Daily Market Insights
Global markets were mixed overnight, as the US market recovered some ground with Technology stocks leading the market rebound. The relief rally came after the biggest one day fall on Wall Street in 8-months on Wednesday after concerns that obstruction of justice charges could be laid against Trump. Reports that Trump had tried to intervene in an ongoing federal investigation cast a shadow on his presidency and the future of his pro-growth agenda.
It will be interesting to see whether the extended period of subdued market volatility has now come to an end, and whether the US political situation will continue to weigh on market sentiment. In any event, given the remarkable period of calm in markets a healthy correction is not too much of a concern in our view.
Closer to home, shares in Infratil (IFT.NZ / IFT.AX) managed to stay in positive territory after the infrastructure investment company reported a solid full year profit result.
Stock in Focus: Infratil (IFT.NZ / IFT.AX)
Infratil company beat annual earnings guidance as it released full year profits yesterday. Underlying operating earnings rose 12%t to $519.5m in the 12 months ended March 31, beating Infratil's prior guidance for between $485m and $505m.
A big boost came from bigger contributions than expected from Trustpower's Australian hydro assets and Tilt's Australian wind farms. Trustpower contributed $234.5m to earnings and Tilt $131.7 million for a combined $366.2m, up from $329.4m before the companies were split up. Another highlight was Wellington International Airport which increased earnings 5.1% to $90.5m as record passenger numbers lifted the transport hub's services. At the same time NZ Bus, which recently missed out on a number of contracts in Wellington, increased earnings 4%.
Infratil now has a large cash pile following the sale of several assets, most recently its stake in retirement village Metlifecare. In terms of dividends, IFT declared a final dividend of 10 cents per share, taking the total dividend to 15.75 cents for the year.
IFT continues to trade cheaply compared to the underlying value of its investment assets (NTA) and looks to offer value in what is generally an expensive market, in our view.
We are currently BUY rated on IFT given its attractive valuation and alignment with several of our investment themes.
Members should look out for a full update on IFT to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market continued to fall yesterday (ASX 200 index -0.8%) as US political concerns weighed on the ASX for a 2nd day. Australian banking stocks continue to suffer after a tax on liabilities was proposed in the budget, while Westpac went ex-dividend, compounding its share price fall. Construction company James Hardie saw its shares come under pressure as it released a quarterly update which disappointed the market. In terms of economic data, the latest employment figures showed the unemployment rate has dropped to 5.7% from 5.9% in the month prior.
The New Zealand market fell yesterday following global moves (NZX 50 index -0.68%). Among the major losers were Xero, Fletcher Building, and A2 Milk, as investors took risk off the table. In stock announcements, Pushpay Holdings, whose mobile payment app allows churches to raise money from parishioners, said its annual loss widened to US$25.3m in the year ended March 31, from a loss of US$13.1m a year earlier which saw a negative share price reaction.
3 Things Markets Will be Watching this Week
1. The Reserve Bank of Australia releases minutes from its last meeting on Tuesday.
2. Australian employment data is released Thursday
3. NZ retail sales data is published Monday.
Have a Great Day,
Team