Australian & New Zealand Market Movers
The New Zealand market (NZX 50 Index, -0.2%) feel marginally on Friday. However, its rally on Tuesday and Wednesday meant that the market closed higher for the week (+0.3%), ending 3 straight weeks of losses.
The Australian market (ASX 200 Index, -0.8%) fell on Friday but still managed to seal their best week (+4.5%) in 2 years thanks to the Energy sector (+1.0%) and the seemingly dovish pivot from the Reserve Bank of Australia.
Even with a dovish pivot, rate hike-sensitive Real Estate (-2.0%) and Technolgy (-1.8%) stocks were the worst performers on Friday.
Crude Oil (+5.4%) continued its surge on Friday, eventually closing +17.3% higher for the week. In response, Whitehaven Coal (+4.8%) booked a similar gain and recorded a new record high.
Europe and US Market Movers
European markets (Stoxx 600 Index, -1.2%) dropped on Friday, led lower by a rout in Technology stocks (-4.3%).
US markets (S&P 500 Index -2.8%) were hit hard by jobs data on Friday that showed that the US unemployment rate fell from 3.7% to 3.5%, and economy added 263K jobs in September.
The declining unemployment rate triggered a rise in bonds, as it reinforced bets the Federal Reserve will maintain its aggressive tightening. The 2 and 10-year Treasury yields rose 6 basis points each, while the US dollar index (+0.5%) rose on the back of declines in the NZ dollar (-0.8%), Australian dollar (-0.7%), pound (-0.6%), and euro (-0.6%).
All US sectors ended the day in the red, led by Technology (-4.1%) or Consumer Discretionary (-3.5%). One of the largest stocks that comprise the former, AMD (-13.9%), tumbled after it warned its Q3 revenue would be ~$1 billion lower than anticipated. Sector compatriots, Nvidia (-8.0%), Intel (-5.4%), Qualcomm (-3.5%) were all caught up in the selloff in chip stocks.
Xero (XRO: ASX)
Caught up in the ASX tech selloff on Friday, Xero (-3.5%) saw its stock price fall to AU $76.57. Yet, the stock still registered an impressive +7.9% gain for the week. While Xero is contending with an environment where central bank rate hikes will continue until at least next year, its stock price is perhaps buoyed by the US moving to digitise tax returns for small businesses. The way some investors see it, Xero will be primed to benefit from such a situation, much like they did in Australia and New Zealand.
We are still encouraged by Xero still achieving its high growth objectives. Its large total addressable market is a major reason we are still BUY rated with a high-risk caveat given the volatility surrounding technology shares. We believe this is an opportune time to add a small position at current levels for a medium-term view but be wary of further near-term downside risk in a highly volatile market
What Markets will be Watching this Week (UTC +13)
Monday
US NFIB Small Business Optimism
Tuesday
AU Westpac Consumer Confidence Index OCT
AU NAB Business Confidence SEP
Wednesday
GB BoE Gov Bailey Speech
Thursday
US PPI MoM SEP
US FOMC Minutes
NZ Food Inflation YoY SEP
Friday
US Inflation Rate YoY SEP
NZ Business NZ PMI SEP