Global markets continued to grind higher overnight, with US stocks hitting new record highs as consumer spending rose in March and benign inflation data was published. The run of “Goldilocks” economic data means the US Federal Reserve will likely be under no pressure later this week in terms of shifting its accommodative stance on interest rates.
Once again, investor attention will also likely remain focussed on US corporate earnings season this week, and earnings reporting season is proving a touch better than expected so far. In saying that, this morning saw Alphabet (Google) fall after hours as it reported revenues which missed market expectations.
Stock in Focus: Sydney Airport (SYD:ASX)
Shares in Sydney Airport have had a strong start to 2019 as investors seek stable income paying stocks and after delivering a record result for their 2018 financial year.
Total revenue for SYD grew +6.8% from last year helped by solid international passenger growth growing all core business. Operating earnings (EBITDA) were also up +7.2% from last year to $1,282.6m and SYD declared an attractive full year dividend of 37.5 cents per share which was up +8.7% from last year. In a low interest rate market SYD continues to pay a healthy dividend of 5%.
There is talk that the tourism boom may be over after SYD released weak passenger numbers for the month of March. We continue to hold a more upbeat outlook, and we expect SYD to continue to benefit from international passenger growth over the medium term.
We currently have a BUY recommendation on Sydney Airport.
Australia & New Zealand Market Movers
The Australian share market retraced on Monday (ASX 200 index -0.41%) as markets took a breather after last week’s strong gains, with investors selling out of real estate companies and banks. Childcare stocks and dentistry companies shone following the Opposition Labour Party's election spending promises for a generous taxpayer-funded childcare package and $2.4 billion for older people on the age pension or commonwealth seniors card holders up to $1000 of dental care every two years. Shares in G8 Education, which runs 500 childcare centres around Australia, jumped 3.4%.
The New Zealand market was slightly higher yesterday (NZX 50 index +0.18%) as stocks that have been beaten up in recent months – such as Pushpay Holdings and Fletcher Building, attracted interest from investors seeking bargains in a market trading at high valuations. In stock news, Skellerup Holdings increased after announcing a $6.5 million acquisition of Nexus Foam. The bolt-on acquisition is expected to immediately boost earnings.
3 Things Markets Will be Watching this Week
- The US first-quarter reporting season continues this week.
- Thursday morning (AU/NZ time) sees a meeting of the US Federal Reserve, and the release of important monthly US manufacturing data.
- The latest NZ employment figures are published on Wednesday.
Have a Great Day,
