Australian shares gain 0.9% over the week
Australia’s share market rose 0.9% this week, its first weekly gain in a month, as news flow from China and better economic growth data in the US supported the increase.
The benchmark S&P/ASX 200 index took a nosedive on Monday, tumbling 4.1% to its lowest close in more than two years amid a huge selloff in Asia, before rebounding the following day.
The gauge advanced steadily for four consecutive days to end the week at 5,263.6, up 49 points from last week. Nonetheless, over the month, the ASX 200 index had dropped 7.6% or 435.6 points.
China and the US
“Fresh stimulus out of China perhaps settled some nerves while back to back solid gains for the US market together with a much better than expected GDP result for the US last night (growth 0.5% above consensus) – all of these helped,” said CommSec market analyst Steven Daghlian.
On Wednesday, China’s central bank cut interest rates and reduced the reserve requirement ratio—the amount of cash banks must set aside—after the Shanghai stock market plunged for five days in a row.
Meanwhile, the US reported yesterday its gross domestic product (GDP) rose at an annual rate of 3.7% in the second quarter.
On the market’s outlook next week, Daghlian said: “The market has been very volatile recently, so there’s certainly no guarantee the gains will continue.”
Economic data due next week includes the Reserve Bank of Australia’s decision on the monthly interest rate after its monetary policy meeting on 1 September, followed by the country’s second quarter GDP the next day, and July retail sales on 3 September.
This week also marked the final week of company earnings reporting season, and key result releases during the week were again mixed.
Mining and metal
BHP Billiton’s underlying profit slipped 52% to US$6.4bn for the 2015 financial year due to falling commodity prices. The stock lost 5% on Monday after the earnings release but had recouped its losses to end the week 6% higher at $25.49.
The miner’s spin-off company South32 meanwhile said its pro forma underlying earnings from continuing operations increased 41% to US$575m in FY15, although in statutory terms, the company posted an after-tax loss of US$926m.
While BlueScope returned to the black with a full year profit of $136m, BC Iron slid into a net loss of $158.5m. Shares of BlueScope jumped 25% weekly while BC Iron was unchanged.
Meanwhile, Fortescue Metals said its annual profit tumbled 88% to US$316m.
Proceeds from an asset sale boosted APA Group’s FY15 net profit to $560m, although its underlying profit of $204m was only 2% higher than a year earlier. The stock rose 4% weekly to $8.90.
Oil Search shares jumped 10% over the week after the company lifted its interim dividend on the back of a 49% growth in first half net profit to US$227.5m.
Meanwhile, writedowns and impairments dragged Drillsearch into a net loss after taxof $8.1m for the year ended 30 June 2015.
Consumer and health care
Woolworths announced today a net profit after tax (NPAT) of $2.15bn, down 12.5% from a year ago. Despite this, the stock gained 1.3% today to close at $27.40.
In the media industry, Nine Entertainment’s underlying NPAT fell 2.9% to $140.1m, while Southern Cross Media saw a sharper decline of 19% in underlying NPAT to $64.8m.
Finally, Ramsay Health Care saw its shares climbing 4% over the week after the company’s FY15 core NPAT improved 19% to $412.1m, and management said they may purchase more hospitals in France.