Global markets were little changed overnight as markets digested the highly anticipated US Federal Reserve policy announcement.
Fed Chair Jerome Powell held interest rates steady, as expected, and signalled potential cuts later this year. Powell had a dovish tone in his comments which markets were looking for and dropped a reference in the Fed statement to being “patient” on borrowing costs and forecast a larger miss of their 2% inflation target this year.
Stock in Focus: Pushpay (PPH:NZX / PPH:ASX)
Pushpay shares made solid gains yesterday as the mobile payments app developer raised its full-year earnings guidance at its annual meeting.
Pushpay now expects earnings before interest, tax, amortisation and fair value adjustments to be between US$18.5 million and US$20.5 million in the year ending March 31, 2020, versus a prior forecast of US$17.5 million and US$19.5 million. It lifted expected total processing volume to between US$4.8 billion and US$5.0 billion from US$4.6 billion and US$4.8 billion.
The company reiterated its annual operating revenue guidance of between US$122.5 million and US$125.5 million and gross margin guidance of over 63 percent.
This was a pleasing update as it looks as if the business continues to make traction in the US faith sector and is improving its operating leverage as it moves towards becoming a profitable business.
We currently have a BUY (High Risk) recommendation on Pushpay.
Australia & New Zealand Market Movers
The Australian share market continued its rally yesterday (ASX 200 index +1.19%) on hopes that the trade dispute between China and the US would settle down after both regimes agreed to hold talks on the side of the G20 meeting in Japan next week. Coles advanced after analysts welcomed the supermarket's decision not cut dividends as part of a five-year turnaround plan aimed at restoring profit growth and maintaining its market share.
The New Zealand market rallied on Wednesday (NZX 50 index +1.11%) which saw the NZX hit a new record high. Blue chips such as Auckland Airport, Meridian, and Fisher & Paykel Healthcare led gains.
Medicinal cannabis company Cannasouth began trading on the NZX yesterday, initially gaining 1 cent to 51 cents (IPO price of 50 cents) before dropping as low as 36 cents and ending the day at 40 cents, down -20% on day one. Cannasouth is clearly an extremely speculative investment given that it has not generated a dollar of revenue, and clearly operates in an industry that is the subject of debate and regulatory uncertainty. Further, with the business still trading at $40m the valuation looks eye-watering to us.
3 Things Markets Will be Watching this Week
- Trade War headlines are likely to remain drivers of investor sentiment.
- On Tuesday, the Reserve Bank of Australia will release the minutes of its last meeting, when it cut interest rates.
- The key event to watch for the week will be the latest US Federal Reserve policy meeting with an announcement set for Thursday morning AU/NZ time.
Have a Great Day,