Global markets were once again higher overnight, as major Wall Street indices hit new record levels with Boeing rising and bank stocks gaining ahead of a near certain move by the Federal Reserve to raise interest rates. The Fed will make its announcement tomorrow morning AU/NZ time.
Closer to home, activity yesterday was dominated by deal news, including ANZ, and the announcement that Westfield will be sold in a giant $32bn deal, making it Australia’s biggest takeover.
Stock in Focus: ANZ Bank (ANZ:NZ / ANZ:AX)
ANZ shares rose 1.1% yesterday with the banking group announcing that it will sell its life insurance business to the Australian arm of Switzerland's Zurich for $2.85 billion.
The move continues the recent trend of ANZ as it shifts its focus back to core banking operations. As discussed in the past, we welcome ANZ’s restructure which aims to reduce both operating costs and risks by removing complexity and exiting low return non-core businesses.
ANZ has been our preferred pick of the big 4 Aussie Banks, in part because of its strong capital position and the prospect of return of capital to shareholders. Special dividends or share buybacks would be obvious choices for ANZ to use its excess cash proceeds from the sale of non-core businesses, in our view.
Australia & New Zealand Market Movers
The Australian share market made gains on Tuesday (ASX 200 index +0.25%) as higher commodity prices and deal speculation in the property sector pushed the ASX to gains on Tuesday, with the benchmark closing firmly over the 6000 level. Resource stocks were well supported, particularly as the oil price and copper moved higher.
The property sector took centre stage on Tuesday, after mall giant Westfield halted trading in its shares and told investors that it has received a take-over offer from European giant Unibail-Rodamco in what would be Australia’s biggest takeover. The offer is at $10.01 a share (a 17% premium to the last traded share price) and is worth circa $32bn.
The New Zealand market was in positive territory yesterday (NZX 50 index +0.04%) as Xero dropped ahead of its departure from the benchmark index and Metlifecare led retirement stocks lower, while Sky Network Television and Fisher & Paykel Healthcare rose. Xero is set to leave the NZX 50 market index on Friday, and make way for company’s such as Pushpay. Ryman Healthcare fell 0.5% percent to $10.30, as it announced it has bought land for a new site in Wellington.
3 Things Markets Will be Watching this Week
1. The US Federal Reserve makes an interest rate decision on Thursday morning AU/NZ time.
2. The European Central Bank also makes a post meeting announcement on Friday.
3. Australian employment figures are released Thursday.
Have a Great Day,
Team