Global markets were mixed overnight (S&P 500 index -0.85%) as all three major Wall street indices sold-off into the close of trade. There wasn't much news to drive markets as oil prices weakened, and US housing data came in softer than anticipated.
US housing starts for the month of April fell -9.5% on the previous month, possibly linked towards rising prices of lumber, other materials and labour. This overshadowed strong earnings result from Walmart (+2.4%) and Home Depot (-0.7%). Most of the cyclical sectors led losses with Energy down -2.6% followed by Industrial's down -1.5%, while only the defensive healthcare and real estate sectors ended in the green.
Major European markets were mixed (Stoxx 600 +0.2%) as stocks generally trading higher as global sentiment improves, with travel and leisure leading gains up +1.6%, while telecoms dropped -1.2% on the back of post earnings falls for Iliad and Vodafone.
James Hardie (JHX:ASX)
James Hardie (JHX) shares fell -4.5% yesterday, despite releasing a solid fourth quarter and full year result for the 2021 financial year – as expectations were high given the recent share price run.
Fourth quarter global sales grew +20% to US$807m and adjusted earnings (EBIT) jumped +43% to $173.1m, with double digit revenue and earnings growth across all regions. Looking ahead, Jame Hardie expects net operating income for 2022 to be between US$520m and US$570m, a 13.5% to 24.5% increase, but with margin expansion to continue through to 2024. The market is citing cost inflation concerns and many believe James Hardie may miss earnings guidance, although demand is likely to remain supportive.
We continue to remain BUY rated on James Hardie given from a macroeconomic point of view we feel comfortable that the construction boom globally will continue over the medium-term.
Australia & New Zealand Market Movers
The Australian market ended higher yesterday (ASX 200 index +0.6%), as commodity plays led the market higher.
Gold miners reported some of the strongest gains in the day following the continued rally in precious metals, with Perseus Mining jumping +4.3%, Oz Minerals up +6.4% and Evolution mining up 4.9%.
Gains were also experienced for major miners and energy sector as most commodities edged higher on inflation concerns.
Tech shares were generally higher higher, with Aristocrat shares up another 3.5% reaching record highs as it fully recovers from its pandemic slump.
The New Zealand market rose slightly on Tuesday (NZX 50 index +0.2%) as investors await promising results for the upcoming earnings season.
Travel booking software developer Serko jumped +4.9% ahead of its result today, as well as Argosy Property +4.7%, Oceania Healthcare was also up strongly +3.8% ahead of its result on Friday – the later two stocks being benefactors of a buoyant property market..
A2 Milk continues to lead the market lower falling another -3.5% as it struggles to find a bottom.
3 Things Markets will be Watching this Week
- Key events this week include the latest US Federal Reserve minutes, US housing starts and existing home sales, Inflation prints across Europe, PMI data across much of the globe and a dump of Chinese data on Monday including Industrial Production and Retail sales.
- This week 20 S&P 500 companies are due to report along with some of China’s largest companies and a few large international companies including Walmart, Home Depot, Lowe’s, Target, VF Corp, Ralph Lauren, Cisco, Applied Material, Tencent, JD.com, Baidu Inc, Vodafone and Porsche SE.
- Locally, the latest employment data in Australia is due along with earnings releases from Incitec Pivot, Trustpower, James Hardie, Kiwi Property, Webjet, Infratil, Serko, Ryman Helathcare, Aristocrat, My Food Bag and Oceania Healthcare.