15.19 AEST, Thursday 16 August 2012
Market focused on company earnings reports
By Ben Taylor (Sales Trader, CMC Markets)
The market has internalised its focus on company earnings reports today, Westfarmers and AMP are both the standout
performers. Diminishing expectations of US quantative easing has however given traders reason to continue the switch out
of miners into banks, industrials and staples.
The Wesfarmers result today revealed the strength of the portfolio and Richard Goyders comments were upbeat and spoke of
the company’s positive outlook. The increase in earnings from Coles helped to propel the groups full year profit 11%
higher YOY.
AMP has also managed to impress the market today delivering a 6% rise in first half profit and announcing a better than
expected dividend of 12.5 cents. The integration of AXA was also reported to be ahead of schedule and enhanced the
competitive position of the company.
The re-pricing of US quantative easing over the last few days seems to be having little effect on the Australian market
which continues to move higher despite unlikely further September Stimulus from the Federal Reserve.
The US bond market has made up its mind that near term US stimulus is not coming. The sale of US 10 year bonds is
painting the picture that we could be waiting a while before we get any desirable result from the Federal reserve. The
Fed’s core inflation reading moving higher and the expected future moves in the headline inflation rate considering oils
recent rise are also decreasing the likelihood of near term quantative easing
As quantative easing hopes fade so does the prospects of higher commodity prices. Our miners are comparatively weaker
today against other sectors and investors continue the switch. Oil can however be said to be the stand-out with tight
inventory numbers and geopolitical tensions causing a rise of the black gold.
ends