ASX Soars Most Since May | Z Update

19 December 2019

Global markets rallied overnight as Wall Street hit record highs for the third straight session, as upbeat domestic data from China and cooling trade tensions between Washington and Beijing improved investor outlook on global economic growth.

Separately, ​US Trump Administration official ​Larry Kudlow said he would visit Britain in early January for economic and trade talks following the victory of British Prime Minister Boris Johnson's Conservative Party in last Thursday's election.

Stock in Focus: Z Energy (ZEL:NZX / ZEL:ASX)

As we touched on yesterday, the tough times for Z Energy continue as its shares were hammered on another profit warning. 

​The transport fuels retailer downgraded its earnings outlook and said it would pay a smaller dividend as its retail margins remained under pressure in an increasingly competitive market. At the same time, refining margins were skinnier.

While "value" may be emerging, we continue to believe there are too many headwinds at play, predominately increased competition in a flat market which is likely under some near-term uncertainty given its sensitivity to economic growth​. Given its recent track record, we believe investors will need to see signs of stabilisation before investor confidence potentially returns.​

​W​e remain cautious and would like to see an improvement in market fundamentals ​before changing our view.​​

We currently have a HOLD rating on ZEL.
Members should look out for a full update on ZEL to be released in our weekly report.

Australia & New Zealand Market Movers

​The Australian market surged yesterday (ASX 200 index +1.63%) with the ASX recording its best session since the federal election in mid-May. ​In stock news, ​Woolworths has been given the go-ahead ​from shareholders to restructure its $10 billion hotels, liquor and gaming businesses ahead of a planned demerger and likely spin-off in late 2020. Buy now, pay later provider and Afterpay rival Openpay failed to shine on its market debut on Monday, dropping 17​% as the rest of the market soared on positive news from the US-China trade war.

The New Zealand market was a touch lower on Monday (NZX 50 index -0.13%) as trading ended early as the stock market operator dealt with connectivity issues. Auckland International Airport ​shares were lower as the ​airport operator’s monthly traffic update showed a 1.1​%​ decline in October from a year earlier, with fewer international and domestic passengers.


3 Things Markets Will be Watching this Week

  1. ​​​US 3rd quarter economic growth (GDP) data is published.
  2. ​Minutes from ​the latest Reserve Bank of Australia meeting will be released.
  3. NZ 3rd quarter GDP will also be released.  


Have a Great Day,


​The Australian market surged yesterday (ASX 200 index +1.63%) with the ASX recording its best session since the federal election in mid-May.

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