Global markets were mixed overnight, with a number of market indices down, while the US S&P 500 index and Nadaq Tech index were slightly higher as a strong forecast from IBM added to optimism over earnings. Investors took heart from measures to curb the spread of a flu-like virus from China, while oil prices tumbled on a forecast for a market surplus
Stocks markets across Asia bounced back somewhat from prior sell off, when investors fretted over the threat of the coronavirus outbreak and whether it would sap international travel during the Lunar New Year
Both the Australian and New Zealand markets rallied to all-time highs yesterday, as Investors are embracing share markets as they hunt for higher returns as interest rates remain at record lows.
Stock in Focus: Infratil (IFT:NZX / IFT:ASX)
IFT shares have continues to climb higher, surging to new highs after announcing the valuation of its Canberra Data Centres (CDC) increased significantly, up +65% in less than a year.
Infratil’s investment into Canberra Data Centres (CDC) were recently valued at A$1,274m to A$1,604m (NZ$1,326m to NZ$1,668m) as at 31 December 2019, reflecting the completion of additional capacity and favourable refinancing ensuring additional funding to complete further development. This in response to continual growth in demand for services provided by datacentres as expansions of data creation and requirement for reliable storage grows. Accordingly Infratil’s 2020 financial year run rate operating earnings from CDC is expected to be between $135m to $145m, up +55% from last year.
We maintain our BUY rating on IFT as we believe there are strong tailwinds and growth potential for many of IFT’s businesses – with the Vodafone acquisition boosting overall group earnings and supplementing cashflow to reinvest into its data centre business and other medium-term growth projects.
We currently have a BUY rating on IFT.
Members should look out for a full update on IFT to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market rebounded on Wednesday (ASX 200 index +0.94%) to notch a new record high. The rally was driven by blue chips and miners as investors positioned for the upcoming earnings season.
Retailers were notably strong, with Woolworths, Coles and Wesfarmers making solid gains – German retailer Kaufland is pulling out of Australia only two years after buying its first store site and six months after starting work on its first distribution centre. One of the strongest performers on Wednesday was iron ore miner Fortescue Metals Group, which rallied 5%, with investors expecting a strong result and dividend. Iron ore peer Rio Tinto jumped to $107.38 for its highest close since 2008.
Travel-related companies came under selling pressure once again , with airline Qantas, Sydney Airport, and Flight Centre in the red after the US confirmed a case of coronavirus.
The New Zealand market rallied yesterday (NZX 50 index +0.72%) as the NZX 50 Index rose to a fresh record high as investor confidence recovered from yesterday's fears over the outbreak of coronavirus in China. A2 Milk led gains, up just over 4%. Investors remained nervous about stocks with direct exposure to the tourism sector, such as Air NZ and Tourism Holdings. Outside the benchmark index, New Zealand King Salmon increased as it said it has encountered more opposition to planned ocean farming than it anticipated, but is still confident of securing resource consent. It was another disappointing quarterly update from Z Energy yesterday with petrol volumes below expectations.
3 Things Markets Will be Watching this Week
- US Earnings season is underway with companies reporting 4th quarter 2019 profit results.
- The European Central Bank has a meeting on Thursday.
- Australian employment data is also published on Thursday.
Have a Great Day,
