Global markets were lower overnight, US Markets (S&P 500 Index, -0.6%) fell again as investors fear the impact of inflation and the Fed’s rapid rate hikes will have on the economy – increasing the risk of recession.
Consumer staples and tech shares were the worst performing with most sectors trading in the red. Cisco slumped -13.7% after its quarterly result disappointed, and guided further weakness for the current quarter.
European markets (Stoxx 600 index, -1.4%) closed lower again digesting the harsh sell-off from Wall street the night before as well as grabling with their own inflation crisis.
U.K. data showed inflation soared to a 40-year high of 9% in April as food and energy prices spiraled out of control- escalating the country’s cost-of-living crisis.
Aristocrat Leisure (ALL:ASX)
Aristocrat managed to buck the market wide sell off yesterday as it lifted +6.7% after delivering a strong half year result for the 2022 financial year. Revenue rose +23% from the previous year to $2.7 billion, while operating earnings (EBITDA) rose +30.3% form last year to $970.3m ahead of expectations driven by strong performance from Gaming operations and Outright Sales, Supported by a robust performance from Pixel United.
Aristocrat increased its interim dividend 73% to 26 cent per share, and given the strong balance sheet and failed acquisition of PlayTech will also undertake a $500m on market share buyback.
We remain BUY rated on Aristocrat with a medium-term investment horizon, and like the general market will be exposed to volatility over the near-term.
Australia & New Zealand Market Movers
The Australian market was down yesterday (ASX200 index, -1.7%) following Wall street sharp inflation induced sell-off.
All sectors traded in the red except for healthcare, and in a similar fashion retailers were hardest hit (both consumer staples and discretionary), followed by tech stocks.
Ramsay Healthcare edged higher after KKR and Co confirmed its $20 billion ($88 per share) takeover bid for the company.
Agriculture chemicals group Nufarm lifted profits by 61.1% but the result wasn’t enough to impress investors as the shares slipped -8.6%.
The New Zealand market (NZX 50 index, -0.5%) was down on Thursday, trimming back larger loss after a “balanced” looking government budget was released with an emphasis on a healthcare and spending to ease higher cost of living – particularly for low-income earners.
Some shares trading in the green, Infratil closing at +2.5%, after reporting a $1.2 billion net profit due to the sale of Tilt renewables last year, and favourable uplift in valuation of its businesses. Goodman property trust rose +2.4%after forecasting solid dividend growth for 2023 financial year, and got a strong property revaluation uplift.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- Eurozone Inflation and employment figures
- Locally, earnings from James Hardie, Argosy Property, Briscoes, Goodman Property Group, Infratil, Oceania Healthcare and Ryman Healthcare