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Pleasing reporting season despite ANZ softer revenue growth

Investors likely to be pretty pleased with the reporting season so far despite ANZ softer revenue growth

By Ric Spooner (Chief Market Analyst, CMC Markets)
15 August 2014
www.cmcmarkets.com.au

Offshore leads should provide a positive macro background for this morning’s share market opening. Mr. Putin’s comments that Russia would stand up for itself but not at the cost of confrontation with the outside world saw further unwinding of risk premium. This was most evident in the oil market which continued its downtrend last night. Consequently oil stocks may be a soft sector in today’s trading.

ANZ’s result will be a key for market sentiment this morning. Banks share prices have struggled to make headway in recent months. This indicates that bank valuations have reached levels that are somewhat of a ceiling for potential buyers at this stage. CBA failed to rally after a better than expected dividend announcement this week, news that the market would have embraced warmly 12 months ago.

The negative aspects of today’s quarterly update from ANZ were pressure on revenues and ongoing reliance on reduced provisioning. However, those looking for a cyclical upturn in the economy will be pleased by news that corporate lending is showing signs of improvement.

Overall, investors are likely to look back on a busy week with relative satisfaction. Expectations for the current reporting season had set the bar at pretty high levels. This was not necessarily going to be an easy task given soft economic growth. So far good cost control has yielded overall results that have been good enough to see a rise in the index over the week.

ENDS

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