Markets Today

A very positive finish to our market yesterday with the initial weakness giving way to afternoon buying. Even more positive was the 27-point gain was hindered by CBA going ex-dividend. This accounted for 13 points so without that we would have been up 40. A good result and with commodity price rises today we should clear 5800 and threaten the top of the range. Can we break out this time? At the end of the day, index traders are the only ones interested in the ASX 200. Though a good benchmark and a media focus, what is really important for investors is the underlying shares. Although we have seen range trading in the index the shares are performing with far more volatility. Reporting season has thrown up some serious moves. Yesterday AOG shrugged of the bad press recently with a good result and an adoption of new practices. DMP rebounded, SEK underwhelmed and so too did CPU. Big moves. The index is irrelevant in this context.

Once again, we will see results dominate proceedings today. Best to ignore politics both here and elsewhere. They have become a sideshow.

Jobs numbers today after the tepid wage growth numbers yesterday. Economists are expecting 10k-20k new jobs but it is a very volatile number. Headline rate still 5.6%. Any significant deviation will erode confidence in the reliability of the ABS numbers.

Telstra numbers are out and the long-anticipated cut to dividends has happened. Not this year though. The company has paid 15.5c again. Good news BUT the company has announced that the dividend for next year is going to be 22c. That is probably a serious shock. The market was looking for a cut and given others reporting cuts this season have risen maybe there is a slim chance that the market will take it as a positive. If you were to assume 15.5c this time and then 22c for FY18 then that is 37.5c over a 3-dividend period. Averaging out at 12.5c. Think retailers use this mentality sometimes. Buy 1 get the second half price sort of thing. But even using this method there is likely to be some serious disappointment in the dividend policy. The bulls that have bought this one back up from 410 to 430 may have a serious rethink.

 

More this afternoon

 

Clarence