Aussie Political Turmoil | Tech Stocks Lead ASX

26 August 2018

Global markets retraced overnight as trade-sensitive stocks were hit by a fresh round of tariffs in the ongoing trade dispute between the US and China.
Closer to home, political instability pushed the Australian share market to its lowest level in three weeks. Markets do not generally respond well to uncertainty and investors were remaining cautious amid the political turmoil in Canberra, with the prospect of a change of government growing increasingly likely. The most vulnerable sectors on the market are the finance and utilities sectors, who face an uncertain regulatory future under a new government.
Once again there were big moves yesterday in both directions as investors digested profit releases from the likes of airlines Air New Zealand and Qantas who pointed to rising fuel costs muting their profit outlook. We have highlighted key announcements below, with full updates on stocks to be released in our weekly report.
Stock on Focus: WiseTech Global (WTC:AX)
There have been some extreme moves across technology stocks which rose for another session as a slew of positive results from the sector caused a short squeeze.

The standout has been software as a service company Wisetech Global which surged another +19% yesterday, following a 27% jump the prior day. Wisetech reported a 44% jump in revenue to $221.6 million for the 2018 financial year, coming in ahead of its own guidance. The company also announced it was forecasting similar growth for 2019, further surprising us and the market.
We currently have a HOLD recommendation on Wisetech.
Members should look out for a full update on Wisetech to be released in our weekly report.

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Australia & New Zealand Market Movers
The Australian share market sold off again yesterday (ASX 200 index -0.34%) amidst political uncertainty and as we move through corporate earnings season. The Australian dollar took a dive on the back of the political news out of Canberra. In stock news, Qantas flagged an 18% rise in fuel prices in their results, sending its shares lower. Chief executive Alan Joyce allayed some investor fears though, saying that the airline would be able to largely absorb the rising cost.

The New Zealand market lost ground on Thursday (NZX 50 index -0.25%) as investors continued to digest company announcements.

Leading the index lower was Air New Zealand as It lifted earnings 2.5% to $540 million despite significantly higher fuel prices. In saying that, the airline is slightly more downbeat about the current financial year as those largely uncontrollable costs continue to push higher. Ebos was flat as it released an in-line with expectations result – as the pharmaceutical and animal health products company boosted annual underlying earnings +10.3%. Fisher & Paykel Healthcare shares hit an all-time high as It raised its full-year earnings forecast by about $5 million on the back of strong sales growth and the weaker New Zealand dollar. New Zealand Refining Group gained as it maintained a dividend despite a large amount of one-off costs (albeit a lower one) with an outlook which was also quite buoyant. Auckland Airport edged higher as It lifted underlying profit 6.2% to $263.1 million in 2018 and expects further uplift in 2019 as it spends more on redevelopment.


3 Things Markets Will be Watching this Week

1.             Locally, investors in Australia and NZ will have a number of profit announcements to focus on as earnings season continues.

2.             RBA Governor Lowe makes a speech on Tuesday, with minutes from the last Reserve Bank of Australia meeting released on the same day.

3.             The annual Jackson Hole meeting of global central bankers kicks off on the weekend.


Have a Great Day,


Global markets retraced overnight as trade-sensitive stocks were hit by a fresh round of tariffs in the ongoing trade dispute between the US and China.

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