Australian Markets Weekly Wrap: Market marks times

Provided by The Australian Investor

Saturday 11th August 2001

Corporate profit announcements over the week were more promising than disappointing, and Australian data, surveys and statistics suggested consolidation rather than decline or a strong surge of growth. Market indices swung backwards and forwards past the same point, to come back to rest by the end of the week.

Nevertheless, the volatility that has characterised investors' actions for some time has not abated: Brambles' complicated deal has left its shares difficult to value, and the market is just selling it down, ERG was sold down strongly yesterday on solid volume, mystifying most in the market, and Renewable Resources suffered the same fate on the same day, to name a few examples.

From last Friday's close, the S&P/ASX 200 eased 1.2 to 3,401.3 and the All Ordinaries eased 1.4 to 3,343.9 over the course of last week.

Monday the ANZ Bank reported that Job advertisements were up in July by two per cent, but are down 31.4 per cent over the twelve months.

The Federal Chamber of Automotive Industries reported car sales in July were down 16.7 per cent but for the year to date, total sales are up 1.9 per cent on last year.

News Corp's bid for DirecTV, thought by many to be a done deal, became complicated when competitor EchoStar returned with a higher offer. News Corp ended the week down 61c at NCP $18.263

Bendigo Bank reported a net profit of $33.3 million, up 56 per cent, and ended the week up 26c at $6.67.

Cochlear bought additional patents and technology and ended up $1.261 at $38.89.

Climax Mining added up its write-offs and came up with a net operating loss of $56.28 million. By Friday's close, its shares were down 2.1c at 3.9c.

Mikoh Corp got an order from an American government agency for its Smart&Secure label technology and by the end of the week it was up 1.2c at 7.6c.

On Tuesday , Wesfarmers increased net profit by 21 per cent to $251 million, and over the week, its shares gained 18c to $29.41 after hitting $30.43 on Thursday.

FH Faulding & Co reported annual net profits of $172 million, up 21 per cent, and ended the week down 5c at $14.40.

Baycorp and Data Advantage finally agreed on terms for their merger. Baycorp ended the week up 85c at $11.00 and Data ended up 5c at DAD $7.05.

Software provider Volante Group made an annual net profit of $7.2 million, a bit of a standout in the new tech sector. It ended the week up 8c at $1.35.

Hutchison Telecommunications incurred a loss of $91 million in the half, and by the end of the week, its shares were down 5c at 24.5c.

In the US, June-quarter productivity jumped 2.5 per cent, more than 78 per cent better than the consensus estimate, and inflation isn't a grave concern - unit labour costs increased only 2.1 per cent. The data suggest that once the American economy returns to full growth, it can meet demand without pressure on prices.

On Wednesday , the Westpac Melbourne Institute consumer sentiment index dropped 3.6 per cent, with declines across all components, but sentiment remains positive. The survey, which reveals sentiment not fact, did not alter analysts' predictions for strong growth later this year and next year.

The Bureau of Statistics reported housing finance measured by volume increased by 0.2 per cent in June and was up almost 34 per cent over twelve months.

David Jones announced its annual sales were up 5.8 per cent to $1.55 billion, and ended the week up 8c at $1.14.

Orica issued a profit warning, indicating it would report a net loss of $125 million, and its shares fell 6.5c to $4.45 from last Friday's close.

Ticor announced a net profit of $46.3 million, up 69 per cent, but voiced its concerns about sales this half, and by the end of the week it had fallen 4c to $1.18.

The Stuart Twins made their first naphtha sale, and Central Pacific ended the week down 10c at $1.90 and Southern Pacific ended the week down 2c at 73c.

In the US, Cisco advised it was cautious about its future prospects, and tech stocks in the US were sold down.

The US Federal Reserve's Beige Book revealed American consumer demand was soft in June and July, but inflationary pressures remain controlled. Wholesale inventories slipped 0.2 per cent in July.

Thursday , the Bureau of Statistics announced the unemployment rate was 6.9 per cent in July, steady with June's rate, because participation fell along with job numbers, and full time employment declined and part time employment rose, as would be expected when conditions for business are tough. The news adversely affected our dollar.

The Westpac Melbourne Institute discovered consumers' expectations of inflation had increased to 4.6 per cent and expectations of wage rises had declined.

Resmed reported net profit of $US8.3 million for the June quarter and by Friday's close, its shares were down 8c at $10.60.

Julia Ross Recruiting did what should have been impossible in a time of rising unemployment - this listed employment business just beat its prospectus forecasts, and by the end of the week, its shares were up 7c at 92c.

Australian Magnesium has been rescued from the short investment time-lines of institutional investors - and they get that from their clients, us - and by the end of the week, its shares had risen 12c to $1.56.

In the US, weekly initial claims for unemployment benefits increased by 33,000 to 385,000. Import prices fell 1.6 per cent in July. US retailers lodged their sales latest reports, which were disappointing for investors who had hoped for steady or rising sales.

On Friday , Coca-Cola Amatil reported a net profit of $362.6 million including abnormal items of $255 million, and over the course of the week, it gained 50c to $5.56.

Foodland Australia increased sales for the quarter and the year, and closed the week up 35c at $12.00.

Autogen announced the discovery of a key diabetes gene, and by the week's end, its shares were up 4c at 99c.

American restrictions on stem cell research have benefited BresaGen, which rose 15c to 94c over the course of the week.

In the US, the Producer Price Index surprised by declining 0.9 per cent, three times the consensus expectation, with plunging energy prices and sliding food prices taking most of the credit. The core rate for this measure of wholesale inflation was a rise of 0.2 per cent, double the average of analysts' forecasts. Weakness in wholesale prices could translate into reduced profits for the September quarter, suggesting more profit warnings to come from American businesses.

Aussie Dollar

The Aussie dollar lost 0.3 cents US over the week - from last Friday's 50.84 US cents it reached 51.5 US cents by 4.00 pm yesterday.

SPI

The September contract finished the week at 3,402, down 17 points.

Industrials

The S&P/ASX 200 Industrials index gained 30.9 for the week to 5,911.4.

Resources

The S&P/ASX Resources index dropped 62.9 points over the week to close at 1,437.

Banks

The Bank Index closed the week up 67.2 points at 9,119.2.

Gold

The Gold Index closed the week up 11.1 points at 803.6.

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