The weekly wrap: banks ahead amid end-year antics

The Australian market may have seen a surge of window dressing on June 30 and a complete reversal of that trade on July 1, but the net result this week has been an index going nowhere much. The ASX 200 finished the week down 0.4 per cent, while the four major banks outperformed with a 0.5 per cent rise.

National Australia Bank was the only stand-out, rising 1.6 per cent. There was little change in premiums/discounts to average broker price targets, with Commonwealth remaining the most expensive stock at 3.8 per cent over target. There were no changes to broker recommendations this week, and the net buy to sell ratio of the recommendations monitored by FNArena remains at five to 10.

All things being equal, we may be in for a sideways market in July as investors sit in wait of the August reporting season for (mostly) year-end results.

The "green shoots" sentiment of the last quarter has taken root in equity valuations, for now, and now the real numbers need to confirm the market's optimism. In the United States, the summer holiday will mean light volumes until the next quarterly reporting season begins later this month and continues into August.

[Note: Among the big four banks, only CBA follows the standard June financial year-end. Nevertheless, the other three will provide their own third quarter updates around the same time.]