Global markets were mostly higher overnight, in quiet trade with US markets being closed for the labor day holiday.
European Markets were up overnight (Stoxx 600 index +0.7%) with gains across the board. Tech stocks were stronger as central bank tightening fears cool, as most sectors traded in the green except for defensive utilities and real estate.
Asian markets were also stronger as investors await cues from China’s trade and inflation data due later this week with China’s CSI 300 rising +1.9% and Hong Kong’s Hang Seng Index rising +1% as tech giants Tencent (+3.5%) and Alibaba (+1.9%) rose strongly.
Locally, NZ is moving to "Level 2" restrictions except Auckland tomorrow. The key beneficiaries will be stocks such as Kathmandu, Freightways, and Summerset. SKC would benefit usually but their Auckland exposure dampens the positive impact.
Pacific Edge (PEB:NZX)
Pacific Edge shares jumped +5.7% yesterday to new record highs, with the shares up +20% over the last month as investors pile into the healthcare company for safety amidst local lockdown and as a couple of major institutional shareholders finished selling down their positions.
Another catalyst for the rise has been the business applying to be listed on the ASX for the company and a way of accessing a broader pool of institutional and retail investors who wish to share in PEB’s success. Increasing the liquidity of our shares and widening the investor base have been consistent strategic objectives of the company.
Since our initiation report on Pacific Edge in May this year its shares have risen +29%. We still believe it is still a relatively early time to invest, and PEB’s market capitalisation of $1 billion is still relatively small for a healthcare company given their ambitious targets in the US market. We see upside potential from Pacific Edge meeting its US revenue targets and with positive cashflow it should help boost the research and development of its other cancer diagnostic products such as – gastric, colorectal, and endometrial cancers and melanoma. We remain BUY rated.
Australia & New Zealand Market Movers
The Australian market ended yesterday higher (ASX 200 index +0.1%), after opening at a heavy loss following weak jobs data from the US.
Locally the market was upbeat as lingering affects of covid would likely to prompt the RBA to remain dovish and delay their bond tapering programme.
Technology stocks led the market higher – as their heightened valuations benefit from a low interest rate environment.
Iron Ore miner Fortescue Metals slumped -11% following a similar fate to BHP as its went ex-dividend – which the dividend representing a significant % of its current share price. A similar was met to lessor degree by Viva Energy down -3.1% and Ramsay health slipping -2.3%.
Gold miners bucked the trend with its mining counterparts benefiting from rise in gold price. Energy shares were hardest hit sector as oil prices slipped on the weak job data report.
The New Zealand market was a touch higher on Monday (NZX 50 index, +0.1%) on a another light trading day marking its 7th consecutive daily gain.
Small caps were strong performers Plexure up +9%, followed by Pacific edge and Sky TV adding another +4.9% with all three making sizeable gains in recent weeks.
Synlait Milk had the day’s biggest loss, falling -3.6%, while A2 Milk slipped – 0.8% after it was removed from the ASX top 50 index.
3 Things Markets will be Watching this Week
- In a quieter week, Chinese trade data will be closely watched given the growing concerns around the state of the Chinese economy. .
- Central Bank Meetings in Europe (ECB) and Australia (RBA).
- Covid-19 and lockdown related announcements locally.
