Global markets were generally lower overnight, while Wall Street traded in a range as shares of Amazon rose amid signs of robust spending by shoppers on Cyber Monday, the busiest online spending day of the year. In other news, the price of oil retreated amid concerns about the terms of the deal between OPEC and Russia to extend oil production cuts. OPEC ministers meet later this week.
As we touched on yesterday, looking forward we see interest rate moves by the Fed as critical to driving markets (as a “policy error” with rates rising too fast could cause a sell-off in markets). On this front, the US Senate Banking Committee holds a hearing on Tuesday to confirm the nomination of Jerome Powell to succeed Janet Yellen at the helm of the Federal Reserve, and his comments will be watched closely.
Stock in Focus: Coca-Cola Amatil (CCL:AX)
Shares in Coca-Cola Amatil remain under pressure, as investors fled the stock last week after the soft drink manufacturer warned its $40 million spending program will impact earnings.
At its AGM, management announced they expect profits for their 2017 financial year to remain in line with the previous year. Given the challenges CCL is facing, particularly in Australia, the company is attempting to re-establish its portfolio as core products have been on the decline. A $40m investment will be required to reduce prices, for marketing, sales and technology in the 2018 year which CCL believe is required to maintain current sales volumes.
While CCL is facing headwinds, we have seen it as an attractive option of income investors, given its healthy forecast dividend yield of 5.7% at current prices.
We currently have a HOLD rating on CCL. Members should look out for a full update on CCL to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was higher yesterday (ASX 200 index +0.10%) with the ASX 200 index remaining slightly below the 6000 level. Macquarie shares jumped over $100 for the first time, although losses for Telstra worked to limit upside for the benchmark. Another notable gainer on Monday was engineering group Downer EDI, which ended the day up 5.1% after upgrading its profit guidance.
The New Zealand market rallied on Monday (NZX 50 index +0.60%) as Ryman Healthcare climbed to a new record after last week's earnings result, while upcoming index re-weightings stoked demand for Fisher & Paykel Healthcare while weighing on Contact Energy. Fisher & Paykel is expected to replace Contact in the MSCI index weights on Thursday (a large global market index).
3 Things Markets Will be Watching this Week
1. The US Senate Banking Committee holds a hearing on Tuesday to confirm the nomination of Jerome Powell to succeed Janet Yellen.
2. US economic data – with GDP released Thursday and manufacturing data at the end of the week.
3. US Politics with Tax Reform taking centre stage.
Have a Great Day,
Team