Global markets were lower overnight, as investors await tonight’s US Federal Reserve interest rate decision. It is a massive decision, with likely the first interest rate cut in the US since the 2008 financial crisis.
Closer to home, the Australian sharemarket jumped to a new record high on Tuesday, surpassing the previous milestone it set more than 11½ years ago. The Aussie market is playing catch-up with global peers, as the market has now reached levels it experienced at the height of the mining boom which saw it outperform in the early 2000’s.
Stock in Focus: Telstra (TLS:ASX)
Shares of telecommunications giant Telstra (TLS) have been on a strong run in 2019, despite no significant news flow since our last report where Telstra delivered a weak 2019 interim result and announced it will be cutting its dividend.
Given all the negativity at the time it appeared to be attractively priced, especially in an expensive market with interest rates moving lower and expected to remain lower for longer making Telstra’s somewhat “stable and sustainable” dividend attractive for many income investors.
Positive sentiment has also returned as the market appears optimistic on Telstra’s ability to turn things around from here especially as they react to challenges in the market, cutting costs, reducing debt and becoming a simpler business which would become more profitable. The reduced risk around another large mobile network competitor in TPG Telecom entering the market is also supportive for Telstra.
We currently have a HOLD rating on Telstra.
Members should look out for a full update on Telstra to be released in today’s weekly report.
Australia & New Zealand Market Movers
The Australian market jumped to a record high yesterday (ASX 200 index +0.28%) topping its previous high set on November 1, 2007 at the beginning of the global financial crisis. The market firmed on the back of largely modest gains from a number of index heavyweights while gold miners were also trading firmer.
The New Zealand market added to gains on Tuesday (NZX 50 index +0.25%) boosted by gains in Sky Network Television and Spark New Zealand after they cut a deal that will let the pay-TV operator's commercial customers access the rugby world cup using a Sky decoder. Under the terms of the deal, Sky's commercial customers will be able to access a pop-up channel to access all 48 matches live at a one-off cost. Green Cross Health rose after it said it has had to sacrifice margin to combat increased discounting by “some large foreign retailers,” particularly of the government-mandated charge for prescriptions.
3 Things Markets Will be Watching this Week
- US Corporate earnings season continues this week with major companies such as Apple set to report earnings numbers.
- The big event for the week will be the US Federal Reserve's interest rate decision on Thursday morning (AU/NZ time).
- Important monthly US manufacturing data and employment figures are released at the end of the week.
Have a Great Day,