Weekly Market Update (Issue 501) – 1st June 2018

Weekly Market Update (Issue 501) – 1st June 2018

image_pdfimage_print

Weekly Market Update (Issue 501)

1st June 2018, 11.00am

A short and sharp one from me this week as I am mid-travel.

Whilst markets ended up a shade lower across the board, there was real fear felt specifically in Europe this week as the two major parties aiming to form government there fought over the appointment of a finance minister.

European equities fell -3% on the week up until Thursday, and Italian bond spreads (the premium of Italian bond yields over their German counterpart) leaped 0.90% from 2.00% to almost 3.00% on fears that the new anti-European coalition would open the fiscal spigot, further eroding Italy’s already laden public finances.

In the end, a new Finance Minister has been agreed and will likely be sworn in today (Friday), calming markets in the near term and helping Italian bond markets to stabilize.

Unsurprisingly with market eyes firmly fixed on European fiscal concerns, the US dollar continued to grind higher on the week.

The other major macro news, which is sure to cast some shade over market expectations for future economic growth, is the volte face from President Trump on his plans to offer tariff exemptions on steel and aluminium to ‘friendly’ nations such as those in the Eurozone, Canada and Mexico. The move drew quick rebuke from each of those nations and will see retaliatory moves made by each of these countries and zones, and arguably spark a fresh round of protectionism.

Telstra (TLS) – the potential for an asset split

The press today is speculating that TLS and its bankers are considering the idea of splitting its infrastructure assets from its customer facing assets in a move that would likely allow investors to re-rate the business from its currently lowly 10x multiple.

These types of restructurings have occurred in several countries, and provide the ability to elevate the financial leverage attached to the safe, defensive infrastructure assets, thereby enhancing shareholder returns, and similarly to allow investors to re-rate the remaining asset-light retail operation.

I alluded to this as a potential outcome in this column in recent weeks, and think that its highly likely this situation plays out the longer the shares dwindle under $3.00.

We are closer to the launch of 5G mobile infrastructure and services in 2019, which has the potential to reinvigorate investor interest in the share. For this reason, at $2.78, we are closer to BUYERS of the stock than SELLERS, but will keep you informed as to if and when we choose to double-down on this currently bad bet.

I am sorry for the short note this week. I am racing back from a few days in Sydney.

Fortunately for me there isn’t a huge amount to remark upon.

Have a terrific weekend.

Jono & Guy

Interest Rate Commentary & Update

For full interest rate commentary and updates please click here

Term Deposit Rates

For to view the latest term deposit rates click here

Australian Market Index

Friday 10am values

Index Change %
All Ordinaries  6124 -20  –0.3% 
S&P / ASX 200  6012  -25  –0.4%
Property Trust Index  1403  -1  –0.1%
Utilities Index  7795  +207  +2.7%
Financials Index  5975  -65  –1.1%
Materials Index  12059  -125  –1.0%
Energy Index  11172  -214  –1.9%


Key Dates: Australian Companies

Mon June 4th  N/A
Tue June 5th N/A
Wed June 6th  Div Ex Date – CBAPC, CBAPD, CBAPE, CBAPF, CBAPG
Thu June 7th  Div Ex Date – SUNPE, SUNPF, SUNPG
Fri June 8th  Div Ex Date – ANZPG, ANZPH, NABPE

Div Ex Date – WBCPD

 

International Market Index

Thursday Closing Values

Index Change %
U.S. S&P 500  2705  -23  –0.8%
London’s FTSE  7678  -39  –0.5%
Japan Nikkei  22202  -235  –1.0%
Hang Seng  30469  -291  –0.9%
China Shanghai  3095  -60  –1.9%


Financial Services Guide

Please click here to download the most recent version of our Financial Services Guide.

Privacy Policy

We have revised our Privacy Policy. Please read these updated terms and take some time to understand them. Your use of this website is subject to these revised terms.

Disclaimer: This information has been prepared by Primestock Securities Limited ABN 67 089 676 068, AFSL 239180 (“Prime”). Prime accepts no obligation to correct or update the information or opinions in it. This information does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate to your situation. It is recommended that you obtain financial, legal and taxation advice before making any financial investment decision. Prime is bound by the Australian Privacy Principles for the handling of personal information.

This information has been prepared by Primestock Securities Limited ABN 67 089 676 068, AFSL 239180 (“Prime”). Prime accepts no obligation to correct or update the information or opinions in it. This information does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate to your situation. It is recommended that you obtain financial, legal and taxation advice before making any financial investment decision. Prime is bound by the Australian Privacy Principles for the handling of personal information.

By | 2018-06-01T17:49:35+00:00 June 1st, 2018|Australian News, Market Summary, Weekly market update|0 Comments

About the Author:

As the Chief Investment Officer (CIO) for Prime Financial Group, I work closely with the national advisory team, high net worth individuals, family groups and Prime’s broader accounting network to provide considered and pro-active investment advice.