Global markets were mostly higher overnight as a rise in Apple led a rebound in technology shares, while trade worries eased after China said it was open to fresh talks with the United States.
Stocks across Asia rebounded on reports US Treasury Secretary Steven Mnuchin extended an olive branch to his counterparts in China, inviting them to ministerial level trade talks. Tensions between the world's two biggest economies have increased volatility in financial markets as investors try to gauge the potential impact on global growth. So far, the Chinese market is hurting far more than the US, and we believe China has more to lose from an all-out trade war.
Stock on Focus: Myer (MYR:AX)
Shares in struggling retailer jumped +37% on Thursday. Myer is one of the most shorted stocks with about 11% of its shares shorted (traders’ betting that the share price will fall) on the ASX. Yesterday’s massive move was driven by a “short squeeze” when short sellers cover their positions on a stock (by buying the shares), resulting in buying volume that drives the stock price up rapidly.
Myer had released its latest result the day before, and it appears investors reassessed the potential of new chief executive John King's turnaround plan. Mr King is putting his money where his mouth is, buying another 100,000 shares on-market on Thursday for $43,500, taking his stake to 150,000 shares and 2.4 million performance rights.
Merger speculation with David Jones also persists in the market, and a it was a mixed bag in terms of analyst responses as number of broker analysts moved around their forecasts on Myer.
We are currently have a HOLD recommendation on Myer.
Members should look out for a full update on Myer to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market sold off yesterday (ASX 200 index -0.76%) as heavyweight finance stocks pushed the ASX down to a 12-week low. The Royal Commission into the finance industry continues to weigh on investor sentiment towards the finance sector. In stock news, Woolworths was in the headlines for all the wrong reasons as reports emerged that at least three needle points were found inside strawberries sold by the supermarket in recent days. It was also revealed that hundreds of members of Woolies' royalty program may have been targeted by scammers trying to steal points from Everyday Rewards accounts.
The New Zealand market made gains on Thursday (NZX 50 index +0.58%) joining a regional rally across Asia on optimism over US-China trade relations. Fonterra Cooperative Group's first annual loss dominated local headlines. Fonterra posted a loss attributable to shareholders of $221 million with all business units struggling. The new leadership team is reviewing the entire business and have pledged to reduce debt levels by $800 million. The result was slight miss even in terms of prior forecasts.
3 Things Markets Will be Watching this Week
1. US-China trade tensions & whether Trump proceeds with the threats of a new tariff which would be imposed on virtually every Chinese good entering the US.
2. The Bank of England and European Central Bank make interest rate decisions on Thursday.
3. Australian employment data is published on Thursday.
Have a Great Day,
Team