Global markets were lower overnight, as US markets (S&P 500 index -0.1%) ended lower as stocks struggled to end the session in the green following Federal Reserve chair Jerome Powell’s comments to Congress.
Powell stated that the Fed is strongly committed to bringing down inflation, and noted a recession was a “possibility”. Recession fears sent commodity & oil prices lower.
Most sectors traded ended lower, both Energy and materials leading losses, as commodity prices come under pressure. Only defensive sectors managed to stay in the green, led by real estate, followed by healthcare and utilities.
European markets (Stoxx 600 index -0.7%) were down, wiping out gains from earlier in the week as most sectors traded lower, led by resource stocks.
De.mem (DEM:ASX)
De.mem announced earlier this week that CEO of Veolia Australasia Danny Conlon has joined the De.mem board. Veolia ANZ water and waste water business serves many clients from local and state government authorities to the oil & gas, mining, health care, food & beverage industries, with a strong focus on service contracts.
De.mem also announced a 3-year $1.7m service contract with Rio Tinto, extending an existing arrangement and in addition providing De.mem the opportunity to sell further products including the company’s specialty chemicals.
We are Buy rated on De.mem although note the small size and volatility of the stock means it is higher on the risk/reward spectrum.
Australia & New Zealand Market Movers
The Australian market was lower yesterday (ASX200 index -0.2%).
Most sectors were lower, with tech and consumer discretionary leading losses. Speculative loss-making companies were hardest hit: buy now pay later provider Zip tumbled -11.4%, and is now down -96% since its peak in February 2021.
Investors took a more defensive stance, opting for utilities and energy stocks which gained to help offset market-wide losses.
Crown rose +0.3% after securing a provisional license allowing it to open its Sydney casino which has remained closed since its completion 18 months ago.
The New Zealand market (NZX 50 Index -0.2%) was down yesterday as growth stocks took another hit.
Fletcher Building jumped +5.5% after holding a detailed investor day, confirming its earnings (EBIT) guidance of $750m. Fletcher’s anticipate margins to improve further in 2023 to help earnings lift to ~$850m as a target – as construction activity remains elevated over the interim.
Skellerup Holdings jumped +5.5% on no news and higher than usual volume.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- Inflation (CPI) data out of the UK and Canada, and PMI manufacturing data from numerous regions.
- Locally, the RBA release minutes from their latest meeting, and Fletcher Building will be holding their investor day.