Global markets moved between gains and losses overnight as investors digested US President Trump's plan to cut taxes. Investors parsed the details for winners and losers, but given traders don't expect the bill to materialise in its current form, the overall market reaction was muted.
Corporate earnings season continues in the US, and Facebook shares dipped after earnings disappointed, weighing on tech shares before Apple reports later on Friday. Once again given the high level of the market the current US earnings season as important as ever in terms of supporting company share price valuations.
In other news, the pound slumped and after the Bank of England indicated its first rate hike in a decade might be the last for a while. The BoE raised interest rates for the first time in more than 10 years and said it expected only "very gradual" further increases over the next three years.
Stock in Focus: NZ King Salmon (NZK:NZ / NZK:AX)
New Zealand King Salmon shares rose 4.9% to a record high of $2.38 after the fish farmer raised its 2018 earnings guidance, saying it expects to lift volumes while maintaining prices and improving production.
The shares were sold in the initial public offering in September 2016 at $1.12 a share, and have gained 78% this year. NZK have raised operating earnings guidance to $24.5m – $26m for the 2018 financial year as a number of factors have moved in NZK’s favour (low cost of goods sold and higher prices on the back of having a premium product). The announcement is encouraging and puts the company well ahead of its prospectus forecasts, however at the current juncture we believe the stock is fairly priced.
We are currently HOLD rated on NZK. Members can read our recent initiation of coverage piece on NZK.
Australia & New Zealand Market Movers
The Australian share market retraced yesterday (ASX 200 index -0.10%) with the benchmark index ending the session in the red as losses from the banking sector offset more gains from miners and energy companies. Baking heavyweight NAB weighed on the market after it posted a slight increase in full-year net profit while revealing that it intends to cut 6,000 jobs as part of a digital transformation strategy that will see it invest $1.5 billion. The headline numbers were broadly in-line with expectations and analysts have pointed out that much will depends on how the market views taking short term pain on cost growth for long term gain.
The New Zealand market was higher on Thursday (NZX 50 index +0.36%) following A2 Milk's recovery upwards, with Synlait Milk and Comvita also bouncing while Metro Performance Glass continued its downward trajectory. The downside continued for Metro Glass to a record low. MPG announced that its North Island general manager Dean Brown will be leaving the company with effect from Dec. 7 to pursue other opportunities.
3 Things Markets Will be Watching this Week
1. Quarterly US corporate profit announcements, with the level of the market making the current earnings season as important as ever.
2. The US Federal Reserve has a meeting this week and Donald Trump is expected to make a decision as to who is the next Fed Chair.
3. Monthly US employment data is released at the end of the week.
Have a Great Day,
Team
