Global markets rallied overnight as markets remain choppy. Geopolitical concerns faded as war rhetoric eased and as the US seemed to retreat from a hard-nosed position on trade with China. President Trump has also deputised two top economic advisers to explore re-entering the Trans-Pacific Partnership trade accord he withdrew from after taking office, Senator Ben Sasse told reporters.
As we mentioned earlier this week, investors will also likely turn their attention to US corporate results, which have begun to trickle out this week. Overnight BlackRock, the world's largest asset manager, said it generated higher profit during the first quarter by luring more money from investors even as stock and bond markets fell.
Stock in Focus: BHP Billiton (BHP:AX)
Several commodity prices such as Aluminium and Oil have surged of late and are at multi year highs. BHP Billiton has been our preferred commodity/mining play for some time now, given its diverse production base and scale of operations.
In their recent 2018 interim result, BHP benefitted from stronger commodity prices, that offset increasing cost of production and unfavourable foreign exchange movements. Operating earnings of (EBITDA) US$11.2Bn were up +15% from last year. However, reported profit fell -37% from last year to US$2.0Bn due to the US tax reform charges and costs associated with the Samarco dam incident.
BHP continue to create shareholder value increasing their dividend and have a new investment target of +20% return on capital employed. BHP continues to show what it is capable of when commodity prices recover as a low cost and efficient mining company.
We currently have a BUY recommendation on BHP
Australia & New Zealand Market Movers
The Australian share market was in negative territory yesterday (ASX 200 index -0.23%) as shares across Asia sold off. In stock news, almond producer Select Harvests saw its shares jump as it released a positively received crop update. Following a disappointing crop last year, the company stated that based on current levels the 2018 crop will be in line with initial estimates of 15,000MT and that market pricing had firmed.
The New Zealand market was lower on Thursday (NZX 50 index -0.59%) as geopolitical tensions weighed on equities. Pushpay extended its slide to a 5-week low after its poorly received update. Fisher & Paykel Healthcare and Sky Network Television also declined. Synlait Milk broke the tremd, notching the biggest gains for the day. In other news, New Zealand Oil & Gas after government announced plans to end new offshore oil and gas exploration permits to pursue its zero-carbon by 2050 goal
3 Things Markets Will be Watching this Week
1. Global politics remain in focus with tensions rising between the US and China as they impose trade tariffs on each other.
2. Earnings season begins in the US again later this week, with the major banks being first to announce quarterly profits.
3. Important US inflation (CPI) data is released on Thursday.
Have a Great Day,
Team