Global markets were mixed overnight with the US market (S&P 500 +3.4%) adding to its rally as Bernie Sanders dropped out from the Presidential race -the market saw political and economic concerns from his far left policies.
Gains were experienced across all sectors, especially energy on hopes that oil prices could see some relief if an OPEC production cut could be agreed upon.
Infratil (IFT:NZX / IFT:AX)
Infratil (IFT) shares rose +7% yesterday after delivering well received earnings guidance of $550m and $560m for the 2020 financial year.
Wellington International Airport, which is owned by Infratil was in discussions with banks and its equity holders about a capital raise, but Infratil believes it might not be required as they anticipate a recovery to near-normal domestic passenger numbers as well as a partial revival of trans-tasman flights by the start of next year. However, their Retire Australia business is exposed to significant risks from covid-19, which could impact cash flow and profitability if it continues to linger on for a prolonged period of time, largely impacting resales.
Most of Infratil's other businesses are tracking on well and are able weather the covid-19 crisis and are cushioned from an extended economic downturns given their defensive nature.
We are currently BUY rated on IFT
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Australia & New Zealand Market Movers
The Australian market (ASX 200 -0.9%) closed lower again yesterday as investors traded cautiously heading into the long weekend. The banking sector was hit hard again after the Australian Prudential Regulation Authority told banks to "limit discretionary capital distributions" and consider "prudent reductions in dividends", echoing similar orders made by financial regulators across the globe.
Treasury Wine Estates announced its intention to look at spinning off its Penfolds business into a separate ASX-listed company by the end of 2021. The new company would be worth about $10 billion and would allow Treasury to focus on other brands.
The NZ market was higher yesterday (NZX 50 +2.3%), with the index breaking above the 10,000 mark again, with the market now almost flat from where it was 12 months ago.
Metlifecare shares slumped -17.4% yesterday after announcing that the European buy-out firm EQT was backing out of the $1.49 billion takeover, executing their right to terminate the purchase agreement stating covid-19 is a "Material adverse Change". Metlifecare is taking legal advice to challenge the cancellation.
3 Things Markets Will be Watching this Week
- Coronavirus related news-flow remains key in terms of market moves.
- Measures by central banks & governments globally in response to coronavirus.
- Capital raising announcements by companies are growing as companies ask for cash from investors in this uncertain period.
Have a Great Day,
