ASX Breaks 6000 | Fisher & Paykel Shows Relative Strength

15 November 2017

Global markets were lower overnight after GE shares plunged for the second straight day and a drop in oil prices hit energy stocks.
 
With the quarterly earnings season winding down, the US market has taken a breather after its rally to record highs last week. Interestingly, a survey by Bank of America showed a record number of investors believe equities are overvalued, however cash levels held are simultaneously falling.  As we mentioned yesterday, what we find astounding is the lack of volatility, and that there have not been any significant pullbacks/market corrections this year.
 
Closer to home, the Australian market continues to retrace following a stellar run, with the ASX 200 market index breaking back below the key psychological 6000 level. This was despite positive economic news with NAB's monthly business survey showing business conditions hit an all-time high in October.
 
Stock in Focus: Fisher & Paykel Healthcare (FPH:NZ / FPH:AX)
Shares in Fisher & Paykel Healthcare were higher yesterday, and the stock has shown relative strength versus the broader NZ market of late as it trades close to all-time highs.

In terms of recent news flow, FPH announced this week that it has won another patent case against ResMed, this time in the UK court. “While today’s ruling is just one more step on the journey, it reinforces our confidence in our position and we are satisfied with progress so far” said Managing Director and CEO, Lewis Gradon.
 
We had noted that the patent battle with competitor ResMed was likely to act as an overhang on the share price (with legal battles being costly and time consuming) and so far FPH appear to be coming out on top. Looking forward, FPH will announce its full year financial results on the 21st of November.
 
We are currently BUY rated on FPH.
Members can login to read our full reports on FPH & should look out for a full update to be released in our weekly report.

 
 
Australia & New Zealand Market Movers
The Australian share market sold off yesterday (ASX 200 index -0.88%) with the ASX 200 market index breaking below the key psychological 6000 level. A long-awaited "liquidity event" in Woodside Petroleum shares sparked selling across ASX blue-chips, as Shell sold down its $3.5bn stake in Woodside Petroleum. Retailers were also under pressure as the market readjusted for a possibly earlier-than-expected entrance by Amazon into the local market, possibly before Christmas.
 
The New Zealand market rose on Tuesday (NZX 50 index +0.40%) led higher by Z Energy on lingering optimism over the transport fuels company's outlook and Precinct Properties New Zealand which is tapping the listed debt market. Tower hit a record low intra-day as investors weigh up whether the $70.8 million of new capital they're being asked to provide will provide enough of a buffer against lingering Canterbury earthquake claims that have repeatedly surprised the insurer.

3 Things Markets Will be Watching this Week 

  1. We move into the last US corporate profit announcements, with the level of the market making the current earnings season as important as ever.
  2. US Politics, with Tax Reform taking centre stage.
  3. Australian employment data is released on Thursday.

Have a Great Day,

Team

With the quarterly earnings season winding down, the US market has taken a breather after its rally to record highs last week. Interestingly, a survey by Bank of America showed a record number of investors believe equities are overvalued, however cash lev

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