Christmas has come early for the bank’s shareholders with the decision to slightly increase the 2024 dividend – despite a single-digit decline in the net profit and cash earnings.
Beating the market benchmark is never easy, with 72 per cent of Australian actively managed global equity general funds trailing the S&P World Index in the six months to June 30, 2024. Domestic equity funds performed slightly better, albeit against a significantly lower bar set by the S&P/ASX 200 Index.
Optimism abound, ASX up 4.4% for the week
Optimism abound, ASX up 4.4% for the week, Macquarie (ASX:MQG) profit falls 32%
The week finished where it began, the ASX 200 (ASX:XJO) adding 0.8% taking the gain to 4.4% with every sector finishing the week higher.
The key driver was real estate (+8.3%) and consumer discretionary (+6.8%) businesses the key drivers as a combination of loosening border restrictions and the RBA’s interest rate decision were greeted positively.
Friday saw investment bank Macquarie Group (ASX:MQG) delivers it’s earnings result, with profit falling 32% for the first half to $985 million. It has been a solid year in difficult conditions.
The annuity style asset management and banking businesses saw revenue slip just 7% to $1.6 billion whilst the market facing capital raising business fell 42% to $672 million.
As has been the case across the sector, impairments of $447 million on their loan books were the biggest detractor.
In my view, the US election result bodes well for MQG, with increasingly likelihood of an infrastructure deal coming to fruition, along with a renewed focus on renewable energy sources, where Macquarie is a specialist.
Management declared a $1.35 dividend with shares finishing 2.3% higher.
News Corp (ASX:NWS) digital pivot is paying off, rumours abound at Tabcorp (ASX:TAH), US markets flat as counting continues
The US markets finished flat on Friday, but it was a week for the ages, the S&P 500 and Nasdaq finishing 7.3% and 9.0% higher respectively as the ‘Risk On’ mood returned in earnest.
This was the strongest week since April and was once again driven by the big technology names.
The market was also buoyed by a fall in the US unemployment rate to just 6.9%, far better than the 7.7% predicted, suggesting the economy is returning to normal despite record COVID cases.
News Corporation (ASX:NWS) lead the US and Australian markets for the day finishing 13.6% higher.
The driver was evidence that their digital transformation was beginning to pay off.
Management reported just a 10% drop in revenue, with traditional media losses offset by 45% growth in their digital real estate division, 47% in the Dow Jones division, which owns Barron’s and the WSJ, and Publishing revenue moving 13% higher.
Never trust forecasts, invest with a margin for error, China on the front foot
The saying goes that forecasts tell us more about the forecaster than the future, and this week couldn’t have better confirmed that statement.
Headlines of a Democrat ‘Blue Wave’ and predictions of huge margins against the Republicans were once again found wanting.
The first takeaway from this week is that both the polling and economist professions may need to rethink their approach, with 2020 seeing consistent misjudgements in bold forecasts.
This leads to my second takeaway, being the importance of never basing investment decisions solely on ‘expected events’, with those who sold out of markets due to the threat of an uncertain election once again missing out on significant returns.
2020 has once again shown us that there is always a reason to sell, but it typically isn’t the best decision.
Finally, it’s the growing threat of China for the Australian economy.
This week saw as many as 7 new export commodities receiving a soft ban, with China ramping up the economic pressure at a difficult time for the immigration driven Australian economy.
