Stocks and themes that stood out in week 2

The market was largely flat for the week. Domain (ASX:DHG) was one stock that actually featured with a very good result that was much better than what the market was expecting, particularly along the EBIT line. The stock had been quite well shorted in the weeks going into the result, and certainly in the week prior, and therefore we actually saw a short squeeze given that the result wasn't as bad as what the market was expecting. Although, I do expect the weakness in the housing market will continue to weigh on the stock over the next few months until we see the bottoming of the housing market.

Overall, company results have largely been in line or a bit better than market's expectations. However, I do note that confession season was quite brutal this year, where we actually saw consensus EPS fall 1.7 percentage points from September to late January. I do note that the market appears to be running now more on fundamentals compared to prior to the new year, where fear saw the market reacting quite poorly at the back end of 2018.

Did any companies disappoint during the week?

Whitehaven Coal (ASX:WHC) disappointed with a slight miss to consensus, albeit they did pay a special dividend of around 5 cents. The big issue with the company was really around costs, which increased from prior guidance, and volumes also were downgraded from prior guidance. We saw the stock perform poorly during the day, down about 7%. AMP (ASX:AMP) was another company that performed poorly. The company reiterated the uncertainty in regards to costs, margins pressure, and potential outflows. It's difficult to read where the underlying earnings are for the company at the moment, and therefore the stock did underperform by about 10% last week.

Brace yourself for a busy week

The third week in reporting season is always the busiest. Wednesday and Thursday in particular has some 40 companies on the ASX 200 reporting. Nothing really stands out, given we're getting a lot of companies reporting, but the week will certainly be very hectic trying to absorb the large amount of information that's going to be released. Coles (ASX:COL) will be reporting next week for the first time as an independent company since it IPO'd out of Wesfarmers, and perhaps we may actually get some good news regarding China/U.S. trade war as well.

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