Global markets were higher on Friday with US stocks advancing as upbeat earnings helped investors shrug off heightened trade anxieties and weaker-than-expected July jobs growth. The S&P 500 US market index notched its fifth straight weekly gain, its longest such streak of the year.
While much of the focus is on earnings at the moment, trade tensions remain as a backdrop for investors. The trade spat between the US and China is set to continue this week with China late last week making clear it will find more US goods to target if the Trump administration pushes ahead with plans to lift tariffs on more Chinese imports.
Locally, earnings season across Australia & NZ gets busier this week, with the likes of AMP, Commonwealth Bank, and SkyCity set to make profit announcements. Both the Reserve Bank of NZ and Reserve Bank of Australia are set to make interest rate decisions this week which will be another focus for investors.
Stock on Focus: SkyCity Entertainment (SKC:NZ / SKC:AX)
As mentioned above, SkyCity is set to report its next results on 8th August.
SKC shares have been stuck in a range around $4 as the casino operator juggles with its struggling Darwin property and major expansion work on the Auckland and Adelaide properties. SKC also recently announced it sold its Federal street carpark for $40m and have made the decision to sell the struggling Darwin casino for at least A$200m as it aims to become “asset-lighter” by divesting non-core assets.
We continue to believe SKC shares are attractively priced in a relatively expensive market, paying just over a 5% dividend yield. We also see a continued tourism tailwind and major growth projects supporting medium term growth.
We currently have a BUY rating on SkyCity.
Australia & New Zealand Market Movers
The Australian share market was in negative territory on Friday (ASX 200 index -0.09%) ending the week on a lacklustre note as banks led losses for the Australian market. In stock news, Gina Rinehart has secured majority control of Atlas Iron as her $390 million cash offer for the loss-making miner was extended late Friday. Mrs Rinehart’s Hancock Prospecting revealed Friday its stake in the miner had reached 56% as her original offer for the Pilbara miner closed.
The New Zealand market was slightly higher on Friday (NZX 50 index +0.17%) led higher by Synlait Milk as A2 lifted its stake in the company while Freightways and Ebos fell. A2 will buy another 8.2% of Synlait Milk at a small discount (at $10.90 per share), lifting its holding in the dairy processor to 17.4%, which reinforces the strategic relationship with Synlait Milk as a key part of their business in terms of providing milk supply for A2. Outside the benchmark index, Briscoe Group shares were unchanged at $3.55 as it said It lifted first-half sales 4.3% to $292.2 million and will report a slightly higher profit on wider margins next month. The company continues to be an efficient operator in a tough retail sector.
3 Things Markets Will be Watching this Week
1. US corporate earnings season continues as investors digest quarterly company profit announcements.
2. Locally, investors in Australia and NZ will have a number of profit announcements to focus on as earnings season gets busier.
3. The Reserve Bank of Australia makes an interest rate decision on Tuesday, the RBNZ also makes a decision on Thursday.
Have a Great Day,
Team