Global markets were lower overnight, as US markets (S&P 500 index -3.2%) slumped as recession fears rise, with the benchmark index currently down -6% for the week, on track for the worst weekly performance since March 2020.
Investors are digesting weak economic data as retail sales and housing starts in the US fell short of expectations, coupled with a more aggressive expected rate hike path for the Fed. All sectors traded lower, with energy consumer discretionary, and tech leading losses. US home-builder stocks were savaged as mortgages rose the most since 1987 and May US Housing Starts were down -14.4% when -1.8% had been forecast and Building Permits fell -7% when -2.5% had been expected.
European markets (Stoxx 600 index -2.5%) were lower, with tech shares leading losses are investors fretted over rising interest rates and an impeding economic slowdown.
Pushpay (PPH:NZX / PPH:ASX)
Pushpay shares ended the day flat yesterday as it held its AGM. Investors were hoping to be given more light on a potential takeover offer, but were only told the company had opened its books and that “multiple interested parties” are looking at buying the business.
Pushpay reiterated +10 to 15% revenue growth for the 2023 financial year and expects operating earnings (EBITDAF) of between US$56m to $61m. Pushpay highlighted they are investing for medium-term growth expecting >US$10 billion of Total Processing Volume by 2025.
We are BUY rated on Pushpay as a quality tech quality that delivers positive cashflow. It’s share price is attractively priced over the medium-term investment horizon, but could be subject to near-term downside risk as market volatility continues over the interim especially if a takeover offer doesn’t materialize. On the flipside, an attractive offer could provide short-term upside as we expect that it would have to be ~$1.80 in terms of a fair multiple of 6x PPH’s sales.
Australia & New Zealand Market Movers
The Australian market edged lower on Thursday (ASX200 index -0.1%) marking its fifth daily loss in a row, as strong local jobs data intensifies the urgency for the RBA to lift rates even faster.
Australia’s unemployment remained low at 3.9%. Markets were mixed, with most sectors trading lower, while the heavily sold-off real estate sector led gains.
The New Zealand market (NZX 50 Index +0.1%) edged higher yesterday as global markets took a breather from their recent selloff.
Locally, economically sensitive stocks continued to slide lower following NZ’s GDP first quarter fell-0.2% coming in softer than expected. Despite no lockdowns in the quarter a large portion of the country isolated at home when cases peaked which would not have helped.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- Central bank meetings dominate the week ahead with rate decisions due from the US Fed, Bank of England, and Bank of Japan.
- The latest CPI (inflation) data from the Eurozone is also due along with a range of housing data in the U.S and activity data in China. Locally, employment data in Australia and Q1 GDP in NZ are the highlights.