Global markets were mixed overnight as the US market (S&P 500 -1.1%) slid, ending a three-day rally. Investors questioned the validity of Moderna's recent covid-19 vaccine early-stage trials (which caused markets to surge on Monday). Home improvement chain Home Depot shares fell despite lifting revenue, as its profit missed guidance due to higher costs associated with safety precautions for covid-19. On the other hand, Walmart exceeded expectations for both revenue and earnings as online sales soared as consumers stockpiled essentials.
The market is at a heightened level of volatility and is reacting more towards health related news as opposed to economic news flow. Many investors are betting on a vaccine to come sooner rather than later and anticipating when business can return "fully" back to normal.
BHP Group Limited (BHP:ASX)
Shares in mining major BHP (BHP) were up +5.5% yesterday and been on a sizeable recovery lately as iron ore prices start to bounce back, with China's economy opening up again with demand expected to pick back up after lock down measures imposed earlier in the year.
Earlier, BHP's CEO told investors they are continuing to sell all its products and receive prompt payment from customers, despite markets for oil, gas, coking coal, thermal coal and copper being depressed. However, he said that while China appeared to be making a ''V-shaped recovery’’, investors should not expect the same elsewhere.
We currently have a BUY rating on BHP
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index +1.8%) was up on Tuesday, following an enthusiastic night on Wall Street, fuelled by hopes on a breakthrough on a potential COVID-19 vaccine is coming sooner than anticipated.
Like on Wall street, travel stocks were the best performer on the day, benefiting from a sooner return to 'normal', while owner of Westfield malls around the world, Unibail-Rodamco, rallied 11.4%.
James Hardie soared 11.2% after the building materials group issued a better-than-expected fourth-quarter result as well as being optimistic on an economic recovery in between a "V" or a "U", more like a Nike "swoosh".
The big four banks also benefited from payrolls data showing Australia's economy may already be past the worst of the unemployment blow, lowering credit default concerns.
The New Zealand market was a touch higher again yesterday (NZX 50 +0.3%) buoyed by vaccine news.This saw beaten up income stocks end a touch higher on the optimism coupled with talks of further quantitative easing from Reserve Bank. Market heavyweights A2 Milk and Fisher and Paykel were lower on a stronger kiwi dollar, offsetting market wide gains.
3 Things Markets Will be Watching this Week
- Covid-19 and lock-down news-flow remains key in terms of market moves.
- China-US tensions. The National People's Congress meeting in China will commence on Friday. The meeting is the Chinese Government's platform to outline its economic growth targets and management plan for the year ahead.
- Locally, earnings are due from James Hardie, Aristocrat, Property for Industry and Argosy Property.
Have a Great Day,