Global markets were higher on Friday, with US Markets (S&P 500 Index, +0.3%) ending in positive territory after a strong jobs report.
The US employment report was strong, with 431k of non-farm payrolls added in March and 95k of net revisions making the level of employment slightly ahead of consensus, with unemployment falling to 3.6%. This is nearing the pre-covid low of 3.5% and the average hourly earnings up +0.4% in March and up +5.6% year on year. The data is reiterating the Fed’s commentary that employment is tight and strong enough to withstand a 50-basis point rate hike at its next meeting.
European markets (Stoxx 600 index +0.6%) were higher as optimism prevailed, after Russia clarified its threat to cut off European gas supplies will only apply in respect of payments due from mid-April. Commodity facing stocks lead gains, while most sectors traded in positive territory. Euro area CPI inflation surged to a record high of 7.5%, well above consensus estimates, which hadn’t incorporated the very strong regional figures released in the preceding days. While the core CPI also rose to a record high, at 3.0% it was slightly below expectations. The data adds to the urgency for the ECB to end QE and begin a rate hike cycle.
Synlait Milk (SML:NZX / SM1:ASX)
A2 Milk’s milk supplier Synlait Milk rose +1.2% on Friday after its 2022 half year result showed signs of improvement, as well as reporting material debt reduction.
Net profit after tax came in at $27.9m, a major turnaround from $6.4m profit in the previous year. While management are guiding for robust profitability for the 2022 financial year and 2023 net profit to return to 2020 levels.
Synlait is not rated.
Australia & New Zealand Market Movers
The Australian market edged lower on Friday (ASX200 index -0.1%) following a weak lead from Wall street, but still marked its third positive week in a row.
Most sectors were lower, while materials and energy reported modest gains to help offset market wide losses.
JB Hi-Fi is believed to be planning to enter the contest for smaller rival Jaycar, with the auction set to ramp up in May.
The New Zealand market edged lower on Friday (NZX 50 index -0.2%).
Air NZ lost another -1.9%, as some investors were happy to hold on to the stock to be eligible to for the discounted $0.53 shares on offer. Tourism holdings (+3.2%) and Sky City (+0.7%) both gained as tourism exposures likely to benefit from reopening boarders and Air NZ’s upbeat outlook.
Heartland Group rose +1.3% after announcing it would acquire StockCo, an Australian a company specialising in livestock finance for cattle and sheep farmers across Australia (60% cattle/35% sheep) with total assets of A$341m.
Ryman Healthcare fell -2.2% reporting the largest loss amongst the big names, while other property facing stocks also traded weaker.
3 Things Markets will be Watching this Week
- Geopolitical risks remain extremely elevated with the Russia/Ukraine conflict.
- The economic calendar in the week ahead is very light – minutes from the March US Fed meeting are released and a number of Fed speakers will be on the wires.
- Locally, in Australia the RBA policy decision tomorrow is a non-event, with no change in policy expected ahead of the May Federal election, but another incremental shift to more hawkish commentary wouldn’t look out of line.