Global markets were higher overnight, US Markets (S&P 500 Index, +2.0%) trading higher as it tries to end its 7-week losing streak, despite a weak GDP print.
US First-quarter gross domestic product declined at a -1.5% annual pace, worse than the -1.3% drop that was expected.
A batch of strong retail earnings boost market sentiment Macy’s, Williams-Sonoma, Dollar Tree and Dollar General were among the leaders, bucking the trend for other retailers, which saw consumer discretionary and tech sector lead gains. Ndvida shares reversed its loss to jump +5.2% on its weak guidance for the second quarter after a wave of analysts reiterated their buy rating on the stock highlighting the momentum in their data centre business.
European markets (Stoxx 600 index, +0.9%) closed higher again, lead by retail stocks after the UK unveiled a plan to boost economic activity and tackle high cost of living crisis.
Pacific Edge (PEB:NZX)
Pacific Edge share’s fell -7.2% after delivering its 2022 full year result, which did not have much to excite investors hoping for strong progress on adoption given its large capital raise last year. Total revenue rose +33% form last year to $13.9m, while Cxbladder test sales rose +49%, with the company reported an net loss of $19.8m – larger than the previous year loss due to accelerated investment to drive adoption of tests.
Pacific Edge remain well funded with $103.5m of cash remaining to adequately fund at least 6-7 years of cash burn. The company highlighted that covid had still played a part in making things challenging over the last six months, and that weekly tests for the month of April was up +25% from last year and that growth was going to a be a marathon not a sprint.
Pacific Edge shares have been hit hard given they are a growth stock with a long time horizon to profitability and extremely sensitive to the recent rise of interest rates – not helping that they are in a cash burn situation, while covid had hampered anticipated growth plans. We still like the fundamentals of the company and large addressable market it can penetrate into, and hope to see more promising update 6-12 months from now, we are BUY rated at current levels given adequate funding to support their growth initiatives but believe this is more suited towards long-term investors that are patient for long slow growth.
Australia & New Zealand Market Movers
The Australian market was down yesterday (ASX200 index, +0.7%).
Sell-off was broad base with all sectors trading lower except for tech. Appen shares surged +29% after receiving a take bid of $9.50 per share, which helped lift other heavily beaten down tech shares higher.
Endeavour group (the beverage and entertainment business) sank -6% at its investors day presentation highlighting that they expect inflation to increase wages and rents and rising interest rates may reduce consumer demand.
The New Zealand market (NZX 50 index, -0.6%) was down on Thursday not helped by RBNZ’s increase in hawkishness and a couple of disappoint results.
Eroad shares slumped -8.7% and Rakon was down -6.8% both results missing expectations.
Mainfreight shares rose +1.3% after reporting a record result boosted by strong demand for air and ocean shipping across the world which lifted revenue +47.2% and profits by 89%.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- RNBZ monetary policy decision
- Local earnings from Kiwi Property Group, Arvida, Fisher & Paykel Healthcare, Pacific Edge, Mainfreight, Tower Insurance, Elders, and Select Harvest.