Welcome to this week's Trader Dealer newsletter!

It’s been another big week for ASX company reporting.  Toll Holdings lost more than $1bn in market value after posting a disappointing first-half profit, but on the other hand, Fairfax returned to profitability, and Insurance Group Australia saw a massive swing into positive profit territory.

Closer to home, MDS Financial Group released its half year results, and I’m delighted to be reporting substantial improvements in our figures.  You can view our half-yearly Appendix 4D financial report and supporting explanation on the MDS Financial website.

This week we’ve also been in the news! The Geelong Advertiser ran an article about the launch Rapid Trader (and yours truly) this week.  We’re moving up in the world!

And speaking of Rapid Trader, our developers have been programming their hearts out, and released some really great new updates to the platform, including a blushing feature on watchlists and the portfolio to make it even easier to spot movement. There have also been under-the-bonnet improvements, so Rapid Trader is just getting better and better.

As always you can find lots more information on our blog, and keep yourself posted with snack-sized updates on our Twitter page.

Happy trading!

Damian Isbister
CEO - Software and Online Trading

MDS Financial Group
Trader Dealer Online
http://blog.traderdealer.com.au

It’s been a moderately negative week on financial markets with the Dow Jones off by 0.78%, the FTSE 100 down 1.5% and the S&P/ASX 200 down by 0.32% (at 11.20am today). Reporting season dominated the landscape in Australia with about 27% of companies surprising to the upside according to RBS research. This compared to 46% of net upside surprise for US stocks during their reporting season so you’d suggest some underperformance locally.

Last week we spoke about the strong results from Westpac and since then the stock has significantly outperformed the sector. This morning the trading update from ANZ gives us some insight into the reasons behind the pricing disparity between the leading banks (on valuation) – WBC and CBA – and the laggers being ANZ and NAB. ANZ said that underlying profit for the quarter increased by 16% on the back of improving margins and a 10% reduction in impairment charges – compare this to Westpac who booked an increase of 33% in underlying profit with a 50% reduction in impairment charges. This stat highlights the equality in the loan books and the higher risk exposures for ANZ – and goes someway to explaining the reasons behind the valuation differential between the big four. You’d argue that when credit risks stabilise and as the market continues to take on risk, there is likely to be more upside in the laggers.

The insurance sector has been in focus this week with three of our major insurers updating the market. Suncorp’s insurance arm was positive with an increase in insurance margins towards 12.5% although the stock was dragged down by underperformance in its banking division. IAG followed suit with higher margins of 13.4% and issued guidance for a full year result in the vicinity of $500m – a positive result. QBE on the other hand was pummeled after missing expectations – largely surrounding a drop in insurance margins down from 20% to 17%. They had guided for margins of 17-18% so it really shouldn’t have come as a total shock. Headline profitability was roughly inline, investment returns had picked up but a fall in cash flows was seen as a concern and supports a general market view that the company is struggling with its growth profile. Still, a drop in the share price of 7+% and a dividend yield now around 6% is starting to look attractive.

Our View

GDP data is due out tonight in the States and this is going to drive the market. Consensus is for real GDP to come in a range of 5.4% to 6.0% - so a number around 5.7% is expected. Last night we saw some numbers on employment and durable goods orders that were below expectations, however we saw buying into the dip – I’d expect this theme to continue.