Global markets were lower overnight as investors digested the latest interest rate decision from the US Federal Reserve.
Policy makers kept the overall target range for the fed funds rate unchanged as Fed Chair Jerome Powell ignored President Donald Trump's call for a cut in benchmark interest rates. Apple shares rose sharply, pushing the iPhone maker's market valuation back towards $US1 trillion as its quarterly report and upbeat forecast calmed investors worried about slowing growth.
Closer to home, it was a busy day in terms of announcements under our stock research coverage yesterday – and we will be providing full updates in our weekly report.It was very pleasing to see ANZ Bank jump on its profit result as we have been positive on ANZ as our preferred Big Bank stock pick.
In the NZ market, muted earnings guidance from SkyCity and A2 Milk didn't meet investors' expectations, while EBOS shares saw solid demand post their capital raise. NZ King Salmon plummeted following a profit warning.
Stock in Focus: EBOS (EBO:NZX / EBO:ASX)
Shares in healthcare business EBOS ended yesterday slightly higher, even after a successful $175m in a capital raise, $25m more than they had been seeking with the increase to accommodate strong demand from both existing and new institutional investors in NZ, Australia and offshore.
The funds will initially be used to pay down bank debt and reduce gearing before being used for strategic acquisitions, organic growth initiatives and general corporate purposes. EBOS has had a strong track record of achieving growth through successful acquisitions and we remain confident this success will continue, while a significant boost in earnings will be realised next year with the commencement of their supply agreement with Chemist Warehouse at the start of 2020 financial year.
We remain positive on EBOS given our healthcare investment thematic and EBOS track record of delivering earnings growth year on year.
We currently have a BUY recommendation on EBOS.
Australia & New Zealand Market Movers
The Australian share market rebounded from a poor start to the week on Wednesday (ASX 200 index +0.80%) closing just 10 points shy of a fresh 11-year high as a strong first-half result from ANZ Banking Group lifted the major banks. ANZ met the market's expectations despite a difficult operating environment, announcing a 2 per cent rise in cash profit for the first half. Origin Energy was also among the market leaders on Wednesday, rising despite reporting a mixed quarterly production result, as chief executive Frank Calabria said the company's 2018-19 guidance was unchanged.
The New Zealand market retraced yesterday (NZX 50 index -0.47%) on the back of announcements from a number of major NZX companies. Shares in A2 Milk gave back some of its stellar gains yesterday after it reported moderating revenue growth and said second-half operating earnings margins would be lower than the first half due to marketing investment and a slightly weaker Australian dollar. SkyCity shares were also down as the casino operator lowered its annual guidance on weaker-than-expected trading.
Outside the benchmark index, King Salmon sank -18% after warning that warm water had increased its fish mortality rate, meaning its harvest would be smaller than expected for the next two seasons. Weather events such as this are largely an unavoidable risk for companies such as NZK.
3 Things Markets Will be Watching this Week
- The US first-quarter reporting season continues this week.
- Thursday morning (AU/NZ time) sees a meeting of the US Federal Reserve, and the release of important monthly US manufacturing data.
- The latest NZ employment figures are published on Wednesday.
Have a Great Day,