Global markets were mostly up overnight as they look to finish the month on a strong note, with US markets (S&P 500 +0.4%) closing at fresh record highs.
Real estate and Tech stocks performed strongly – the two sectors benefitting from delay in any interest rate decisions by the Fed – while banking stocks were weaker. Tech leaders Apple (+3.0%), Amazon (+2.2%), Microsoft (+1.1%), Netflix (+1.3%) Alphabet (+0.6%) did most of the heavy lifting.
Airline stocks lost ground after the European Union recommended that member countries reinstate a ban on non-essential travel to the U.S. due to the Covid-19.
Concerns about the damage from Tropical Storm Ida sank US insurers lower and energy producers, while pushing gasoline prices higher. QBE Insurance, one of our ASX Buy rated stocks, does have exposure to the US market, but with a ~1% market share is believed to have limited exposure to losses due to reinsurance – and we are not concerned with losses expected to be minor and manageable.
European Markets were a touch higher overnight (Stoxx 600 index, +0.1%) as chemcial and tech stocks led gains offset by weakness across banking stocks
Invocare (IVC:ASX)
Funeral operator Invocare jumped +8.7% yesterday, after posting a solid first-half result, highlighting growth across key metrics fearing much better than initially anticipated. InvoCare returned to form during the first half, delivering a 13% increase in operating revenue to $257.3m and a 31% lift in operating earnings (EBITDA) to $63.6m.
Our long-term investment thesis remains intact as we believe IVC is set to benefit from favourable demographics of an aging population. We remain BUY rated on IVC on a medium-term view at current levels. 2021 is likely to be a transitional year with continued lockdown risks limiting recovery but we anticipate a return to normal trading over the medium-term.
Australia & New Zealand Market Movers
The Australian market was up yesterday (ASX 200 index +0.2%), following a strong lead from Wall street, fuelled by dovish tones from the Fed.
This saw commodity stocks perform strongly – miners and energy sectors led gains as Iron ore wass up +3% and oil prices up 2.5%. Fortescue share price jumped +6% after the company released full year result, reporting its revenue increased by 74% to US$22.3 billion, helped increase the net profit after tax by 117% to US$10.3 billion and pay a final divided of $2.11 per share doubling tis previous year dividend.
Altium was the sessions biggest loser down -14% after posting profits increasing +246% and revenue rising +6%, which were below expectations.
The big 4 banks all lost ground as cases in NSW continue rise questioning when the current lockdown will end. Likewise travel stocks were weaker with Flight Centre down -1.4%, Qantas falling -2.1%, Web Jet slipping -0.5%, and Sydney Airport losing -0.6%.
The New Zealand market was up strongly on Monday (NZX 50 index +0.9%), following the positive tone from global markets – despite lockdown restrictions in Auckland being extended for another 2 weeks, while most of the country will have restrictions ease.
EBOS (+2.8%) and Pacific Edge (+4.5%) both rose to all-time highs with the latter announcing it has applied for a foreign exempt listing on the ASX.
3 Things Markets will be Watching this Week
- Locally Earnings season eases down. Major names including Fortescue, Altium, Harvey Norman, Healius, and Crown.
- ANZ Business Confidence survey in NZ will be released along with Q2 GDP in Australia.
- Globally, economic events this week include Nonfarm payrolls in the US along with the latest ISM activity data, Chinese PMI data and Eurozone CPI.
