Global markets were mixed overnight, as stocks on Wall Street moved between relatively small gains and losses.
Investors continued to fret about US-China trade tensions and the political impasse in the US which has resulted in a government shutdown. The Dow Jones Index stayed afloat on positive earnings reports from IBM, United Technologies and Procter & Gamble. As we have discussed, the current US corporate earnings season is going to be the key near-term factor in terms of driving markets.
The price of crude oil has tumbled since October last year, after trading at above $70 a barrel, prices are currently sitting at just over $50 a barrel.
Stock in Focus: Z Energy (ZEL:NZX / ZEL:ASX)
There was finally something to cheer about for Z Energy investors yesterday, as the company increased its full-year earnings guidance by more than $15 million due to improved margins following the sharp drop in oil prices late last year.
The country’s biggest fuel retailer said falling crude prices and resulting reduction in pressure on margins will enable it to deliver operating earnings of between $420 million and $450 million for the year ending March 31. This comes as a relief for Z Energy after it has had to lower earnings and cut its dividend payment on the back of headwinds last year of higher crude oil prices and a weaker NZ dollar.
To add to this, there is government scrutiny & regulatory uncertainty, with the Commerce Commission into fuel prices making last year difficult for Z Energy shareholders. While yesterday’s news is positive, we remain cautious, particularly thinking longer term as we believe there is a huge uncertainty around the company imposed by the potential proliferation of electric vehicles.
Members should look out for our full update on Z Energy to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market ended yesterday’s trading session (ASX 200 index -0.26%) with a small loss. In stock news, shares of Challenger plunged 17 per cent after the investment management firm warned shareholders to expect a 97 per cent drop in first-half profit. Harvey Norman shares jumped 4 per cent after a major broker upgraded their recommendation to outperform from neutral. Lithium miner Galaxy Resources lifted its resource estimate in its Western Australian Mt Cattlin Project after drilling suggested a stronger reserve, with estimated to be 42 per cent higher than its previous June 2018 estimate. Lithium is a key ingredient for battles in electric vehicles.
The New Zealand market was a touch lower on Wednesday (NZX 50 index -0.09%) as investors continued to fret about US-China trade tensions and the political impasse in the US. In stock news, logistics and fleet management technology firm Eroad reported a lift in the number of units sold in the third quarter of its financial year, despite the holiday season.
3 Things Markets Will be Watching this Week
- US corporate earnings season continues this week.
- The Bank of Japan makes a policy decision on Wednesday, and the European Central bank will also make a decision on Thursday.
- China releases it 4th quarter economic growth (GDP) numbers on Monday.
Have a Great Day,
