Global markets sold off overnight as investors worried about President Donald Trump's ability to pursue his pro-growth policies, as well as nervousness in the wake of a terror attack in central Barcelona.
The fallout from President Donald Trump's response to the deadly violence in Virginia last weekend continued to gather pace. Overnight, there was speculation that Gary Cohn, Trump's top economic adviser, was so dismayed by Trump's comments at a wild news conference in New York earlier this week that he was considering resigning. This week's Trump turmoil casts further doubt on what lies ahead for his efforts to revamp health care, cut taxes and secure support for a massive infrastructure spending push.
Yesterday saw more companies across Australia and NZ report profit results, with the likes of Treasury Wine Estates beating market expectations, while Telstra and QBE Insurance disappointed the market.
Stock in Focus: Telstra (TLS.AX)
Shares in Telco giant Telstra plunged -10.6% to a five-year low after it cut future dividends in a move to build up a war-chest to protect its massive market amid growing competition. had downgraded its recommendation on Telstra back in mid-April, primarily on the on the back of extreme competition in the industry which we see as only getting tougher from here.
In terms of the announcement, TLS experienced a one per cent lift in full-year profit and a slimmer 0.4 per cent rise in revenue to $26 billion on Thursday, but attention was centred on a new dividend policy that will cut pay-outs from 2017/18 which saw a very negative market response
We are currently HOLD rated on TLS.
Members should look out for our full report on TLS to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was slightly lower on Thursday (ASX 200 index -0.1%) weighed down by a massive sell-off of Telstra shares after the telco said it will cut future dividends. As touched on above. Insurance giant QBE's half year profit rose 30 per cent to $US345 million after a strong performance in Australia, New Zealand and the US helped offset a claims blowout in its emerging markets business., however its shares were still sold by investors. On the flipside, shares in Treasury Wine Estates were higher as it released profits and revealed its plan to buyback $300 million of shares.
The New Zealand market edged to new records yesterday (NZX 50 index +0.2%) as stocks across Asia rose in a relatively quiet earnings day domestically, with Fletcher Building extending its gain after yesterday's result while Skellerup climbed on its increased profit.
3 Things Markets Will be Watching this Week
1. Corporate profits will be in focus as earnings season continues across Australia, NZ and the US.
2. The geopolitical situation as tensions remain high between the US and North Korea.
3. The Reserve Bank of Australia release minutes from its last meeting n Monday.
Have a Great Day,
Team