Global markets were mixed on Friday with the US Technology sector being hit hard. Shares in the world’s Biggest Tech stocks (Facebook, Apple, Amazon, Netflix & Google) all reversed course sharply after previously hitting record highs. It should be kept in mind that the Tech sector has been by far the strongest performer in 2017, and the pullback looks to have come on the back of profit taking and market concerns that the stocks may be overvalued.
Over the weekend the major news was that the snap election in the UK resulted in a hung parliament. Theresa May called the election to give herself a greater mandate in negotiating Brexit, but the result has been described as a clear indication of opposition from those who had voted to remain in the European Union.
Unless the election result translates into broader investor uncertainty, it is unlikely to have a meaningful impact on Australian and NZ stocks in our view. As with Brexit, there may be certain stocks which may be effected more than others, such as exporters to the UK, and companies effected by movements in the British Pound (GBP).
Australian & NZ Model Portfolios Beat Market Once Again in May
Both ’s model portfolio performed significantly better than the broader market in May.
The NZ Model Portfolio gained 1.9% in May (versus NZX 50 index 0.5%) taking the portfolio to a total return of +43% since September 2015.
At the same time the AU Model Portfolio fell -1.7% in May (versus ASX 200 index -3.4%) taking the portfolio to a total return of +23% since September 2015.
Key performers for the month were Xero, Air New Zealand, Sydney Airport, and Elders. At the same time, Myer, Select Harvest, Fletcher Building and Tegel weighed on overall returns.
Looking forward, we remain confident in our key investment themes such as Agriculture and a Tourism boom, with our portfolios positioned accordingly. Members can login below to view the Model Portfolios and read the full reports on stocks mentioned above.
Australia & New Zealand Market Movers
The Australian share market was essentially flat on Friday (ASX 200 index +0.02%) ending what was the worst week of 2017 for the ASX. In stock news, Ardent Leisure said visitor numbers and revenue at theme parks picked up last month but both are still down by more than a third on the same time last year.
The New Zealand market sold off on Friday (NZX 50 index -0.30%) as investors went into a holding pattern following the UK general election, with Comvita, Xero and Auckland International Airport declining. At the same time Fletcher Building shares experienced a relief rally to be the top performing stock on Friday.
3 Things Markets Will be Watching this Week
1. The US Federal Reserve makes an interest rate decision on Thursday morning AU/NZ time.
2. NZ quarterly economic growth (GDP) figures are released on Thursday.
3. How the US Technology sector trades following the sharp correction last Friday.
Have a Great Day,
Team
