Global markets were lower overnight, US Markets (S&P500) closed lower reversing last week’s gains as inflation concerns remerged after hot inflation print in the Eurozone and more hawkish comments from Fed governor Christopher Waller saw US treasury yield rise.
Christopher stating that it would still take multiple 50 basis points hikes to control inflation and targeting above neutral rate.
An initial rally in oil as eased China relaxed lock downs while the EU agreed to pursue a partial ban on Russian oil which helped lift commodity prices higher, however later slipped after The Wall Street Journal reported the Organization of the Petroleum Exporting Countries was weighing suspending Russia from its oil-production deal.
Healthcare and energy sector were the worse performers, while consumer discretionary was the best performing sector.
European markets (Stoxx 600 index, -0.7%) traded lower as Eurozone inflation hit 8.1% in May, beating expectations, with retail stocks leading losses.
Infratil (IFT:NZX)
Infratil shares were down -2.8% yesterday after trading ex dividend, but amongst the volatility its shares have held up and delivered a strong full year result for the 2022 financial year which didn’t contain too many surprises meeting expectations reporting a record $1.17 billion profit largely driven by the Tilt renewable sale which booked a $1,015m profit.
Proportionate operating earnings (EBITDAF) was $513.9m, a +27.9% increase from the same corresponding period last year and inline of its previous guidance of $500m to $520m. The increase predominately reflects strong earnings growth form Vodafone and increased contribution from Infratil’s new healthcare platform.
With a sound balance sheet and ample funds to make further acquisitions or reinvest into existing businesses, we like IFT’s new strategy of focusing on earlier stage businesses like data centres, and see it as more of a private equity type play now, rather than “old-school” investor of listed infrastructure assets. We remain BUY rated on Infratil as our preferred Infrastructure play due to the attractive growth sectors it invests in with a more attractive portfolio repositioning, and ample cash to make value acquisitions in a rising interest rate environment.
Australia & New Zealand Market Movers
The Australian market was down yesterday (ASX200 index, -1.0%) suffering a harsh selling towards the end of the session following hawkish comments from the Fed and highlighted inflation concerns from Europe’s ban on Russian oil and China’s easing of restrictions saw commodity prices trade higher.
Financials and tech shares led losses with all sectors trading in the red.
The New Zealand market (NZX 50 index, +1.5%) was up on Tuesday, with a strong finish towards the end for some stocks with end of month portfolio rebalancing.
Many large cap defensive names saw strong gains towards the end the session, Meridian (+6.8%), Goodman Property Trust (+4.9%), Fisher and Paykel Healthcare (+4.2%) and Spark (+2.5%).
Sky TV rose +8.5% on potential takeover rumours.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- RNBZ monetary policy decision
- Local earnings from Kiwi Property Group, Arvida, Fisher & Paykel Healthcare, Pacific Edge, Mainfreight, Tower Insurance, Elders, and Select Harvest.
