Global markets continued to move higher overnight with US markets hitting all-time highs for the fourth session in a row, boosted by a jump in Amazon.com and Alphabet, and on optimism over trade talks between the United States and Canada.
Closer to home, the big news in Australia yesterday was that Westpac became the first of the Big Four banks to hike its variable home loan rates, a move the rest of Australia’s financial institutions are expected to copy. The bank said it was raising rates by 0.14% due to an increase in its wholesale funding costs. The Aussie dollar fell as the out-of-cycle rate hike caused traders to question the Reserve Bank of Australia's policy stance.
Stock on Focus: NZ King Salmon (NZK:NZ / NZK:AX)
NZ King Salmon (NZK) released record profits yesterday as growth in its lead North American market and in Asia saw a +21% increase in operating earnings to $26.2m.
The result would have been stronger had the company not experienced high mortality among its salmon stocks because of high Marlborough Sounds water temperatures – something which was already well flagged to the market.
While we like the NZK business and how it fits our dining boom investment theme, concerns around its valuation continue to hold us back in terms of becoming more positive.
We are currently have a HOLD recommendation on NZK.
Members should look out for a full update on NZK to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was higher on Wednesday (ASX 200 index +0.75%) for a 4th straight session as the major banks rallied during the afternoon after Westpac became the first of the big four banks to hike home loan rates. In stock news, Bellamy's Australia's earnings climbed 65%, lifting the organic baby formula company back to a $43.2 million profit following an $809,000 loss in the previous year.
The New Zealand market rallied strongly yesterday (NZX 50 index +1.61%) to a new record high with A2 Milk and Synlait leading gains. In stock news, Genesis Energy shares were lower as it reported a decent result, with an 8% increase in full-year operating earnings to $360.5 million after dry, still weather boosted demand for coal- and gas-fired generation from its Huntly site. The company has made a number of acquisitions in recent times lifted headline numbers, and had significant expenditure over the year including upgrades at Tekapo, Tuai and Tokaanu, integrating the new LPG business and new digital retail products.
3 Things Markets Will be Watching this Week
1. Locally, investors in Australia and NZ will have a number of profit announcements to focus on as earnings season continues.
2. It is likely that attention shifts away from Australian politics and back to the global political stage.
3. US economic growth (GDP) data is released on Thursday, as well as core personal inflation figures.
Have a Great Day,
Team