Global markets continued to edge higher overnight, as Wall Street’s three main indexes hit all-time highs on Tuesday, as comments by President Donald Trump on trade as well as gains for Disney and Best Buy countered weak consumer confidence data.
Closer to home, Reserve Bank of Australia governor Philip Lowe last night hosed down the prospect of quantitative easing until the official interest rate dropped to 0.25 per cent (if the level is reached, which could be a while away in any case).
Stock in Focus: Caltex (CTX:ASX)
Caltex shares jumped +13% yesterday after Canadian convenience store operator Alimentation Couche-Tard lobbed an $8.6 billion takeover offer at Caltex Australia. The board said discussions were at a preliminary stage and there was no certainty the talks would result in a transaction.
Earlier, Caltex shares were higher after the firm proposed an initial public offering of up to 49% of 250 core convenience retail freehold sites. In a separate profit update, Caltex said it expects second-half earnings before interest and tax at its retail business of between $190 million and $210 million, which would represent an increase of $20 million to $40 million from the first half of 2019.
We currently have a HOLD rating on Caltex.
Australia & New Zealand Market Movers
The Australian market continued to trend higher on Tuesday (ASX 200 index +0.82%) for a third straight session, as Westpac rebounded following a four-day slide in its share price, during which it lost $7.5 billion of its valuation. Westpac chief executive Brian Hartzer would step down within a week as it sought to stem the reputational damage from the AUSTRAC scandal. CSL lifted the market higher, while Bank of Queensland shares were hit hard, sliding after it completed a $250 million institutional share placement to improve its capital position.
The New Zealand market rallied yesterday (NZX 50 index +0.83%) with the NZX 50 index once again moving above the 11,000 level, as the official MSCI New Zealand Index re-weightings drove more than half a billion dollars of activity in the market's busiest day for almost a year-and-a-half.
A significant amount of institutional and passive money (mainly ETFS) track the MSCI index weights, which saw a large bounce in the likes of Tourism Holdings, Pushpay, Z Energy, and Metlifecare in particular. Interestingly, Tourism Chair Rob Campbell bought shares on market yesterday at $3.05 a share. Outside the benchmark index, Green Cross Health dropped after it reported a -3% decline in first-half profit and weaker revenue.
3 Things Markets Will be Watching this Week
- Trade deal prospects between the US & China remain at the forefront of investor attention.
- RBA governor Philip Lowe makes a speech on Tuesday.
- The RBNZ releases its financial stability report on Wednesday.
Have a Great Day,