Global markets stabilised overnight post a few days of selling.
More weak US data was interpreted as opening the door to lower US interest rates later this month, with hopes further easing by the US Federal Reserve will stem a wider economic downturn. We think this can only go so far, as if there is a deep downturn in economic growth, lower interest rates will not be able to stop a market sell-off.
Once again, US employment figures released tonight will be watched very closely.
Stock in Focus: Kathmandu (KMD:NZX / KMD:ASX)
Kathmandu entered a trading halt as the outdoor clothing retailer completes an entitlement offer to raise $145 million for an acquisition of Rip Curl. The company will pay $368 million to buy the surf brand which it says will create a billion-dollar retailer and add at least 10% to earnings per share.
Check out this week's podcast, Kathmandu (KMD) Swings for the Fences and Buys Rip Curl – to listen CLICK HERE.
We currently have a HOLD rating on KMD.
Members can login to read our full reports on KMD.
Australia & New Zealand Market Movers
The Australian market went into free-fall yesterday (ASX 200 Index -2.21%) to record its worst session since August. The yield on Australia's two-year government bond hit a record low 0.623%, and bets on a Reserve Bank rate cut in December jumped to 80 per cent from 68 per cent. Bank shares were hit heavily on the risk of a prolonged economic downturn which investors fear will add to the sector's mounting profitability woes.
The New Zealand market continued to sell-off on Thursday (NZX 50 Index -1.19%) in the wake of data suggesting the US economy is slowing and after the US threatened to open another front in its trade war, this time with Europe. Surprisingly, the Fonterra Shareholders Fund was the day's best performer, as its shares continue to experience a relief rally post its recent result.
3 Things Markets Will be Watching this Week
- Trade War related news-flow is likely to continue to feature in headlines.
- The Reserve Bank of Australia makes an interest rate decision on Tuesday.
- Monthly US employment figures are released at the end of the week.
Have a Great Day,