Global markets retraced overnight after Donald Trump moved to re-introduce tariffs on steel and aluminium from Argentina and Brazil. The latest tariff development outweighed bets the US and China were close to signing the first part of a trade deal. Disappointing US manufacturing data also weighed on markets, although the forward looking portion of the manufacturing survey remain solid.
Stock in Focus: Select Harvests (SHV:ASX)
Select Harvests jumped after a successful year the nut grower attributes to a bigger than expected almond crop, firmer prices and the shrewd navigation of an expensive water market. The company delivered operating earnings of $95.2 million and a net profit after tax of $53 million. This compares to operating earnings of $51.7 million and NPAT of $20.4 million in the 2018 financial year.
After what has been a challenging three-year period for SHV, things are starting to turn around dramatically for the almond producer. This is being driven by favourable market conditions with demand for plant-based protein (particularity from China) outstripping supply with the outlook remaining promising, especially given the recent opportunity created by the China-US trade war, and improved horticulture programs. SHV is also benefitting from a weaker Aussie dollar, which we expect to remain weak. We continue to see SHV as an interesting way for investors to gain exposure to global agricultural and health conscious consumer trends over the long-term, especially growing trend towards plant-based protein.
We currently have a BUY (High-Risk) rating on SHV.
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Australia & New Zealand Market Movers
The Australian market was higher on Monday (ASX 200 index +0.24%) as investors shrugged off mixed economic data ahead of today's RBA announcement. Energy was the worst-performing sector on Monday, following the sharp fall in oil prices on Friday after Australia's market close. Anecdotal evidence suggests a strong Black Friday and Cyber Monday for Australian retailers with Kogan.com having its biggest day in its 14-year history.
The New Zealand market was a touch lower to start the week (NZX 50 index -0.13) snapping a 5 day winning streak. Stocks were led lower by Gentrack as investors fretted over how the utilities software developer will cope with ongoing turmoil in Britain’s electricity market. On the flipside, A2 Milk continued to trend higher, but was unable to see the market index end the day in positive territory.
3 Things Markets Will be Watching this Week
- In NZ, the RBNZ is due to announce the new capital requirements for NZ banks and the ComCom due to release the final Fuel Study report.
- The Reserve Bank of Australia meets on Tuesday and markets expect the bank to keep interest rates on hold.
- Closely followed US payroll and manufacturing surveys are released this week.
Have a Great Day,