Choppy Session, EV Stocks | Aristocrat Dips

19 November 2021

Global markets were volatile overnight, but the US market (S&P 500 index +0.3%) closed higher in  a choppy session. 

There were mixed market moves as company earnings continue to show strength and drive gains. Chipmaker Nvidia saw its shares surge 8.3% after the company reported beats on the top line revenue and bottom line profit and issued a bullish revenue forecast for the current quarter ending in January. The news saw other chipmakers to trade higher such as Qualcomm (+1%) and Micron Technology (+2%).

Technology mega-caps like Amazon (+3.2%) were in favour overnight, while more speculative stocks like electric vehicle developers Rivian (-15.5%) and Lucid (-14.4%) took a breather. Interestingly, Apple (+2.5%) is reportedly aiming for a fully-autonomous electric vehicle as soon as 2025.

European Markets (Stoxx 600 index -0.6%) dipped as investors cite concerns over inflation outlook in the region, and there was weakness in oil and metals prices that weighed heavily on commodity stocks.

Aristocrat (ALL:ASX)

Aristocrat Leisure shares fell -3.6% yesterday. This is despite the gaming technology company releasing a strong 2021 full-year result. Aristocrat delivered a +14.4% increase in revenue to $4.7 billion and an 81% lift in normalised net profit (NPATA) to $864.7m – this result was partially flagged earlier.

What looks to have weighed down on sentiment was a warning that Aristocrat’s takeover target, UK listed Playtech, is facing competition with a third suitor eyeing up making a competing offer.

We remain BUY rated on Aristocrat, and are "buyers on this price dip".


Australia & New Zealand Market Movers

The Australian market was down on Thursday (ASX 200 index -0.1%) as gains for healthcare, tech and consumer-facing sectors offset falls among energy plays and another sell off session across the big banks.

CBA fell another -1.6%, following a heavy loss on Wednesday after reporting a weak result, likewise its big 4 banking peers were also down. Energy stocks were lower as brent crude slipped below $80 per barrel as producers look to increase supply.

Treasury Wines rose +2.6% after announcing it has agreed to acquire Napa Valley’s Frank Family Vineyards for around $432m – it’s expected to fill a luxury chardonnay-sized hole in Treasury Americas’ portfolio.

The New Zealand market was down on Thursday (NZX 50 index -0.3%) following the Reserve Banks survey that showed inflations expectations for the next two years have jumped to just under 3%

This time property stocks were hit harder as they are most affected by higher interest rates, Investore Property leading the sector lower down -2.6%, while most gentailers and retirement villages were also weaker. 

Meridian Energy's Australian business sale process is nearing a conclusion with a sizable special dividend a possible outcome for shareholders.


3 Things Markets will be Watching this Week

  1. Key events this week include CPI (Inflation) and employment data across the Eurozone and UK, and third quarter GDP in Europe.
  2. A raft of US housing market data is due along with retail sales and a data dump in China (retail sales, IP and fixed assets investment).
  3. Locally, CBA will release its first quarter result, AGM’s and Investor days held by  Aristocrat, Incitec Pivot, Ryman Healthcare, Afterpay, Seek, a2Milk, BlueScope Steel, Goodman Group, Resmed, Wisetech and Next DC.
Global markets were volatile overnight, but the US market (S&P 500 index +0.3%) closed higher in  a choppy session. 

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