Global markets were lower overnight on rising tensions around North Korea, however the US market managed to recover over the course of the day.
Both the ASX and NZX experienced selling yesterday as news of a fresh North Korean missile test which flew over Japan early Tuesday morning sent traders scurrying for safe-haven assets such as gold and bonds and sent share markets around the Asia-Pacific region tumbling as investors lost their appetite for risk. Given the recovery overnight we would expect a similar move higher across Australia and NZ today.
US stocks rebounded from steep losses as investors seemed to shrug off concerns over the missile test, and as US President Donald Trump said that "all options" were on the table before he flew to Texas to see the impact of Hurricane Harvey in person.
Stock in Focus: Mantra Group (MTR.AX)
Accommodation and Hotel services company Mantra Group released its full year result yesterday with revenue up 13.7% to $689m, which translated into underlying earnings up 12.7% to $101.2m.
We saw this as a solid result, with the standout in the 2017 financial year being the Resorts segment. What appears to have held the share price back was Mantra’s guidance for the year ahead as it gave a wide range, estimating operating earnings to be between $107m and $115 which implies growth of between 5.7% and 13.6%.
Mantra is a stock we believe should benefit from our tourism boom investment thematic over the medium terms and at current share price levels looks attractively priced.
We are currently BUY rated on Mantra.
Members should look out for our full update on Mantra to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market continued to sell off on Tuesday (ASX 200 index -0.72%) wiping gains for the year for the market. The ASX had been set for a cautiously upbeat start before the fresh provocation from the rogue state, but instead sank like a stone at the open and failed to recover from there amid heavy selling in the biggest, most liquid blue-chip names. There were some well received profit updates yesterday – among the highlights was vitamins business Blackmores, which jumped 7.5 per cent, Downer EDI, which moved up 2 per cent, and Caltex, which gained a more modest 0.9 per cent.
The New Zealand market fell on Tuesday (NZX 50 index -1.13%) in a sea of red after North Korea fired a nuclear missile over Japan, with Chorus and Metro Performance Glass extending their recent declines. New Zealand Oil & Gas was one of the only stocks to make gains yesterday as it kept its dividend unchanged after reaping a $95 million gain on the sale of its stake in the Kupe oil and gas fields and trimming its operating and exploration costs. The company reported a net profit to shareholders of $61.2 million for the financial year, turning around a loss of $35.9 million a year earlier.
3 Things Markets Will be Watching this Week
1. Corporate profits will be in focus as earnings season continues across Australia and NZ.
2. US politics as investors are concerned around the Trump Administration’s ability to pursue its pro-growth agenda.
3. Closely watched monthly US employment and manufacturing data is released at the end of the week.
Have a Great Day,
Team