Global markets were mixed on Friday as most sectors gained while the major US Technology stocks continued to retrace.
Over the weekend, the major piece of news flow was that Amazon has bought US grocery store retailer Whole Foods, which gives Amazon a major bricks and mortar presence in the US. This saw grocery stocks fall sharply given the potential disruption to the sector with the entry of Amazon.
Closer to home, with the Arrival of Amazon into Australia, there are also questions as to how Amazon’s latest move will effect Woolworths and Wesfarmers, who are already struggling with heightened competition from German discount grocer Aldi.
Stock in Focus: A2 Milk (.NZ / A2M.AX)
A2 saw its share price jump +8% to a record high on Friday as it released its second sales guidance upgrade in 2 months.
A2 has increased production to meet hot Chinese demand for infant formula. A2 expects revenue to be $545m in the 12 months ending June 30, a $20 million increase from its April update which was itself an upgrade. A2 reported annual revenue of $352.8 million in 2016.
What is interesting is how well A2’s sales channels into the Chinese market have performed to date. While there are always risks stemming from Chinese regulatory change, we highlighted as recently as last Friday that recent results speak volumes about A2 management’s superior agility and execution versus peers such as Bellamy’s.
Members can login to read our full reports on A2 Milk and should lookout for another full update to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market managed to end the week with gains (ASX 200 index +0.19%) as the market shook off a slumping oil price. Healthcare stocks continue to be the standout sector of late with stocks such as CSL trading at record highs.
The New Zealand market moved higher on Friday (NZX 50 index +0.48%) as A2 Milk & Fletcher Building led gains, while Tegel Group fell 1 cent as it left the benchmark index. In other stock news, Ryman Healthcare has secured a 4.5-hectare site in Henderson, West Auckland to target an area it believes is under-supplied with retirement village options.
3 Things Markets Will be Watching this Week
1. The Reserve Bank of New Zealand makes an interest rate decision on Thursday.
2. Minutes from the last Reserve Bank of Australia meeting are released on Tuesday.
3. How the US Technology sector trades following its recent correction.
Have a Great Day,
Team