Global markets were mixed once again overnight, as the US market continues to trade in a tight range with the energy sector weighing on the market.
US oil stocks slipped further as Tropical Storm Harvey bore down on the US energy hub and battered the refinery sector in Texas. Harvey became the most powerful hurricane to strike Texas in more than 50 years when it came ashore on Friday – and dumped more rain on Houston on Monday, worsening the flooding that has paralyzed the country’s fourth-largest city. Flood damage from Harvey may equal that from 2005's Hurricane Katrina, which resulted in more than $US15 billion in flood insurance losses, according to an insurance research group.
It was a full-on week last week in terms of earnings announcements across Australia and New Zealand. Profit announcements will continue this week at a slower pace as we are moving into the tail-end of earnings season.
Stock in Focus: Metlifecare (MET.NZ)
Metlifecare was the best performer on the NZX yesterday as the retirement village operator reported a 10 percent increase in full-year profit to $251.5 million on the back of resale gains and wider development margins. Importantly, MET said that it isn't yet seeing any impact from a slowdown in New Zealand's housing market – which we have highlighted as the key shorter-term risk for MET, particularly given its large exposure to the Auckland market.
Underlying profit, which removes unrealised gains in asset values, was $82.1 million which was also up 24 percent on the year. Overall we saw the announcement as a solid result, as the company continues to benefit from our baby boomer/ageing population investment theme.
We are currently BUY rated on MET, and it has been our preferred NZ retirement village exposure.
Members should look out for our full update on MET to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market sold off on Monday (ASX 200 index -0.59%) as the major banks weighed heavily on the broader market. News of an inquiry by the prudential regulator into CBA’s compliance failures around money laundering saw its shares come under selling pressure, and the other 3 major banks followed suit lower. Some of the upward momentum across the miners slowed as heat came out of metals markets and positive sentiment from recent bumper results faded. In stock moves, shares in Qantas were down sharply following a broker downgrade and as the airline announced a management reshuffle.
The New Zealand market started the week lower yesterday (NZX 50 index -0.39%) led by Chorus which hit a one-month low, while Metro Performance Glass extended last week's slide and Metlifecare rallied. Chorus led the market lower as while It lifted annual profit 24 percent to $113 million after cutting costs, it forecast gross capital expenditure for 2018 of $780-$820 million, up from $639 million in 2017. The amount of capital expenditure surprised the market and saw the shares come under selling pressure.
3 Things Markets Will be Watching this Week
1. Corporate profits will be in focus as earnings season continues across Australia and NZ.
2. US politics as investors are concerned around the Trump Administration’s ability to pursue its pro-growth agenda.
3. Closely watched monthly US employment and manufacturing data is released at the end of the week.
Have a Great Day,
Team