Note from the MD: A bankable bank: Commonwealth ups dividends after reporting stellar earnings

Markets are looking up today after the country’s largest bank, the Commonwealth Bank, reported a 19.8% increase in cash profits for the year.

Markets are looking up today after the country’s largest bank, the Commonwealth Bank, reported a 19.8% increase in cash profits for the year.

While that’s undoubtedly good news for shareholders (who will earn a fully-franked $2 dividend per share), it also paints a relatively rosy picture for the economy as a whole given almost one in two Australians conducts some of its business through the bank.

In its report, Commonwealth Bank noted its performance last year reflects the strong bounceback we saw on markets up to 31 July. 

In other bank news, Westpac has copped a warning from the Reserve Bank of New Zealand (RBNZ) for failing to report 8000 international transactions under anti-money laundering/counter-terrorism financing (AML/CTF) legislation.

This is only a few years after the bank was slapped with a $1.3 billion fine for similar AML/CTF breaches in Australia –  granted, that monster fine came after AUSTRAC identified 23 million breaches.

Looking ahead, futures markets are pointing to gains on the ASX today after US markets rose, helped along by financials, industrials, energy and materials. 

We’re also a week out from the next ABS inflation print, with labour force and weekly earnings figures to follow on Thursday, 19 August. I’ll be watching those numbers with a keen eye.

The XJO continued to soar and set new all time highs as buyers maintained control of the market. Price action is now above the post-COVID trend line and is approaching the 7600 level. 

The last two sessions have seen a strong open followed by a quick pullback. There are signs that the market is bouncing off its trend line in intraday trading.

At the smaller end of the market, the Emerging Companies index (ASX: XEC) was virtually flat yesterday, closing down only 0.02% while the Small Ordinaries (ASX: XSO) climbed 0.82%.

Pilbara Minerals (ASX: PLS) led Tuesday’s gains on the XSO with a 10.95% lift while Pointsbet Holdings (ASX: PBH) came a close second after climbing 9.86%.

Miners Orocobre Limited (ASX: ORE), Galaxy Resources (ASX: GXY), Piedmont Lithium (ASX: PLL), and Whitehaven Coal (ASX: WHC) all also notched up gains above 5%.

Curiously, the six worst performers in the index yesterday were also miners – Ramelius Resources (ASX: RMS) dropped 5.9%, St Barbara (ASX: SBM) eased back 4.8195%, and SSR Mining (ASX: SSR) slipped 4.9%.

Westgold Resources (ASX: WGX), Silver Lake Resources (ASX: SLR), and Resolute Mining (ASX: RSG) rounded the bottom six out with declines between 4.035% and 3.67%.

One fund manager who has seen the best and worst of the markets and has perfected the art of finding the right investment opportunities is Ron Shamgar, Head of Australian Equities at TAMIM Asset Management.

Ron will be joining us this Friday 13th August at 12pm (AEST) for “The Insider: Meet the Fund Manager” webcast, where he’ll provide insights into how he identifies undervalued companies with good investment potential. He’ll also discuss his three favourite stocks and his views on using fundamental factors to delineate the good companies from the bad. To join us for this session, click here.

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