June quarter, supported by 3% growth in Australian SME business lending and Australian home lending, our growth was sub-system at 1%. And we continue to target productivity savings of approximately $400million in FY24 and for cost growth in FY24 to be lower than FY23(3)”
• In response to cost-of-living pressures, the CEO added “that while most customers are proving resilient… we have seen asset quality deteriorate further in 3Q24”.

CSL reports strong FY24 results

• Aussie pharmaceuticals giant and our second largest company CSL has reported FY results with underlying profit on a constant currency basis up by 15% to US$3.01 billion, at the top and of their previously guided $2.90-3.00B range. A final dividend of US$1.45 per share was declared taking the FY dividend to US$2.64, up 12% for the year.
• Behring, CSLs largest segment, delivered exceptional growth driven by significant patient demand with Immunoglobulin product sales of US$5.67 billion, up 20% on a constant currency basis. The environment for CSL’s Seqirus vaccines business remains challenging and recently acquired Vifor iron deficiency treatments grew volume in Europe despite generic entrants.
• CSL said they expect underlying profit of between US$3.2 billion and US$3.3 billion at constant currency for FY2025, equal to growth of between 6% and 10%. CSL has said it expects annualized double-digit earnings growth over the medium term with CEO Paul McKenzie saying the company is well placed to achieve that goal.

The Week Ahead

• Tuesday: The RBA meeting will be closely followed with stronger inflation data putting pressure on another rate rise.
• Wednesday: FOMC minutes will be reported, with investors looking for clues around how many rate cuts are ahead in the USA, with expectations currently at 0.75% worth of cuts this year. Wisetech reports earnings with consensus at $0.80/share.
• Thursday: S&P global services PMI, expecting a reading of 54.2 vs previous month of 55. Investors will be wary of evidence of further economic slowing.