New Zealand Market Movers
The New Zealand Market (NZX50 Index, +0.7%) rose on Wednesday, recovering Tuesday’s losses helped by a positive lead from Wall Street overnight.
Logistics company Freightways rose +1.8% after announced plans to dual list on the ASX with a new ticker symbol of FRW.
Australia Market Movers
The Australian market (ASX200 Index, +0.4%) rose yesterday snapping up a two-day decline, as mining stocks lead the rebound.
Financials were up strongly again digesting RBA’s rate hike path with Suncorp Group leading gains up +4.6% the gains as it looked to lift its dividend by more than 40% driven by higher insurance profits, driven by strong growth in premiums and higher investment returns.
Macquarie Group lead major lenders up another +2.6% following its update as well as excess capital sparking rumours of a potential takeover for one of the Australian smaller banks.
US Market Movers
US markets (S&P 500 Index –1.1%) were lower overnight, as investors digested mostly weaker earnings as well as the Fed reiterating their hawkish stance, which has been mostly ignored by the market recently.
Fed speakers noting they expect the fed funds rate to be between 5.00% to 5.25% by the end of the year- indicating further hikes, and no cuts this year, while market optimism is hoping for cuts later this year.
Alphabet shares fell –7.7% as concerns of its core search business comes under threat from rising A.I search technology.
Activision-Blizzard (ATVI) declined 3.58% on news that the UK’s regulator is formally its acquisition by Microsoft. The software giant is expected to now mount a defense of the acquisition; one option is to do as it has done in Europe and strike deals with local stakeholders (I.e. the company has already assured Japan’s Nintendo that their Wii platform will have access to Activision’s popular Call of Duty Francise). As we have written in the past, we’re agnostic to a deal with Microsoft. If the merger goes ahead it represents a good arbitrage at a 25% premium to the current share price. If it doesn’t, the company trades for less than its true value and is likely worth a premium either way; in a quarter where its rivals reported declining sales, Activision reported record sales & bookings – largely on the back of Call of Duty.
Manchester United, which we wrote up yesterday, gained +10.51% intraday as rumors spread that the Qataris will be putting a bid in for the club within the next couple of days. MANU’s current owners, the Glazers, aren’t in a rush to sell (unlike the divestiture of Chelsea FC) and will be looking for top dollar.
Stock in Focus: Elders (ELD.ASX)
Diversified Agriculture business Elders shares slumped –5.9%, on no news, after an inquiry by the ASX. Elders said it could not explain the decline but noted that it “held two investor briefings yesterday with a number of institutional investors”.
Elders noted factors already known by the market may be a contributor; 1) Declining livestock prices from historic highs; 2) Unseasonably wet conditions affecting eastern Australia ; 3) Softer real estate activity amid rising interest rates; 4 )Strong winter cropping outlook.
Assuming no major downgrade and a slight softening in earnings over the near term, we remain comfortable with our BUY rating on Elders, being attractively priced, and majority of its earnings being defensive and mostly immune to an economic slowdown.
What Markets will be Watching this Week (UTC +13)
Tuesday
RBA interest Rate Decision
Wednesday
US Balance of Trade Data
UK House Price Inflation
Disney Earnings
Uber Earnings
Thursday
US Weekly Jobless Claims
Paypal Earnings
PepsiCo Earnings
Warner Music Group Earnings
Friday
AUS Monetary Policy Statement
Inflation Data from China
NZ PMI data