The market was well into interim reporting season last week with 37 companies announcing interim or full-year results. Although closing above that all-important psychological level of 5000 on Friday, it was only up 1.3% over the previous Friday’s closed.

For the doomsayers that contest the current rally is not sustained by earnings, the reaction of the market to many of last week’s results might come as a surprise. A good result didn’t necessarily mean an increase in share price and vice versa. See the table of the largest 25 that reported last week below.

ANZ delivered a perfectly respectable result. But because that followed in the wake of the best performer of the week, Commonwealth Bank, it just wasn’t enough and shares slipped by 1.2%.

The star performer

CBA didn’t really surprise but the market liked the $3.78 billion half year cash profit and particularly the bigger dividend.

CBA chief executive officer Ian Narev also gave mortgagees hope when he suggested that the strong result would give the bank room to cut interest rates outside of RBA decisions – a welcome announcement although viewed with some scepticism by a borrowing public more used to the opposite.

CBA’s half-year dividend rose by almost 20% on last year’s, to $1.64 a share. But that was also partly due to some juggling of final and interim dividends that it had told the market about earlier.

JB HiFi’s gain over the week of more than 13% (and 17% on Monday when it made the announcement) might seem like a stellar result but the market noise is that much of that move was from short sellers buying back the stock after the retailer reported better than expected growth in a lacklustre retail environment.

CEO Terry Smart was optimistic about the coming year for shoppers and noted that total sales growth had increased by 11.7% in January alone.

Some good news

Wesfarmers was very popular after it lifted its interim dividend by 10% to 77 cents. Profit was in line with expectations, and proving that it has done an excellent job in turning Coles around, the supermarket chain now accounts for 36% of profit.

Stockland has suffered from poor investor sentiment after revision upon revision to profit guidance over the past 12 months. But that fog seemed to disappear last week momentarily as investors decided they liked the stock again, despite a slip in underlying profit to a loss of $147 million.

Bradken was another well-liked  stock, its big price increase was on the back of a 9% increase in net profit after tax and a 3% boost in dividend to 20c.

Leighton was definitely in investors favour after chief executive officer Hamish Tyrwhitt managed to get the company’s balance sheet in order. Gearing has been cut to 36%, down from 46% just six months ago. A final dividend of 60c was declared bringing total dividends declared for the 12 months to end December to 80c – an increase on the 60c for the same period last year.

The disappointments

On the down side ANZ and Rio delivered softer results. ANZ’s profit for the three months to end December was up 6.2%, compared to the same period a year earlier, but the market still didn’t like it much coming just a day after the CBA result.

Rio delivered a bottom-line loss although it had signalled that was on the cards well in advance.

Paladin also delivered a big loss, which it blamed on write-downs at its uranium mine in Malawi. It paid no dividend.

The week ahead

This week will be another big week for reporting season with 26 companies set to announce results on Thursday alone. Qantas, Brambles and ASX will update the market then. The ASX announcement should be an interesting result. Market activity over the past six months hasn’t been spectacular and most are expecting softer numbers but perhaps a stronger outlook as companies take advantage of current market conditions for IPOs and corporate activity. It will also be buoyed by recent confirmation of its monopoly in clearing trades for at least another two years by Treasurer Wayne Swan although broker sentiment on the stock remains poor.

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