Global markets were mixed on overnight, as US Markets (S&P 500 Index, -0.7%) traded lower, as US growth stocks took a hit ahead of the Fed decision later this week.
The Hong Kong market experienced its worst day since the global financial crisis in 2009 as HK’s covid-19 outbreak escalated with record high case numbers and deaths. A Covid-19 outbreak in China spurred concerns that extensive lockdown restrictions would put added strains on already encumbered supply chain woes – with the entire province of Jilin (population 24m) in North East China and Shenzhen (population 17.5m), a large manufacturing hub for the tech industry in lockdowns.
Chinese market was down -3% and the largest China Tech ETF in the US has wiped out 9 years of gains, with massive declines about 28% over the past three days. Chines stocks have fallen out of favour, following geopolitics, rising interest rates, slowing economic growth, and regulatory uncertainty.
Companies’ exposed to Chinese manufacturing were hit hard especially chipmakers Apple (-2.6%), Nike (-4.1%), Shopify (-5.9%), Nvidia (-3.5%), Intel (-3.1%) and Qualcomm (7.2%). The
European Markets closed higher (Stoxx 600, +1.2%) overnight on hopes of a diplomatic solution to the war in Ukraine. Talks are taking place again in a bid to establish a solid ceasefire immediate withdrawal of troops and security guarantees to find room for any compromise between Russia and Ukraine’s demands, although previous discussions have ended in failure.
Elders (ELD:ASX)
Elders shares stormed up +11% yesterday reaching a new decade high after releasing a positive trading update. Elders revealed that it expects its underlying earnings before interest tax (EBIT) to increase 20% to 30% the 2022 financial year, driven by improved retail and wholesale segments compared to the previous year thanks to favourable seasonal condition in most parts of Australia. Management notes that this outlook exceeds the market expectations based on the mid-point of the earnings expectations of analysts covering the company.
Elders’ Managing Director and CEO, Mark Allison, commented: “Elders’ performance so far in our financial year 2022 has been strong and exceeds our performance after the first five months of FY21. After finalisation of the February trading numbers, which continue improved earnings for the first quarter, we now believe we will exceed analysts’ consensus for the full year to 30 September 2022 and produce an Underlying EBIT result in the range – which is necessarily broad given we are only five months into our financial year.”
We remain BUY rated on Elders.
Australia & New Zealand Market Movers
The Australian market was up yesterday (ASX200 index, +1.2%) as most sectors traded higher.
Financials were the best performing sector with strong gains across the major banks, while Magellan slipped -1.4% after suffering around round of net outflows losing another $5billion over the last 2 weeks. Materials was the only sector to trade lower, with gold miners losing their shine as the price of the precious metal fell -0.4%.
Virtus Health jumped +7.5%after accepting a $706m takeover bid from CapVest.
Costa group rose +4% following Elder’s lead and a broker upgrade.
The New Zealand market was down on Monday (NZX 50 index, -0.1%) on a generally weak day.
Travel stocks managed to buck the trend and perform well on the day on news the government will announce on Wednesday changes to boarder rules, reopening dates could be brought forward.
Tourism Holdings led the market up +5.3%, while Auckland International Airport (+0.70%) and Sky City(+0.4%) also edged higher.
Z Energy rose +1.1%, after new Ampol sold its NZ Gull service station network to a private equity buyer, to ease the path for its acquisition of Z Energy.
3 Things Markets will be Watching this Week
- Geopolitical risks remain extremely elevated with the Russia/Ukraine conflict.
- Highlights this week include the US Fed interest rate meeting, Bank of England and Bank of Japan rate calls, inflation data from the Eurozone, and Chinese retail sales, industrial production, and fixed assets investment.
- Locally, NZ fourth quarter GDP results, and Australia’s employment data.