Global markets were slightly lower overnight, with weakness on Wall Street as the US Fed meeting minutes signalled more rate hikes ahead.
Unanimity among Fed policymakers in voting for a rate hike last month and their expectation that more hikes will be needed dented sentiment this morning. As we have discussed previously, the pace of rate hikes in the US is a key factor to watch in terms of driving markets.
US corporate earnings season is also now underway, with stocks such as Netflix announcing quarterly profit figures.
Stock in Focus: Netflix (NFLX:Nasdaq)
Netflix was one of the best performers overnight, as its shares jumped +5% on the back of another solid quarterly update.
The company put fears of a slowdown in growth to bed by adding a massive seven million new subscribers between July and September. The figures put its total customer base at 137 million worldwide, two million more than consensus forecasts. The news saw the release of a number of bullish reports on Netflix’s growth prospects as better-than-expected subscriber gains and an upbeat outlook reassured investors.
Earlier this year we recommended investors may want to take profits on Netflix, although we do remain positive on the company’s ability to grow earnings and deliver on their guidance.
We currently have a HOLD recommendation on NFLX.
Members should look out for a full update on NFLX to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market continued to trade higher yesterday (ASX 200 index +1.18%) following on from a strong session on Wall Street. Australian blue chip stocks followed the strong gains in the US, led by CSL which rose 2.5 per cent to $193.00 after it reaffirmed its profit guidance for 2019. BHP was a market laggard after it announced it cut its copper production target by about 3%, following outages at mines in South Australia and Chile. BlueScope Steel shares fell after the company announced it had bought a 15.8% stake in New Zealand-based Steel & Tube Holdings, although it ruled out taking over the company.
The New Zealand market rallied on Wednesday (NZX 50 index +1.23%) ed by A2 Milk Co, which calmed nervous investors with a strong first-quarter update. Synlait Milk followed suit, albeit on much lighter volumes.
A2 jumped +9% as the milk marketer said it increased its Chinese market share for infant formula to 5.6 percent in the September quarter from 5.1 percent just three months earlier, and affirmed its outlook for revenue growth. Overall it looked like a solid update, in our view. Z Energy fell as the transport fuels firm reported lower retail petrol sales in the September quarter.
3 Things Markets Will be Watching this Week
1. US corporate earnings season for the 3rd quarter gets underway.
2. Trade related news-flow is likely to continue to feature in headlines.
3. Minutes from the last US Federal Reserve Meeting are released on Thursday morning AU/NZ time.
Have a Great Day