Global markets were mixed overnight, and Wall Street looks to be swinging between small gains and losses at the time of writing this report.
In the US, after some initial concerns about the results from Facebook and Microsoft after yesterday's closing bell, the two tech companies paced the sector higher. Facebook was up more than 4% at one point, to reset its record high. Weighing on stocks was a string of lacklustre earnings and after the Federal Reserve raised its inflation outlook for the year.
Equity markets are currently somewhat torn between buoyant economic growth and double-digit company earnings growth on the one hand, and the possibility that US and euro zone central banks will tighten policy faster than expected, which is pushing up interest rates. On the corporate earnings front, market heavyweights Apple, Amazon and Alphabet (Google) are set to release quarterly profit figures this morning.
Stock in Focus: Z Energy (ZE:NZ / ZEL:AX)
Z Energy recently released a brief report on the “The future of Mobility in New Zealand” and are aware of how electric vehicles and the “sharing economy” will likely change how people of New Zealand view transport. They believe they have an opportunity to shape the transport industry with the use of their existing network of infrastructure. Without providing any concrete ideas we remain sceptical as to how this may play out and as of now view the industry change as a major headwind for ZEL – the rise of electric cars remains a large longer-term uncertainty, in our view.
In other recent news flow, Z Energy reported poor operational performance for the 3 months to 31 December 2017 with unexpected supply disruptions and the rise in price of crude oil since September being the major factors driving the downgrade. Z Energy have downgraded their 2018 full year earnings guidance from $445m – $475m, down to a lower range of $430 – $455m.
We currently have a HOLD rating on ZEL.
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Australia & New Zealand Market Movers
The Australian share market was higher on Thursday (ASX 200 index +0.25%) as shares started the new month on an upbeat note, with investors looking ahead to an upcoming earnings season to deliver some solid corporate results. Market commentators have pointed out that the general lack of companies telling the market to prepare for bad news ahead of earnings season has been notable. The ASX shrugged off a lacklustre lead from Wall Street where stocks flattened after the US Federal Reserve signalled it remains on track to boost interest rates again in March. Returns were led by the banks and miners as well as consumer discretionary stocks.
The New Zealand market was lower yesterday (NZX 50 index +1.73%) as shares fell on the first day of the month in a muted trading session after institutional investors staked out positions yesterday. Contact Energy and Summerset Group Holdings led the declines. In stock news, Pacific Edge shares rose 12% to 43 cents after the cancer diagnostics firm signed its first commercial deal to supply its suite of Cxbladder tests in Singapore.
3 Things Markets Will be Watching this Week
1. US earnings season gets into full swing – with a particular focus on company comments around the impact of US tax cuts.
2. The US Federal Reserve makes and interest rate decision Thursday morning (AU/NZ time).
3. Australian Inflation data is published Wednesday.
Have a Great Day,
Team