Global markets were generally lower overnight, although Apple shares lifted the US Dow Jones market index to a fresh high. Apple shares jumped +5% to a record high powered by healthy iPhone sales which boosted investor sentiment.
Investors remain focussed on quarterly profit reports especially as the market has been counting on earnings to support the relatively high valuations for equities. We had highlighted this week as being important in terms of US earnings figures, and markets appear to be holding up well. With two thirds of major US companies having reported so far, 72% have beaten Wall Street’s expectations.
Closer to home, the NZ Market hit a fresh all-time high while the Australian market retraced as we move into local corporate earnings season.
Stock in Focus: Rio Tinto (RIO.AX)
Mining giant Rio Tinto released its half year earnings yesterday with a recovery in the iron ore price boosting underlying earnings by +152% to $US3.9bn. The shares were little changed over the course of the day as the result was slightly lower than analyst expectations.
Rio Tinto also announced it is paying shareholders a record interim dividend after its underlying half year profit more than doubled due to stronger commodity prices. The mining giant will deliver $US1.10 a share, or about $US2 billion in total, and launched an additional buyback of $US1 billion of Rio Tinto's London-listed shares that will be completed this year.
We are currently HOLD rated on Rio Tinto.
Members should look out for a full update on RIO to be released in our next weekly report.
Australia & New Zealand Market Movers
The Australian share market retraced on Wednesday (ASX 200 index -49%) as investors digested earnings reports from a number of companies including Rio Tinto. Respiratory face mask and machine maker ResMed's annual revenue has pushed past the $US2 billion mark as fourth-quarter revenue lifted in the Americas, Europe and the Asia-Pacific. However, ResMed’s profit was lower and the share price fell sharply on the announcement.
The New Zealand market rallied to a fresh record high yesterday (NZX 50 index +0.24%) led by large cap stocks including Xero and Ryman Healthcare, while Metro Performance Glass retraced. In terms of economic data, New Zealand's jobless rate fell near an eight-year low as participation dwindled, while at the same time employment fell. The kiwi dollar dropped on the figures.
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