Global markets were choppy overnight, with US Markets (S&P 500 Index -0.04%) ending a touch lower, clawing back earlier losses as markets take a breather following last week’s rally.
Ukraine-Russia tensions continues to influence the market as peace talks fail to progress, with the price of oil lifting +7% to $112/barrel.
Post the US Fed’s interest rate announcement last week the market digested an even more hawkish tone from Fed Chair Jerome Powell overnight who stated inflation is too high and that he would take necessary steps to control prices – hinting towards more aggressive 50 point rate hikes if necessary. The 10-year US treasury bond lifting 15 basis points to 2.30% reach fresh post pandemic highs, and a level not seen since early 2019.
Rising rates hit tech stocks, with consumer discretionary and real estate sector leading losses. Commodity stocks finished the session stronger particularly energy stocks to help offset market losses. Boeing fell -3.6% after a 737-800 jet crash in China.
European Markets edged higher (Stoxx 600 index +0.1%) as Russia-Ukraine jitters continue to weigh down on the market, with gains in commodity stocks more than offsetting market-wide losses.
Tourism Holdings (THL:NZX)
Tourism Holdings shares have been recovering strongly over the last few weeks, helped by the NZ government announcement to bring forward quarantine/isolation free travel for Australian tourists starting in April, and a wide list of countries with visa-waivers from May. Tourism holdings also did announce an understandably weaker result earlier (which was well known and contained no real surprises), while the next leg of upside now comes from gaining regulatory approval for its Apollo acquisition – the commerce commission making a statement to delay their decision highlighting concerns about the planned acquisition of Apollo Tourism.
We are Buy (High Risk) rated Tourism Holdings as one of our few tourism/reopening plays as being attractively priced assuming the takeover goes ahead and a partial recovery in international travel over the medium-term.
Australia & New Zealand Market Movers
The Australian market edged lower yesterday (ASX200 index, -0.2%) easing into the week with no catalyst to continue to current rally.
It was mixed bag of a day, tech energy and commodity stocks posting modest gains which help offset losses across remainder of the market healthcare and industrials leading losses.
Block was the best performer up +9.2%, while Xero (+2.4%), and Lynas (+2.1%) performed well. Wesfarmers rose +0.7% after the Federal court approved its proposed takeover of Australian Pharmaceutical Industries.
The New Zealand market was flat on Monday (NZX 50 index) on a generally mixed day on the market following a strong recovery rally last week.
Positive movements by most of the market saw Arvida group lead the market up +4.4%, Fletcher Building (+1.3%), A2 Milk (+1.2%) and Fisher and Paykel (+1.2%) performing well. EBOS rose +2.3% after announcing it has opened its 500th TerryWhite Chemmart, adding ~100 over the last three years.
These were offset by loss by a range of larger companies some giving back parts of their Friday rally, with Auckland International Airport down -4%, Scales slipping -3.7% and Kiwi Property group down -2.3%.
3 Things Markets will be Watching this Week
- Geopolitical risks remain extremely elevated with the Russia/Ukraine conflict.
- Highlights this week include CPI inflation data in the UK.
- Locally, earnings from Kathmandu and The Warehouse, Z Energy holding its Scheme meeting to vote on Ampol’s takeover offer.