Latest / ausbiz a.m / 18.08.26 with Andrew Wielandt, DP Wealth Advisory
Transcript
- Andrew: Good morning and welcome to your morning wrap from Ozbiz. It is Tuesday, August the eighteenth, and we are expecting another negative session on the local market. ASX futures down four tenths percent. That sounded like yesterday's start to the day. In a moment, we'll preview it with Andrew Uvala, but first though, quick wrap of where global markets finished overnight. US and European shares falling, oil futures rising as investor pessimism deepened about the diplomatic efforts to resolve the Iran war. Wall Street's majors, they finished lower as investors weighted quarterly reports from the large retailers, the SP down half percent, as was the Dow, the Nasdaq down around a third of a percent, and gains in chip stocks were offset by declines in the software stocks such as Microsoft and and Meta. Among the commodities, Brent was up around 2.5% to $91 a barrel, gold up close to 1% to 4,415. Bitcoin was higher, it's close to 64.500 US dollars. And the Aussie is strengthened. It's trading at seventy one US cents. Well, joining us to get across the market moves is Andrew Violent from DP Wealth Advisory. Andrew, good morning. AMW: Good morning, Andrew. Andrew: So yeah, a bit of negativity to start the week on Wall Street, but look, i it's that ongoing well, I mean w well ongoing, it's it's not going anywhere. Th that that's the whole problem with what we're seeing in the Middle East at the moment. So as you were saying earlier, same old, same old. AMW: Yeah, look, unfortunately it it is, Andrew. oil ticking up overnight, and again that's in part because President Trump threatening to to bomb Oman. certainly unhelpful for the Omanese if if that's the the collective noun for people who live in i in Oman, but more broadly it just continues to add to the uncertainty and and the volatility facing global markets. certainly US Earnings, we're coming to the end of that. That's that's been a positive. gold, as you've just mentioned before, ticking up, but really all eyes on on what's happening with the US Fed, what are they going to be doing with interest rates, and of course what's going to be happening with the Japanese yen as well. So there's still a little bit of uncertainty about, but certainly at least those US earnings, in particular those tech earnings proving to be sort of resilient, if not better than expected. Andrew: Well, and of course earnings locally as well with reporting season. We're about halfway through. Y some of the biggies yet to come, we're gonna get to those today, including BHP and and the likes of CSL. first off though, Andrew, what are your impressions thus far of what you've seen out of reporting season? AMW: Yeah, no great surprises, Andrew. I mean, certainly if you've got the federal budget, which is quite restrictive relating to sort of its its impact on the property market, you're then seeing that flow and effect through loan applications. Of course, we've now had all the banks either report or give quarterly updates and they're all saying the same thing. They're all saying that there's reduced interest, no pun intended, in loan applications. And of course that's going to have a a knock on effect to their earnings. But it has a broader knock-on effect, Andrew, across the broader economy as well, because of that wealth effect. If you're sitting in Sydney and Melbourne and you've got your 1.1, $1.2 million home loan, and you're seeing interest rates at a 10 year high and the equity in your home flatlining, if not even falling, in some cases, you're gonna be putting your hands in your pockets and you're not going to be spending as much. And that's got that broader impact across the economy and that we're starting to see that with profit reporting season, which we might touch on in a second. Andrew: yeah, well of course we had NAB yesterday to round out the the big four, similar story from all with those mortgage applications plunging. AMW: Mm, indeed. And even though their profit result, I mean, don't cry for them. I think NAB from memory was one point eight three billion dollars for the quarter. It wasn't net earnings, it wasn't exactly shocking. you're right, there was that sort of as we know, earnings season is sort of twenty percent what you've done, eighty percent what you're going to do. And their NAB's l loan growth only half of West Pax. So and West Pax was reasonably anemic as well. So a as as a consequence I think the market didn't sort of take that news overly well and that's one of the reasons why their their share price was under some pressure yesterday. Andrew: Andrew, you you look at the broader Australian economy, obviously the Australian consumer is doing it tough at the moment, and that's that has put enormous pressure on the retailers. We did get that result from JB Hi Fi yesterday. What did you make of that? AMW: look, the result wasn't wasn't great. And in fact we're sort of seeing from a a market point of view that their share price has fallen 37% over the last 12 months. the the new CEO there pointing out that in fact the consumer is really opening their wallet when they see some discounts. No great surprise, I'm sure you and I exactly the same. but also the key thing that's hurting JB Hi Fi, apart from that wealth effect that we spoke about before, has been that significant increase in the chips