Global markets were higher overnight as volatility remains low. There were strong gains across Europe while optimism was somewhat more contained on Wall Street ahead of Apple's results after the closing bell.
In addition, the latest US economic data continues to be mixed. While July proved to be another solid month for US manufacturers, June proved another challenging one for consumers with a third consecutive easing in nominal spending.
Closer to home, the Reserve Bank of Australia kept interest rates on hold yesterday at a record low of 1.50%. The market was expecting no change, and we continue to believe the RBA will keep rates on hold in the near term. In the wake of yesterday's RBA rate meeting, the Australian dollar has drifted lower and while it seems to have caught the attention of the RBA it does not seem to be a large concern for them, yet.
Stock in Focus: Fonterra Shareholders Fund (FSF.NZ / FSF.AX)
New Zealand dairy processor Fonterra (FSF.NZ) has announced an increased forecast Farmgate Milk Price for the upcoming 2018 season, to $6.75 per kilogram of milk solids. This lift is a 25 cent increase of their previous forecasted pay-out of $6.50 in May.
Fonterra had also released their dairy global update, outlining production, export, and import numbers for the past 12 months. With a lot of moving parts, overall it was a solid outcome, with strong demand particularly from China for cheese and butter. Also, Fonterra identified Africa as one of the fastest growing markets for dairy, and will be looking into expanding their footprint to meet growing demand
We are currently BUY rated on FSF as a medium-term agriculture holding.
Members should look out for a full update on FSF to be released in today’s weekly report.
Australia & New Zealand Market Movers
The Australian share market rallied on Tuesday (ASX 200 index +0.91%) as the earnings season in Australia officially got underway. Continued strength in the iron ore price supported mining stocks. In stock news, shares in Treasury Wine Estates rebounded after the wine supplier reaffirmed its earnings guidance for the second half of the 2017 financial year.
The New Zealand market was higher on Tuesday (NZX 50 index +0.46%) as blue chip stocks including Spark New Zealand and Fisher & Paykel Healthcare helped lift the benchmark index higher, offsetting a bigger number of smaller firms declining. Auckland International Airport shares slipped after the country's main air hub said it might need balance sheet support towards the end of the regulated period from 2018 to 2022 as it rolls out a $1.9 billion investment programme to upgrade its infrastructure.
3 Things Markets Will be Watching this Week
1. US Corporate Earnings season continues with stocks such as Apple and Tesla reporting this week.
2. Local earnings season kicks off across Australia & New Zealand.
3. The Reserve Bank of Australia makes an interest rate decision on Tuesday.
Have a Great Day,
Team