Finance sector proves resilient despite AMP

REPORTING season proved a positive influence on the Australian market again this week, with a strong performance from the Financial sector (XFJ), which gained 1.5 per cent or about 100 points.

But it was AMP Limited that weighed on the sector, after another grim report of declining profits released to the market this week.

Diehard AMP investors are likely to continue to question their loyalty, as AMP has fallen by around 50 per cent from a high of about $7 in February 2015, and in the short term there is still a risk of further downside for the stock price.

A trade below $3.36 would increase the probability of a further fall towards $2.73 (the all-time low).

That said, in the coming months, AMP may trade towards $4 as the market has largely factored in negative news about company profits and findings from the royal commission.

On a brighter note, Commonwealth Bank of Australia and Suncorp Group Limited were two of the standout companies to release their results this week.

Interestingly, CBA’s $700 million AUSTRAC fine didn’t stop CBA from announcing a profit of $9375 million, but the result was down by around 4 per cent on last year. Despite the news, the stock rose by around 3.5 per cent this week.

Plans to sell its wealth management divisions may pave the way for a potential capital return to shareholders.

Banks will continue to generate multi-billion dollar profits and pay dividends at market or above, making the stock attractive to investors. That said, bank stocks are more likely to fall in coming weeks as the royal commission probe continues into superannuation and puts banks under the microscope again. Dale Gillham Wealth Within is chief analyst at