pricing, and also you know, that sort of broader AI piece. So, you know, we've got a whole range of new phones coming out from Apple next month. We've had Samsung recently, we've had Google come out a couple of days ago, and most of their prices have gone up somewhere between 10 and 12 percent. and some of the The features are either the same if not diminished versus last year because of those import c import costs. We've seen that, you know, with the Samsung and SK Heinrich share prices. So, you know, between the the feature piece and also the consumer being under pressure piece, that is certainly feeding into that JB sh sh JB Hi Fi share price, which I think was down ten percent, down thirteen percent there at one stage. Andrew: Andrew, let's turn to today. BHP, the biggie, of course, has this year done very well, perhaps outdone expectations. And you've got to put that down to the copper price, haven't you? Because it is now very much I mean that's now I guess most of its returns from copper rather than iron ore at the moment. AMW: the BHP results coming this afternoon, of course, Andrew, all eyes will be on that one. As you mentioned before, the results relating to the sort of the copper side of the business, which is generating more than half their revenue. Of course, who would have thought that a few years ago? But that iron ore price back under a hundred dollars a barrel. hundred dollars a barrel, under a hundred dollars a ton rather, too much oil on the mind, Andrew. as a consequence, that is certainly going to be act as a a bit of a headwind for them. they do have record output going on though, as well, which is also helping them in that regard. But the market in particular, as always, with BHP and resource companies in particular, what are they going to be doing with some of their big capital allocation? some of their big projects, and in particular that Jansen potash development, how's that going to be sort of looking as well? And of course, it's the first profit result. the new CEO Brandon Craig and how will he perform. So yeah, it'll be interesting to see. And of course that dividend is the other piece as well because, you know, with profit reporting season, not only is the market interested in how much profit they've made, but we're greedy, Andrew, how much is this going to be paid out as well. And we're looking for around a dollar sixty per share US. So it'll be interesting to see yeah how that dividend plays out as well. Andrew: Indeed. And Andrew, healthcare. Interesting. Obviously, that sector has been punished severely over the past year or so. just some green shoots emerging there. Look, we've got CSL, Cochlearhead, a couple of those stocks that have really been hurt. But wha what are your expectations? AMW: Yeah, CSL in particular, I think the market is certainly going to be very interested in that one. Their results are out this morning. Looking for a profit of around 3.1 billion dollars US. And really though the market is going to be focused on is there any more impairments coming? you know, we're sort of knocking on the door of about five billion dollars of non-cash impairments. that they spoke about back in May, in particular the ViFor business, that much aligned business. Also going to be looking for what's happening with their margins, how's their cost savings program going? Would be helpful to know how's the the search for the new CEO is going. As you know, we've got an interim CEO there at the moment. So all eyes are on CSL. Their share price has bounced coming into this result. So if there's any disappointment you would expect the big stick to be out for them, equally so if they've arrested some of those margin declines, announcement relating to the new CEO. A glimmer of hope, Andrew, then given how significantly they've been sold down over the last twelve months, you would expect to see a bound. So it's gonna be one of those fifty fifty ones today. Andrew: Now, Andrew, it'd be remiss of me if I didn't ask you about ETFs. have you have you AMW: Yeah. Andrew: made any sort of significant changes to your portfolio recently? AMW: Not really. continuing to note there's been significant interest in income-focused ETFs, certainly since the budget. notice has been getting a lot of financial press as well. I think from memory, over the last month there was around 1.5, 1.6 billion dollars worth of new monies that went into income-focused, Australian income-focused ETFs. And that's obviously a function of the budget, whereby The budget would seem to be prioritizing more from a tax perspective, more income-focused investments and the changes to the capital gains tax regime. Penalising is probably a harsh word, but certainly more favour relating to income. And so we're certainly seeing a lot more interest from investors in in that regard. otherwise, you're seeing before we were just talking briefly about healthcare, we're seeing some of the healthcare ETFs getting some interest as well. and some of those sort of banking focused ones, obviously under a little bit of pressure by virtue of what we were talking about there before. But no no no sort of wholesale changes, Andrew. Andrew: Andrew, terrific to get across the day ahead. Enjoy it. Thanks for joining us in DP Wealth Advisory. AMW: Thanks, Andrew. Andrew: And that is your OSBIS morning wrap. Hope you have a great day. I'm Andrew Gagan. Thanks for listening.