Australian Markets Weekly Wrap

Provided by The Australian Investor

Saturday 1st September 2001

There was no Friday rally to bring the market back to balance this week, in fact in a reverse of a situation common recently, most of the week's decline occurred on the last trading day. Despite a series of official figures that make it ever clearer that the worst is behind us here in Australia, foreign news is still not painting a clear picture, nor a particularly positive one.

From last Friday's close, the S&P/ASX 200 fell 72.4 points to 3,275.6, a weekly drop of 2.16 per cent and the All Ordinaries fell 70.4 points or 2.14 per cent to 3,217.7 over the course of last week.

On Monday Woolworths reported annual profits of $475.7 million, an increase of 48 per cent. Its shares fell 18.3c over the week to $10.727.

MIM's net profit was down 37 per cent at $104.6 million and it announced its intention to sell its troubled Avonmouth and Duisberg operations in Europe. Over the week, its shares rose 5c to $1.07.

Origin Energy made an annual net profit of $98.04 million and ended the week at $3.20, up 14.4c.

Westfield Holdings added to its portfolio of American shopping centre interests by taking 23.9 per cent of Rodamco. The market reacted strongly the next day, but by the end of the week, its shares were at $16.986, a rise of $2.286.

Japan's unemployment rate hit five per cent, a record for that nation, where unemployment benefits are unknown.

On Tuesday , PriceWaterhouseCoopers released the results of a survey suggesting the confidence of players in the retail sector is the lowest it's been for four years.

The Yellow Pages Business Index, on the other hand, recorded a big increase in confidence amongst small businesses.

Foster's Group made an annual net profit of $465.2 million, up 8.7 per cent. Its shares ended the week at $5.17, down 17c.

Challenger International increased annual net profit by 91 per cent to $154 million, and by Friday's close, its shares were at $3.46, down 34c.

Brickworks reported net profit of $60 million, up 40 per cent, and over the course of the week, its shares rose 20c to $7.20.

Pacific Hydro's profit was up 206 per cent at $26.9 million, and its shares ended the week at $4.085, up 20.5c.

Contract miner Henry Walker Eltin's annual profit was down 35 per cent at $17.2 million, and its shares fell 10c to $1.15 over the course of the week.

Tap Oil's annual net profit reached $10 million, an increase of 25 per cent. Its shares ended the week at $1.287, up 1.7c.

In the US, investors got some bad news: consumer confidence fell in August to 114.3 from the previous month's 116.3, when a movement in the opposite direction had been expected. Consumer sales have helped support American business through this slowdown, and any drop in confidence could easily translate into reduced sales.

The news scared investors, and American stockmarket indices slid for the rest of the week.

On Wednesday , the June-quarter current account, at a seasonally adjusted $3.487 billion, is the lowest it's been since 1974. March-quarter balance of payments was revised down to a deficit of $4.291 billion to accommodate a 'confidential transaction'. Net international investment increased by $5 billion.

Telstra proved it is one of the world's most profitable telcos, reporting a 10.4 increase in annual result to $4.06 billion. Its shares fell 12c from last Friday's close to $4.813.

Mayne Nickless turned last year's loss into a profit of $161.6 million and its shares rose 0.4c to $6.254 over the week.

QBE increased net profit by 56 per cent to $122 million, and it ended the week at $10.70, up 48c.

ASX made a net profit of $51 million, down 4.8 per cent, and ended the week at $12.72, down 76c.

Newcrest Mining increased its profit more than ten times to $38.15 and its shares fell 9.6c to $4.184 over the week.

Miller's Retail made $23.55 million, up 92 per cent. Over the week, it gained 7.4c to $6.254.

Medical Imaging increased net profits by 90.1 per cent to $17.67 million, and over the course of the week, its shares gained 3c to $1.23.

Auspine's net profit down 42 per cent at $13.1 million, due to conditions in the construction industry, and its shares ended the week up 5c at $2.35.

