Global markets were slightly lower overnight in quiet trade, as investors mulled the implications of the partial trade deal reached last week between the US and China.
The US agreed to suspend a tariff hike on $US250 million of Chinese goods that was scheduled for this week. In exchange, China will buy up to $US50 billion of goods from American farmers (which seems like an inflated target number to us). The deal has yet to be officially signed. Treasury Secretary Steven Mnuchin said he expects Trump and President Xi Jinping to finalise the accord at a summit in Chile next month, so that will be the next key date to watch on the trade front.
Stock in Focus: Fisher & Paykel Healthcare (FPH:NZX / FPH:ASX)
Fisher & Paykel Healthcare shares jumped +7% yesterday to a new record high as the company raised earnings and revenue guidance once again, after upgrading its guidance as recently as the end of August.
FPH said that net profit after tax is now forecast at $255 million to $265 million, up from earlier guidance of $245 million to $255 million. The new estimate assumes an exchange rate of about 63 US cents to the dollar for the rest of the year. About half of F&P Healthcare’s operating revenue is in US dollars.
The bulk of the upgrade however, came on the back of FPH saying it got early US regulatory approval for its Vitera breathing mask. The face mask treats obstructive sleep apnea and was not expected to be released in the US until next year.
“Clearance of Vitera for sale in the US this month is sooner than we had previously guided and this has been a meaningful contributor to the increase in our guidance,” said managing director and chief executive Lewis Gradon in an announcement.
Gradon says the mask has already been received well in Australia, Canada, New Zealand and Europe.
We currently have a BUY rating on FPH.
Members should look out for a full update on FPH to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market started the week in positive territory (ASX 200 Index +0.54%) with investors heartened by signs of trade progress and a bout of dealmaking in the energy sector.
Santos shares rose after the energy firm told investors that it will buy ConocoPhillips’ northern Australia interests for Darwin LNG, Bayu-Undan, Barossa and Poseidon for $US1.39 billion plus a $75 million contingent payment subject to a final investment decision on Barossa. Most miners were also strong, but the gold miners were the market's key detractors.
The New Zealand market rallied yesterday (NZX 50 Index +0.94%) led by a strong recovery in Sky Network Television after the pay-TV operator all-but secured rugby broadcasting rights in a deal that will also bring NZ Rugby on as a substantial shareholder. Sky said it now has the rights to broadcast domestic and international rugby in New Zealand from 2021 to 2025. The contract will need shareholder ratification at this week's annual meeting and includes a part payment in equity, with NZ Rugby getting 5% of Sky's shares on the market. Vista Group International was unchanged after saying it bought the remaining half of box office reporting platform Numero for an undisclosed and immaterial sum.
3 Things Markets Will be Watching this Week
- US earnings season for the 3rd quarter kicks off this week, with the major US Banks the first to report quarterly profits.
- Minutes from the last RBA meeting are released on Tuesday
- A host of Chinese economic figures are published on Monday.
Have a Great Day,