Large cap stocks on the move

The All Ordinaries is back within striking distance of all-time highs, adding 0.9% during the week ending 20 September 2019. All industry groups participated in the gains. However, ultimately, the big miners and banks dictate index performance, and they have been on the up.

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The Energy sector was the most significant contributor to performance during the week. Consumer Staples sector was next, helped along by the surprise bid to buy Bellamy’s (BAL) pitched at a 59% premium.

Energy

Large capitalisation stocks in the Energy industry drove the sector higher last week. Despite last week’s uptick, Energy is still the worst performing over the previous 12 months, six months and year-to-date.

The sector index is struggling to break it’s way back into the trading range that it’s found itself in for most of 2019. As can be seen below the sector has made no progress since early 2018.

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Only five stocks included in the S&P ASX 200 Energy index have managed positive returns over the last 12 month period. Of these, only three are within 10% of 52-week highs.

Santos (STO), Beach Energy (BPT) and Cooper Energy (COE) have been the standout stocks in the sector over the last 6 and 12 months. The charts of STO and BPT look remarkably similar. Each shows a breakout in the previous few weeks to new highs on a substantial increase in volume.

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COE has been in a strong uptrend since the beginning of 2018.

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The coal group including Washington H. Soul Pattinson (SOL), Yancoal (YAL), Whitehaven (WHC) and New Hope (NHC) are all trading substantially below their highs and down over the last 6 and 12 months.

Woodside (WPL) and Oil Search (OSH) both had active weeks, last week on the back of the spike in the oil price. However, both stocks remain ~18% below 52-week highs and down close to 10% each for the last 12 months.

Financials

The Financials sector index has steadily travelled since the beginning of 2019 from the bottom of its range up towards the top. The index has been in this range since late 2013.

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Large capitalisation stocks have been the primary drivers of the move this year – CBA, WBC, NAB, ANZ and MQG are all up over the last 12 months and all within 5% of 52-week highs.

The large insurers have similarly exhibited strong performance over the last 12 months. Each of the majors, including Suncorp (SUN), IAG and QBE, have contributed positive return to the sector in the previous 12 months. Moreover, each is now within 10% of 52-week highs.

Interestingly, only IAG has been able to able to make new highs since the GFC. Both SUN and QBE are still well below their pre-GFC peaks, and both have virtually gone nowhere since 2013.

NIB and Medibank have been the standouts of this group. Both were helped along by the Coalitions reelection, and each is up more than 30% in the last six months.

The other group worthy of some commentary here are the fund managers.

Magellan (MFG) is the only one to have defied the gloom heaped on the industry. MFG is up close to 100% over the last 12 months while AMP, Janus Henderson, Platinum, IOOF, Pendal and Perpetual are each down between 7% and 41%. Regulation is taking its toll on the sector as well as the flight from active to passive.

Magellan has built a marketing machine more than anything else over the last ten years. Their prowess in sales and marketing, along with the great bull market in equities have allowed them to continue growing at breakneck speed while the others have floundered.

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