Global markets were lower overnight to start the week, as US investors toned down expectations of an aggressive interest rate cut by the Federal Reserve later this month. US Fed chairman Jerome Powell will testify before Congress on Wednesday and Thursday. In Europe, Deutsche Bank shares continue to tumble as traders weighed a plan by the bank to cut its workforce by one-fifth.
Once again, the upcoming focus will be on quarterly US Corporate earnings season. It will be an interesting earnings season, as investor attention usually shifts back to company profit announcements and it will be interesting to see company comments around trade & with tax cut benefits now rolling off.
Stock in Focus: Summerset (SUM:NZX / SUM:ASX)
Summerset led the NZ market lower yesterday, after reporting a 9.6% decline in second-quarter sales. The retirement village operator tried to allay investor fears, saying the property market was showing signs of stabilising.
Summerset said it sold 141 occupation rights in the three months to June 30, versus 156 in the same period a year earlier. Of those, 65 were new sales while resales numbered 76. In the same period a year earlier, 77 were new sales while 79 were resales.
The downbeat figures also weighed on rival Metlifecare, and there has been negative sentiment around the sector for some time now given the slowing property market. While property market weakness is no doubt a near term headwind, longer term there a still strong tailwinds from an ageing population which will benefit the sector.
We currently have a HOLD rating on SUM.
Members should look out for a full update on SUM to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market sold off on Monday (ASX 200 index -1.17%) as the ASX posted its biggest fall in five weeks. The major miners led the market losses on Monday after the price of iron ore fell heavily. Major banks also weighed the market down, as a major broker downgraded its earnings expectations for the commercial banks on the back of the latest rate cut and warned they would struggle to pass through even a majority of a future cut.
The New Zealand market started the week a touch lower (NZX 50 index -0.09%) in light trading, led lower by Summerset Group after quarterly sales figures kept investors wary about the outlook for retirement stocks. New Zealand Refining rose after saying it was considering installing a 26-megawatt solar electricity generation array alongside the Marsden Point refinery.
3 Things Markets Will be Watching this Week
- US Corporate earnings season kicks off this week.
- US Fed chairman Jerome Powell will testify before Congress on Wednesday and Thursday.
- In Australia, a business confidence survey on Tuesday will give its first report for a full month since the Coalition’s surprise Federal election victory.
Have a Great Day,