Global markets were mixed overnight as investors awaited a widely expected Fed interest rate cut tomorrow morning AU/NZ time, while the impact of weekend attacks on Saudi Arabia’s biggest oil refinery faded. Closer to home, minutes from the Reserve Bank of Australia’s last meeting also highlighted that the RBA is leaning towards further interest rate cuts, particularly highlighting the weak construction sector outlook.
Stock in Focus: Ardent Leisure (ALG:ASX)
Ardent Leisure shares continue to slide downwards as it struggles to recover from the fatal incident at Deam World back in October 2016, releasing another weak result for the 2019 financial year.
Ardent reported a net loss of -$60.9m, lower than the -$90.7m net loss reported in the previous year due to a reduction of Specific items. Management cancelled paying a dividend as it focused on expanding their Main Event business and investing into their Dreamworld theme park.
Revenue from continuing operations was up +14.4% due to Main Event expanding the number of centres and also favourable currency movements. Operating earnings were also +15% higher as Main Event earnings were boosted by favourable currency movements and reduction in corporate costs, which were both offset by weaker earnings from theme parks.
The turnaround of their core Dreamworld theme park has taken much longer to play out than the market expected and is still a work in progress We believe investors seeking to gain exposure to the tourism investment theme have plenty of superior options such as Sydney Airport, Sky City or Tourism Holdings.
We currently have a HOLD rating on ALG
Members should look out for a full update on ALG to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market was in positive territory on Tuesday (ASX 200 Index +0.33%). Hopes of fresh stimulus from the Reserve Bank of Australia lifted the Australian market for a fifth straight session, with the minutes from the central bank's September meeting striking a more dovish tone than its post-meeting statement – with several economists now expecting another interest rate cut in 2019. Base metals traded weaker across the board while iron ore slid, weighing on the major mining stocks.
The New Zealand market rebounded yesterday (NZX 50 Index +0.33%) as NZ shares snapped a six-day decline as export-focused firms such as Scales Corp and Fisher & Paykel Healthcare benefited from a weaker currency. Synlait Milk extended its gain amid merger and acquisition activity in Australia's dairy sector. In stock specific news, retailer Briscoe Group fell after reporting a 3.6% decline in first-half profit and saying the outlook for the rest of the year remained uncertain.
3 Things Markets Will be Watching this Week
- Trade War related news-flow is likely to continue to feature in headlines.
- The US Federal Reserve makes an interest rate decision on Thursday morning AU/NZ time.
- Oil related news-flow is likely to feature in headlines following the drone strike on Saudi Aramco
Have a Great Day,