Global markets traded in a tight range overnight as US investors eased off the pedal with earnings season dying down and the Thanksgiving holiday coming up.
While stock markets continue to remain in a range, both the NZ dollar and Australian dollar have continued to weaken, especially versus the US dollar. The Australian dollar is at a 5-month low versus the USD, while the NZ dollar is at lows not seen since June 2016 against the USD. We have been positive on the outlook for the US dollar for some time now (in particular given our forecast for higher interest rates in the US) and we expect current trends to continue.
Stock in Focus: Metro Performance Glass (MPG:NZ / MPP:AX)
Shares in Metro Performance Glass rebounded +4.5% yesterday after the troubled glass construction company reported its first half financial results.
MPG posted a 2.6% gain in first-half profit to $11.8 million, in line with its guidance last month, and gave a forecast for a little changed full-year result. Sales jumped 22% to $141.7 million, helped by a full six-month contribution from Australian Glass Group, while the NZ side of the business showed a broad-based decline, with the South Island being the main weak spot.
While on the analyst conference call with management yesterday we were not exactly filled with enthusiasm, however the share price reaction illustrates just how much negativity is being reflected in the MPG share price at current levels. It appears as if the market was expecting worse given a number of negative announcements in a row, and there is potentially significant upside if MPG can positively surprise the market, in our view.
Members should look out for a full update on MPG to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market started the week off lower but staged a partial comeback on Monday (ASX 200 index -0.19%) as the major banks and miners pared the worst of their opening losses. Momentum in commodity markets has waned of late after a strong run, although oil & gas stocks were boosted on Monday as the price of crude oil jumped, buoyed by a massive US pipeline leak and news of further production cuts from the oil cartel.
The New Zealand market was higher on Friday (NZX 50 index +0.35%) led by Kathmandu Holdings ahead of its annual meeting while Metro Performance Glass gained on its first-half earnings. In other news, milk producer Synlait said it is in a good position to sell increased amounts of infant formula and other products to China now that it has a new $55 million blending and packaging plant up and running in Auckland.
3 Things Markets Will be Watching this Week
1. The US Federal Reserve Chair makes a speech on Wednesday, with minutes from the last meeting released on Thursday
2. US Politics with Tax Reform taking centre stage.
3. The Reserve Bank of Australia releases minutes from its last meeting on Tuesday
Have a Great Day,
Team