NAB missed expectations amid increasing costs

Share price at NAB closed down 0.4% this week after announcing a disappointing third quarter result on Tuesday. Cash profits at the bank rose 6% over the quarter bringing it up to $1.8 billion due to an increase in home and business lending a well as a rise in deposits rose. However, NAB filled to this failed to meet revenue expectations made by analysts sending the share price down. The bank also increased its cost forecast for 2022 an additional 1%, changing the range from 2%-3% to 3%-4%. Chief executive Ross McEwan is confident going into the fourth quarter, saying that 70% of customer home loan repayments were ahead of schedule despite rising rates and soaring inflation.

If you are looking for more reporting seasons updates you can find them here.

Taiwan has the Australia-China relationship on thin ice

China extended military exercises surrounding Taiwan this week after warning Australia that it was creating “new obstacles” when attempting to repair the fractured relationship between Beijing and Canberra. On Monday, the Chinese Foreign Ministry spokesman accused Canberra of sticking its nose where it doesn’t belong, saying the Australia was impeding China’s internal affairs and violating the United Nations Charter. This effectively dashed any hopes that under the Albanese government the relationship between Australia and China would be mended. In his address, the spokesman said Australia must abide by the “one-China principle” to improve relations with Beijing. Acceptance of the principle would require acknowledgement that Taiwan is a part of China and not an independent country.

Trump quick to invoke fifth amendment after Florida home raid

Former American president Donald Trump’s Florida home was raided on Monday morning by FBI agents. The agents broke into Trump’s safe and took official white house documents which he had failed to return. In true Trump fashion, the former president claimed the “unannounced raid on [his] home was not necessary or appropriate” adding “[The FBI] even broke into my safe!” A source confirmed to Reuters that the raid was related to classified documents which Trump had taken from the White House during his presidency. During the New York state’s civil investigation on Wednesday, he decided to exercise his fifth amendment constitutional right and declined to answer any of the questions asked under oath. A surprising approach considering Trump criticised other politicians who decided to invoke the right. During a 2016 rally in Iowa, the then president had much to say about the Hillary Clinton’s use of the constitutional right. “If you are innocent, why are you take the Fifth Amendment?” You tell us, Trump.

Oz Minerals swipes left on BHP

Australia’s favourite iron ore miner submitted a takeover proposal to Oz minerals last Friday which was quickly rejected by the copper miner on Monday morning. Oz Minerals board turned down the $8.1 billion offer saying the deal significantly undervalues the company and is not in the best interest of shareholders. After elaborating on the company’s assets, Oz Minerals chief executive and managing director Andrew Cole said, “we do not consider the proposal form BHP sufficiently recognises [the companies] attributes.” The $25 per share offer was a 32% premium to the copper miners’ close price on Friday. However, Morningstar equity analyst Jon Mills believes BHP will be back with a bigger bid. “We think it is more likely that BHP raises its bid, as it did with Noront Resources in 2021,” says Mills. Oz Mineral investors will have to patiently wait and see if BHP will be back with more cash.

US inflation data has investors excited

The Nasdaq rallied on Wednesday after hitting lows earlier this year. Fresh inflation data revealed that inflation rose 8.5% during July on a year on year basis. This is down from the 9.1% in June. Additional data also showed that on a month on month basis there was no increase in inflation during July, whilst in June prices rose 1.3% over the month. The cooler than expected inflation data has given investors hope that the Fed will scale back on aggressive rate hikes. Upon announcement of the inflation data, the technology heavy Nasdaq Composite rose 2.9% on Wednesday summing to gains of over 20% since it hit lows in June.

Market Wrap

The local bourse has given up some of this week's gains despite strength from the energy sector but still managed to finish in the green for a fourth week in a row.

The benchmark S&P/ASX200 index on Friday finished down 38.5 points, or 0.54%, to 7032.5, while the broader All Ordinaries lost 36.6 points, or 0.5%, to 7288.8.

"Very mixed day today, energy was probably the most obvious one, stocks up, that was probably on the back of oil and a lot of the other commodities picking up overnight," CMC Markets analyst Azeem Sheriff told AAP.

The energy sector was up 2.3% for its best day in nearly three weeks after the International Energy Agency raised demand forecasts.

Woodside gained 3.7% to $32.77, Beach Energy gained 3.1% to $1.85 and Whitehaven Coal finished up 2.5% to an all-time closing high of $6.62.

"All the other sectors didn't really do to well. Eight out of 11 sectors are in the red and I think that's based on the global market sentiment overall, from US markets and Asian markets kicking in," Mr Sheriff said.

But there was plenty of company-specific news as more Australian companies reported their full-year earnings results.

IAG was up 1.1% to $4.66 after beating consensus estimates with a full-year profit of $347 million, compared to a $427 million loss the year before, although the insurance giant also cut its dividend after an extraordinary year for natural perils claims.

Stanmore Resources advanced 10.9% to a two-month high of $2.24 after the coking coal producer announced first-half revenue had increased 15-fold to $1 billion on soaring coal prices and the acquisition of two mines.

ResMed was down 3.0% to $33.60 despite the sleep apnoea device maker announcing fourth-quarter net income of $US195 million, beating estimates of $US193.7 million, with revenue up 4% to $US914.7 million.

Baby Bunting Group dropped 4.9% to $4.62 million after its full-year profit of $19.5 million missed expectations, although Australia's largest baby goods retailer saw sales grow 8.3% to $507.3 million.

In other company news, Woolworths gained 0.1% to $38.05 after the Australian Competition & Consumer Competition decided not to oppose its $243 million acquisition of

MyDeal shares were up 1.0% to $1.045, with Woolies proposing buying them for $1.05.

For the week, the ASX200 closed up 16.9 points, or 0.24%.

What we are watching:

  • Monday: JB Hi-Fi reports earnings
  • Tuesday: BHP reports earnings
  • Wednesday: Magellan Financial Group reports earnings, Santos reports earnings, Australia wage price index, US retail sales data
  • Thursday: Australian unemployment rate
  • Friday: AGL reports earnings

One good read:

Markets get cold feet even as more good news rolls in