Global markets were lower on Friday and the US market dipped as investors braced for potential damage from Hurricane Irma as it drove toward Florida.
The US dollar has remained under pressure amid a deepening rethink on the Federal Reserve's rate hike path. William Dudley, the New York Fed boss made comments around the persistence of low inflation over the weekend and a potential hurricanes-related interruption in the rate hike cycle.
The Australian dollar has soared to a two-year high against the US dollar as local currencies continue their upward trajectory. However, the NZ dollar (Kiwi) has not experienced the same uplift of late, which has seen the Kiwi fall versus its Aussie counterpart back down to the NZD/AUD 90 cent level. Given the uncertainty of the upcoming NZ election there also appears to be market speculation that the kiwi-dollar would weaken under a Labour-led government.
Stock in Focus: Fisher & Paykel Healthcare (FPH.NZ / FPH.AX)
Fisher & Paykel Healthcare shares hit an all-time high last week as currency sensitive stocks made gains (FPH sells the majority of its products offshore).
FPH recently updated its earnings guidance at its annual shareholders meeting stating trading has been in-line with expectations for the first five months of the financial year. FPH noted that there has been a firming of the NZ and assuming a NZD/USD exchange rate of approximately 72.5 cents for the balance of the year, and expects full year operating revenue to be approaching NZ$1 billion and net profit after tax to be in the range of approximately NZ$180 to NZ$190 million.
The profit expectations remain in line with previous guidance and taking a bigger picture view FPH continues to experience market share and operational improvements which have been years in the making. Further, any weakening in the NZD would be a boost for FPH.
We are currently BUY rated on Fisher & Paykel Healthcare.
Members should look out for a full update on FPH to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was lower on Friday (ASX 200 index -0.30%) ending a week dominated again by worries about North Korea with a loss, while the Australian dollar soared to a two-year high.
The New Zealand market was higher on Friday (NZX 50 index +0.61%) with Fisher & Paykel Healthcare edging up to a record on speculation the kiwi dollar would weaken under a Labour-led government, providing a boost to companies with offshore sales. A2 Milk and Mainfreight added to the benchmark index's gains. The latest Colmar Brunton poll showed National down 2 points to 39 percent and Labour unchanged on 43 percent, while Labour’s Jacinda Adern leads National’s Bill English as preferred prime minister by 34 percent to 33 percent.
3 Things Markets Will be Watching this Week
1. Important Australian employment data is set to be released on Thursday.
2. US inflation data is published at the end of the week.
3. US politics as investors are concerned around the Trump Administration’s ability to pursue its pro-growth agenda.
Have a Great Day,
Team