Global markets were higher overnight with the S&P 500 and Dow Jones (Major US Market indices) hitting record highs as technology stocks rebounded after recent losses. Apple shares led gains as the technology sector is coming off its second straight weekly decline, triggered by fears of stretched valuations and investors moving money to other sectors.
Closer to home, both the NZX and ASX managed to start the week off with gains, despite the retail sector being hit hard again. As we discussed yesterday the threat of Amazon and its potential impact in Australia has expanded after it bought US grocery chain Whole Foods. It means there will be another competitive front with traditional retail (although it is very early to quantify what the impact may or may not be), which saw shares in Woolworths get hit particularly hard.
Amidst the volatility on the ASX of late a standout sector has been healthcare, which has been one of our favoured sectors. One of ’s top investment themes is that an ageing population is likely to result in a pick-up in demand for healthcare goods & services as the baby boomers near retirement. One of the best performing healthcare stocks of late in our portfolio has been CSL Ltd (CSL.AX), which we discuss below.
Stock in Focus: CSL Limited (CSL.AX)
CSL shares hit all-time highs last week and has been one of the best performing bigger name stocks in 2017.
CSL has made several recent profit upgrades which have reversed previous negative market sentiment, which was centred around the large acquisition made to boost its flu business division.
CSL has also secured a foothold in the world's fastest growing plasma therapeutics market with a $US352 million ($A466 million) stake in Chinese biotech Ruide. The purchase of an 80%stake gives the ASX-listed vaccines and blood products supplier access to China's plasma product market, which was valued at more than $A3.3 billion in 2016 and is tipped to grow at an annual rate of about 15%.
Members should lookout for our full update on CSL to be released in tomorrow’s weekly report.
Australia & New Zealand Market Movers
The Australian share market started the week off higher on Monday (ASX 200 index +0.54%) as the Bank stocks lifted the market. The retail sector was a drag on the market, while gains in Chinese iron ore futures saw some support for the larger miners.
The New Zealand market made gains on Monday (NZX 50 index +0.52%) led by A2 Milk's continued rise after an earnings upgrade which we discussed yesterday, and as Ebos Group and Comvita also rallied. In terms of economic data, interestingly NZ consumer confidence gained in the June quarter and reached its highest level since early 2015 as consumers were more upbeat about the economic outlook
3 Things Markets Will be Watching this Week
1. The Reserve Bank of New Zealand makes an interest rate decision on Thursday.
2. Minutes from the last Reserve Bank of Australia meeting are released on Tuesday.
3. How the US Technology sector trades following its recent correction.
Have a Great Day,
Team