Global markets were little changed overnight and traded in a narrow band. Investors remain focussed on quarterly profit reports especially as the market has been counting on earnings to support the relatively high valuations for equities.
Overnight on Wall Street there was some profit taking on Apple, while Tesla shares jumped +6.5% following the release of their quarterly result which defied the expectations of many in the market. Over the weekend monthly employment figures (US Payrolls) will be watched closely, especially in terms of implications for the US Federal Reserve’s interest rate track.
Stock in Focus: Select Harvests (SHV.AX)
Almond producer Select Harvest saw its shares fall 13 per cent yesterday after the company warned that it now expects full year 2017 profit to come in between $7.5 million to $8.5 million.
The reason for the downgrade was increased costs, currency movements (a higher Australian dollar is bad for SHV), and high rents for its orchards. Select Harvest shares have now fallen significantly over 2017 as investors worry about falling almond prices after a record-breaking drought in the almond growing centres of California came to an abrupt end in 2016.
The group’s managing director commented that the “fundamentals of our business are positive and we expect strong growth over the next eight years as our orchards mature”. Select Harvests will report its full-year results on August 25.
We currently have a High-Risk BUY rating SHV.
Members should look out for a full update on SHV to be released in our next weekly report.
Australia & New Zealand Market Movers
The Australian share market closed lower on Thursday (ASX 200 index -0.16%) as investors took profits, especially in the mining sector and among major oil stocks, and a disappointing earnings report from Suncorp weighed on insurance stocks. Banking and insurance giant Suncorp released a full-year result that was lower than brokers had been expecting. The company posted a 4 per cent increase in net profit to $1.07 billion. Investors were unimpressed and sent the stock tumbling 6.4 percent.
The New Zealand market was slightly higher yesterday (NZX 50 index +0.07%) with retailers Kathmandu Holdings and Briscoe Group gaining on positive earnings, while Xero hit a new high. Kathmandu Holdings said full-year profit rose as much as 13 percent after a successful winter sales season and increased revenue from Australia. Profit was between $37.4 million and $38 million in the 12 months ended July 31, from $33.5 million in 2016.
3 Things Markets Will be Watching this Week
1. US Corporate Earnings season continues with stocks such as Apple and Tesla reporting this week.
2. Local earnings season kicks off across Australia & New Zealand.
3. The Reserve Bank of Australia makes an interest rate decision on Tuesday.
Have a Great Day,
Team