Global markets were higher overnight as Wall Street rallied amid optimism that the US is backing off its recent protectionist stance in an effort to resolve an international trade dispute with China.
US Treasury Secretary Steven Mnuchin said that the US-China trade war was "on hold" and that the US had suspended a threat to impose tariffs on $US150 billion of Chinese goods. Mnuchin announced that trade talks with China had progressed as America looks to reduce its trade deficit with Beijing as it agreed to "slightly increase" its purchase of American goods and services. Companies in the crossfire of a potential trade war, including technology firms and industrial giants Boeing and Caterpillar, posted share price gains.
Stock in Focus: Infratil (IFT:NZ / IFT:AX)
Shares in infrastructure investment company Infratil gained as the company beat its annual earnings guidance last week and said it expects profitability to increase in the future on the back of its recent investments.
In terms of the numbers, Infratil reported solid operating earnings of $552m, ahead of its forecast for $510 – $525m and the $518.5m achieved in the previous year.
Infratil noted that each of last year’s new investments, Canberra Data Centres, Longroad Energy and ANU Student Accommodation, performed above expectations while investments in Wellington Airport and Trustpower investments delivered record results. We highlight that Infratil management have had a long track record of delivering strong performance.
We have a positive view on Infratil given their long-term investment approach and given a number of their investment themes align with our views – such as the tourism exposures, retirement villages, and the explosion of data (through the ownership of data centres).
We currently have a BUY recommendation on Infratil.
Members should look out for a full update on Infratil to be released in tomorrow’s weekly report.
Australia & New Zealand Market Movers
The Australian share market was marginally lower on Monday (ASX 200 index -0.05%) as the banking royal commission returned with a focus on small business loans. CBA shares fell to their lowest level since September 2016 following a Fairfax Media report that showed the bank's staff had fraudulently activated thousands of children's bank accounts to meet performance targets. Telstra shares fell after the company suffered its third major network outage on Monday, shaking investor confidence in the telco which fell to a fresh 7-year low. On the flipside, Santos closed the day higher after it received an improved takeover offer from Harbour Energy.
The New Zealand market sold off on Monday (NZX 50 index -0.48%) as A2 Milk continues to extend last weeks losses. Shares in Comvita dropped -8% as the honey products exporter has pulled out of talks with an unnamed third party looking to take it over when it couldn't reach a deal on price. In other stock news, Kiwi Property Group as it lifted annual earnings 8.2% with rental income boosted by the completion of several developments and new acquisitions, although smaller revaluation gains led to a fall in bottom line profit
3 Things Markets Will be Watching this Week
1. The development of trade talks between the US & China.
2. US Federal Reserve Chairman Powell makes a speech on Friday, following the release of the latest Fed meeting minutes on Wednesday.
3. This week also sees a number of profit updates from ASX/NZX company’s which we will be watching closely
Have a Great Day,
Team