Global markets were lower overnight, with US markets (S&P500 -0.9%) pulling back from fresh highs as investors remain in wait & see mode ahead of a number of central bank meetings, including the US Fed which will make an announcement on Wednesday.
Re-opening plays like airlines and cruse liners were hit hard in the session, as new variant covid cases spread across Europe, heightening the of risk of further lockdowns and travel restrictions.
Moderna shares rose +5.8% after the White house top infectious disease expert Dr Fauci called covid booster shots “optimal care”. Israeli researchers at the Sheba Medical Center and the Health Ministry’s Central Virology Laboratory concluded on Saturday that the three-shot course of the Pfizer-BioNTech Covid-19 vaccine was effective against the new omicron variant. Pfizer rose +4.6%, also announcing it agreed to buy competing Biopharmaceutical company Arena Pharmaceuticals.
European Markets (Stoxx 600 index -0.4%) started the week lower heading into a busy week of central bank policy decisions, while UK reporting its first omicron death which enhanced covid related concerns.
It is set to be an important week for monetary policy with the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank all due to make decisions this week. With inflation running hot across the globe, there is expectations that central banks are likely to accelerate their bond tapering and signal earlier than foreseen interest rate hikes.
G8 Education (GEM:ASX)
Early childhood education business G8 Education shares edged higher (+0.5%) after providing a trading update, as management said they expect 2021 full year operating earnings (EBIT) to come to $76m, and operating net profit after tax of $43m. Occupancy rates for the year were up +1.7% from last year, and closed the gap with 2019, down -2.1% from that period.
We remain BUY rated on G8 Education with a high-risk caveat, as it returns to more normalised operating conditions, following the recent easing in lockdown restrictions and we see the stock as attractively priced at current levels.
Australia & New Zealand Market Movers
The Australian market was up on Monday (ASX 200 index +0.4%) after a strong lead from Wall Street, and a day full of deals.
CSL confirmed with was in discussion with Vifor Pharma about a potential transaction, but stated it was still uncertain if and when the deal could be completed.
Ramsay Healthcare slipped -0.9% after agreeing to buy UK based mental healthcare provider Elysium Healthcare.
Origin Energy rose +1% after flagging a potential further investment of up to $185m in energy retail and technology company Octopus Energy.
Senex Energy rose +2.9% after Korean steelmaker Posco agreed to buy out the company for $4.60 per share.
Charter Hall rose +5.6% after the property and fund manager announced it will book a $3.5 billion valuation boost for the end of December and upgraded its earnings guidance for the 2022 financial year.
The New Zealand market was up yesterday (NZX 50 index +1.1%) as US inflation numbers released over the weekend came in not as hot as expected buoying local equity markets, as well as a late surge on the back of KiwiSaver fund flows.
Property and retirement village operators were stronger, added by REINZ's national median selling house price hitting a new record high of $925,000 in November, up +24% year on year.
Vista Group jumped +7.6%, while Tourism holding rose +4% to lead the market higher on the back of its propsed acquisition of Apollo Tourism.
3 Things Markets will be Watching this Week
- A busy week ahead with an interest rate decision from the US Federal Reserve, European Central Bank and Bank of England. Inflation data from the Eurozone and UK, and a raft of housing data from the US.
- Locally, Australia’s employment data and NZ‘s third quarter GDP.
- AGM’s held by Westpac, ANZ, NAB and Nufarm.