Telstra proves a shining light

Market updates continued throughout the week and downgrades were the common theme.

Stocks missing targets were sold off brutally, even where the share price had already factored in a poor result prior to the report.

Gold miner Newcrest Mining (NCM) hit four-year lows crashing below $26, JB Hi-Fi (JBH) traded below $10, and probably the most spectacular of all was the more than 20 per cent fall of Seven West Media (SWM) in one trading session.

On the positive side, Telstra (TLS) was the standout with strong share performance since its guidance to focus on long-term balance sheet and dividend stability in favour of short-term capital returns.

On top of all this, market attention was also focused on the 'other two' big banks - the market update of Australia's biggest investment bank, Macquarie Group Ltd (MQG), and the Reserve Bank of Australia's May interest rate decision on Tuesday.

MQG's net profit fell 24 per cent for the 12 months to March 31, compared to the previous corresponding period.

However, this was widely anticipated and consistent with the performance of other world investment banks.

The fact that MQG chief executive Nicholas Moore announced staff cuts, reduced the dividend and a proposed share buyback highlights that changes in market conditions are not a temporary phenomenon and that it had to restructure its businesses.

It wasn't all bad news for the share price, however.

Confirmation of MQG's plans to conduct a share buyback, initially spending up to $500 million with the possibility of buying up to 10 per cent of ordinary shares subject to market conditions, saw the investment bank's shares rise even with such a drop in net profit.

The news also lead international broking houses Credit Suisse to put an outperform rating on the stock with a price target of $35.

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_Information contained in this article does not consider your personal circumstances. You should consult a stockbroking professional before making any investment decisions. Sentinel may hold positions in stocks discussed from time to time. _