American Gross Domestic Product was the piece of economic information the world was most curious to know last week. The rate hit a positive 0.04 per cent in the June-quarter, or an annualised rate of 0.2 per cent. The experts had been predicting anything from a fall of 0.6 per cent to a rise of 0.7, but any positive result was welcome. Consumer spending was the engine, and inventories fell $US38.4 billion, the greatest drop in eighteen years. Falling inventories are going to have to be replenished, and demand for manufactured goods looks set to rise.

Thursday , the Bureau of Statistics reported that housing is still booming, with dwelling approvals rising 6.3 per cent in July to a level 39.1 per cent higher than July last year. Approvals have risen for four months in a row.

The trade balance in July was in surplus again, the Bureau confirmed. For the month, we exported $1.09 billion more goods and services than we imported. Analysts sounded a warning note: exports are falling, but the good news is that imports of capital goods are rising, suggesting businesses want to increase production to meet perceived demand.

Delta Gold made an annual profit of $51.9 million, an increase of $166.7 million from its result for the previous year. Its shares ended the week up 8c at $1.75.

Computershare increased annual net by one per cent to $38.7 million, and by Friday's close, it shares had fallen $1.50 to $4.58.

Anaconda's capital raising closed successfully, putting that concern behind the company. Its shares closed at 93c, down 7c.

Adelaide Bank's net profit of $34.14 million was a record for the company, and its shares ended at $6.48, down 4c.

Rural Press reported a profit of $24.9 and it ended the week up 2c at $4.57.

In the US, personal incomes increased by 0.5 per cent in July, above the predicted rise of 0.3 per cent, while personal consumption expenditure increased by 0.1 per cent, its smallest increase in nine months. The savings rate jumped to 2.5 per cent, suggesting those Federal income tax rebate cheques went straight to the repayment of debt or into savings accounts.

September-quarter consumption is still on target to increase three per cent, providing continuing support for American producers.

Weekly initial unemployment claims fell by 1,000 to 399,000, slightly weaker than the expected decline.

The European Central Bank cut interest rates from 4.5 per cent to 4.25 per cent, its second easing so far this year. The President of the Bank warned he could not forecast when the next such cut might happen, and disappointed investors sold down European stocks.

On Friday , the Bureau of Statistics reported that retail trade increased by one per cent in July and motor vehicle sales increased by 13.3 per cent in the same month. Analysts were delighted by further evidence corroborating the strength of the national economy.

The NRMA reported its first profit: $122.6 million. Its shares closed the day down 7c for the week at $3.27.

National Foods' annual profit was down 6.5 per cent to $45.06 million, and its shares ended the week at $2.23, up 4c.

Gunns reported an annual profit of $17.8 million, and from the previous Friday's close, its shares fell 21.2c to $4.338.

All the fuss about petrol prices and evil oil companies seems to have passed Caltex by. Its annual profit was down 97 per cent to $1.24 million. Its shares closed Friday at $1.41, down 16c.

In the US, the economic news was mixed but mostly positive. The University of Michigan consumer sentiment index for August fell to 91.5 from the preceding month's 92.4, not good for an economy reliant on consumer demand. However, there are signs the American manufacturing sector, most profoundly troubled in their slowdown, is on the mend. The Chicago Purchasing Managers Index rose in August, up 3.5 points to 43.5, and its 'new orders' and 'employment' components are also up. Factory orders rose 0.1 per cent in July, while the consensus of analysts' forecasts was a fall of 0.4 per cent. New defence contracts played the major role in supporting the rise.

On Saturday, the Australian Financial Review revealed the IMF's latest World Economic Outlook, due to be published later in September, warns of a significant danger of a global recession. The Fund warns the recession, if it happens, could be protracted and deep, and the most likely trigger will be slower growth in the United States.

Aussie Dollar

The Aussie dollar hardly moved over the week - from last Friday's 53.43 US cents it reached 53.4 US cents by 4.00 pm yesterday.

SPI

The September contract finished the week at 3,272, down 79 points, and most of that fall happened on Friday.

Industrials

The S&P/ASX 200 Industrials index fell 123.3 for the week to 5,685.

Resources

The S&P/ASX Resources index rose 6.1 points over the week to close at 1,426.9.

Banks

The Bank Index closed the week down 198.8 points at 8,892.8.

Gold

The Gold Index closed the week down 17.9 points at 763.4.

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