19 February 2024 | Weekly Snapshot

Did you know?

Prior to last week the S&P 500 was up 14 of the last 15 weeks with Goldman Sachs noting this has only happened five other times since 1928, with the last occurrence 52 years ago.

Market Movements

Australian Share Market (ASX 200) – up 0.18% despite weaker offshore leads as our first half reporting season ramped up. Information Technology (+6.2%) led the gains on some corporate activity in the sector. Consumer Discretionary (+4.5%) was the next best led by a better-than-expected result from Wesfarmers with Bunnings and Kmart doing well as households increasingly sought out value for money. The Real Estate sector (+2.62%) was also higher on some not a bad as feared results. Health Care (-4.86%) led the declines, pulling back from recent strong gains with CSL reporting mixed results with Behring, their largest division, doing well but vaccine business Seqirus missing estimates and the newly acquired Vifor underperforming expectations. The Energy sector fell (2.15%) despite the oil price hitting a 3 month high as geopolitical tensions, particularly in the Middle East, remain elevated. The Communication Services sector (-2.02%) was also lower led by Telstra who despite a strong first half on continued gains in retail mobile services, lowered their full year guidance slightly due to some weakness in the Network Applications and Services (NAS) business as some customers shifted from traditional calls to integrated video and digital solutions. The Australian Westpac-MI consumer sentiment index jumped 5 points to 86.0 in February, the highest in 20 months with Westpac attributing the rebound to falling inflation and reduced expectations for rate hikes. NAB business confidence also rose to +1 in January from 0 in December while NAB Business conditions slipped to +6 from +8 but remain positive. In what was a bit of a theme last week inflation metrics in the NAB survey picked back up with retail prices rising at a quicker pace, and quarterly purchase and labour costs increased. Australian employment rose by just 500 jobs in January, well below estimates for a 25K increase with the unemployment rate rising to a two-year high of 4.1%, higher than the 4.0% expected and up from December’s 3.9%. The ABS did note some shifting seasonal trends during the summer holidays with more people expected to start jobs in February. And job vacancies also remain historically high. Markets brought forward the expected first RBA rate cut to September following the employment report, having been pushed out to November following the US CPI report earlier in the week.


U.S. Share Market (S&P 500) – down 0.42%, with the Dow (-0.11%), and Nasdaq (-1.34%) also lower ending a 6-week winning streak and only the 2nd down week in the past 16 weeks in what has been quite a rally from the October low. Energy (+2.17%), Financials (+1.44%), and Utilities (+1.35%) outperformed while the Info Tech (-2.46%), Communication Services (-1.61%) sectors that have led the rally underperformed. Inflation data coming in a bit higher than expected last week was enough to dampen the rally and maybe prompting some profit taking. Headline CPI increased 0.3% for the month, the highest since September and ahead of the 0.2% expected, to be up 3.1% for the year which was also ahead of the 2.9% annual rate expected. And Producer Prices on Friday also rose more than expected with headline PPI up 0.3% for the month, above consensus for 0.1% while core PPI surged 0.5% for the month, well above the 0.15% expected. The US 10 yr. treasury yield rose to the highest since late November and rate cute expectations shifted further with market pricing for the expected first Fed rate cut pushed out to July from May prior to the CPI data, and from March just a couple of weeks ago. Markets are now also pricing in a reduced 90 basis points of cuts in 2024 compared to 175 basis points of cuts expected in January. US January retail sales were weaker than expected with harsh winter weather getting some of the blame. Other than that, data was better than expected with the NAHB housing market index up for the 3rd month in a row and the highest since August. The Philly Fed and Empire State indexes improved, and the University of Michigan Consumer Sentiment rose to the highest since July 2021. The weekly initial jobless claims at 212K remain historically low, although there has been increased mentions of job and cost cuts during the Q4 earnings analysts calls. With 79% of S&P 500 companies having now reported, the blended earnings growth rate for Q4 S&P 500 EPS is currently at 3.2%, better than the 1.5% earnings increase expected at the beginning of the reporting season.

Portfolio Movements

CME Group (CME) beats Q4 estimates – Posts record year. CME Group reported Q4 EPS of $2.37 last week, a decent beat on the $2.28 expected. It was the strongest year in company history with interest rate products driving record annual average daily volume and revenue. Total Q4 Average daily volume (ADV) was 25.5M contracts, up 17% versus Q4 2022, including non-U.S. ADV of 7.2M contracts, up 28% compared with the same period in 2022. Interest rate ADV surge 35.8% to 13.3 million contracts in the quarter, driven by record U.S. Treasury futures and options volumes with the company continuing to benefit despite a pause in rate hikes as customers needed to manage risk against the backdrop of diverging views about where the rates were heading. CEO Terry Duffy said “I’ve never seen such a disparity in opinions on what the Fed may or may not do, and I believe that is a tailwind for CME Group in our rates products,”


Commonwealth Bank (CBA) reports first half profit falls 3% but earnings beat. CBA has reported first half cash NPAT of $5.02B, down 3% on last year but ahead of the $4.95B expected, or cash EPS of $3.00 vs. the $2.93 expected. The interim dividend of $2.15 per share fully franked was also a bit better than the $2.10 per share expected. The Net interest margin fell a further 6 basis points in the half to 1.99% mainly due to increased competition. Loan impairment expenses fell by $96 million to $415 million as the loan loss rate decreased from 12 to 9 basis points in the half. With arrears remaining historically low at just 0.5% for home loans. “Our lower cash profit reflects cost inflation and a competitive operating environment,” CEO Matt Comyn said, adding “We further strengthened our balance sheet, with high levels of provision coverage, surplus capital and conservative funding metrics … The stability of our earnings and our balance sheet strength allows us to invest in products, services and experiences that our customers value.”


Sony (SONY) beats Q3 estimates – but cuts PlayStation 5 sales target. Sony reported a 22% surge in quarterly sales for the October to December period with revenue of ¥3.748T well ahead of the ¥3.598T expected. Net income of ¥367.37B was also a big beat on the ¥319.56B expected, up 13% on the year ago period. The Pictures Division saw increases in television and digital streaming licensing revenues and home entertainment sales. And the music division was a standout with revenues at JPY422 billion ($2.81 billion), up from JPY364 billion last year, buoyed by higher sales for recorded music and music publishing from paid subscription streaming services. Although a lower sales forecast for its PlayStation 5 console weighed with the company cutting its PS5 sales forecast for the year ending March to 21 million units, from 25 million units previously, after weaker-than-expected sales over the year-end shopping season.

The Week Ahead

Domestic economic data releases this week include the RBA minutes tomorrow, with the Q4 Wage Price Index on Wednesday a highlight.

International economic data releases include China Foreign Direct Investment today, and US leading Indicators tomorrow night. Thursday night is Eurozone Consumer Confidence, the FOMC meeting minutes, and the Markit Global PMIs. US Existing Home Sales are Friday night along with German IFO Business Survey. The US markets are closed tonight for Presidents’ Day and China markets reopen today after their week-long New Year celebrations.

Portfolio company reporting this week includes Westpac Q1 today, with Sonic Healthcare and BHP first halves tomorrow. Wednesday has Santos full year, Woolworths and Charter Hall first halves, and NAB Q1 results. Friday has Rio Tinto and Lloyds full year results, along with Qube and APA first halves.

Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice

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Some numerical figures in this publication have been subject to rounding adjustments. Akambo Pty Ltd (including any of its directors, officers or employees) will not accept liability for any loss or damage as a result of any reliance on this information. The market commentary reflect Akambo Pty Ltd’s views and beliefs at the time of preparation, which are subject to change without notice.