Global markets were higher overnight as commodity stocks led gains with the US market moving back to a 4-week high.
Surging prices for nickel and aluminium lifted miners in London and New York, while the price of oil reached its highest level since 2014 as Saudi Arabia pushed for higher oil prices.
Investor attention also looks to have shifted back to company fundamentals, with US stocks such as Untied Airlines and American Express releasing earnings which were ahead of expectations. Once again, we reiterate that the latest round of US corporate profit results which will be key to supporting equity markets.
Stock in Focus: Next DC (NXT:AX)
Shares in data centre business Next DC (NXT) touched a new all-time high yesterday after announcing intentions to buy more data centre sites with the proceeds from a share placement at a premium. We have held a positive view on NXT as one of our top growth stocks in the ASX given its exposure to the “explosion of data” investment theme.
NXT is going to purchase 3 new sites (in Sydney, Melbourne, and Perth) and has completed an institutional share placement for $281m. $150m was raised through a cornerstone placement to UniSuper at $6.98 per share (a large premium to the previous trading price), with another $147m raised from institutional investors at $6.81 per share.
The capital raise illustrates to us the strong support from investors for the company. There will also be another share purchase plan in which retail investors may participate, with details to be released shortly.
We currently have a BUY recommendation on Next DC.
Australia & New Zealand Market Movers
The Australian share market made gains on Wednesday (ASX 200 index +0.34%) with resource stocks leading the market higher as investors rewarded quarterly updates from Rio Tinto and Woodside, while keeping a wary eye on the banks. Rio Tinto climbed after the diversified mining giant lifted its Pilbara iron ore shipments by 5% in the March quarter. Woodside shares were also up after the energy firm revealed that it is on the cusp of an uptick in LNG production after reporting an 18% rise in quarterly sales to $1.2 billion. However, financials came under pressure again as the sector continues to face questioning at the ongoing Royal Commission into the industry.
The New Zealand market was higher yesterday (NZX 50 index +0.30%) in light trading as Fletcher Building's discounted rights issue and upcoming MSCI New Zealand index review weighed on investors' minds (index weightings are important for fund flows as some funds and ETFs will buy the stock if it is in the market index – it appears Mercury may leave the index now rather the Fletcher Building). Trade Me and Metlifecare increased while Comvita dropped. Fletcher’s said institutional investors took up 98% of their entitlements, raising gross proceeds of $500 million.
3 Things Markets Will be Watching this Week
1. Corporate earnings season has kicked off in the US, with the major banks being first to announce quarterly profits.
2. Chinese GDP data is published at the start of the week.
3. The latest Australian unemployment figures will be announced on Thursday.
Have a Great Day,
Team