ASX to open flat, AMP delivers, Telstra feeling the pressure

The ASX 200 (ASX:XJO) started the day strongly, but finished on its lows (-0.7%) as investors digested a flurry of earnings reports from AMP Ltd (ASX:AMP), Telstra Corporation Ltd (ASX:TLS), and AGL Energy Ltd (ASX:AGL). Most sectors fell, with telecommunications off 4.7% and the banks giving back recent gains, down 1.1%. The leaders for the day included TWE, adding 12.3%, after delivering better than expected sales growth, and Premier Investments Ltd (ASX:PMV) who reported record profits despite being recipients of JobKeeper and refusing to pay rent on many of their properties. Unemployment data showed an increase to 7.5%, meaning 1 million people are now out of work, and this is before Stage 4 Lockdowns in Victoria. Once again, my views on the key takeaways from today’s reports is as follows: AMP stems the bleeding, pays a special dividend – Despite a series of self-inflicted pain and missteps, AMP has shown signs of bottoming, announcing a special dividend of 10 cents per share following the sale of AMP Life; the share price rallied 10.9% as a result. Underlying profit was $149 million, a 42% fall on 2019, but outflows from wealth management were just $1.2 billion. Management have acquired the 15% of AMP Capital they don’t own, affording full control of this $200 billion growth engine. Summary: A solid result, capital return and renewed focus on growth. Telstra maintains dividend – Despite reporting in line with guidance, a 14.4% in net profit to $1.8 billion, and maintaining its dividend, TLS ended the day down 8.3%. Investors were clearly concerned about managements guidance on the lingering impacts of COVID-19, ignoring the $40 million profit growth excluding NBN losses. TLS has ramped up its 5G connectivity, targeting 74% of the population by June 2021, leveraging off the surge in digitisation. Summary: Good signs for this digital infrastructure business. AGL runs out of franking credits, but special dividends to come – AGL reported a 12% increase in statutory profit, benefitting from the revaluation of electricity futures contracts, but profit actually fell to $816 million. The final dividend was cut 18%, sending the share price down 9.6%, the worst performer in the ASX 200. Of greatest concern was management’s decision to cease paying franking credits, as years of losses have eaten away at their reserves. Summary: Difficult period ahead for the coal-reliant company.

S&P 500 weaker, Apple rallies on new service

The S&P 500 remains just shy of its record, falling 0.3% on Thursday, as cyclical sectors continue to sell off whilst investors await an announcement on further stimulus. Once again, the Nasdaq finished 0.3% higher, on the back of an announcement that Apple Inc. (NASDAQ:AAPL) would be launching Apple One, a subscription service that includes their many products in a simple package; it seems they are heading in the same direction as Adobe Inc. (NASDAQ:ADBE) as they seek to lock in annual revenues. At the time of writing the ASX 200 looks to open slightly weaker, with Newcrest Mining Ltd (ASX:NCM) and Baby Bunting Ltd (ASX:BBN) due to report earnings.