Global markets were higher overnight, as shares on Wall Street moved between small gains & losses as optimism fuelled by progress in US-China trade talks was clouded by fears of an economic slowdown after a fall in fourth-quarter US GDP growth.
The latest US economic growth (GDP) figures showed that in the 4th quarter of 2018 there was a notable 0.4% downward revision of growth from 2.6% to 2.2%. While this is a significant move, there were several temporary factors at play and it needs to be kept in mind that it has been a very strong few years of growth for the US economy.
Some of our subscribers may already know that Jeremy from runs a stock market podcast. Listen to his latest episode “Kathmandu. Ethical Investing Discussion and Quick Fire Stock Updates” by CLICKING HERE
The focus on the episode is Kathmandu who updated the market during the week with their interim report. We also have some quick fire stock updates and discuss Wellington Drive Technologies, Sky TV, Air New Zealand, Methven and Restaurant Brands.
Stock in Focus: Kathmandu KMD:NZX /KMD:ASX)
Kathmandu fell earlier this week after reporting a 14 percent gain in first-half profit as improved margins, the Oboz acquisition, and a tax refund offset flat sales in New Zealand and Australia.
We have held a cautious view towards the retail industry for some time now, and Kathmandu have bucked the trend to some extent due to their unique product offering. We think consumer spending particularly on discretionary items (such as the products Kathmandu sells) will be under pressure over the near term as the Australian and New Zealand economies see falling house prices and tightening credit. We believe the share price fall has now partially reflected the difficult times ahead, although do not see much upside potential at the current juncture. Interestingly, Briscoes managing director Rod Duke last week reiterated his interest in taking full control of Kathmandu.
We currently have a HOLD recommendation on KMD.
Australia & New Zealand Market Movers
The Australian share market notched a decent gain yesterday (ASX 200 index +0.65%) with an afternoon advance lifting the market out of its early doldrums. Miners were the strongest performer by sector on Thursday, as Pilbara Minerals surged 15 per cent. The strength in commodity prices, particularly iron ore, has been driving earnings upgrades of late across mining stocks.
The New Zealand market continued to trend higher on Thursday (NZX 50 index +0.69%) as the prospect of low interest rates maintained the appeal of companies with reliable dividends, such as Genesis Energy and Trustpower. Air New Zealand rose on plans to cut costs. The national carrier outlined plans to cut $60 million from its annual spending on top of $50 million of savings already flagged, while it will also put off $750 million of capital spending to upgrade its fleet.
3 Things Markets Will be Watching this Week
- Signals around the health of the global economy will remain a focus for investors.
- US economic growth (GDP) figures are published Thursday night (AU/NZ time).
- The Reserve Bank of NZ makes an interest rate decision on Wednesday.
Have a Great Day,