Market Rebound | BHP Jumps, Z Energy Tumbles

2 November 2018

Global markets have started the month on a higher note, with shares on Wall Street continuing to rally overnight. 

After a torrid October, the US market has risen for a third session with all three major benchmarks higher at the close; the S&P 500 posted its best three-day advance in two years, capping a three-day surge of 3.75%. Part of the advance is being credited to a tweet from President Trump: "Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina".

As we have highlighted, relations between the US and China, and a potential trade war is one of the big risks for markets, with the other being rapidly rising interest rates, in our view. 

Closer to home, the ASX and NZX continue to recover, with the Aussie market recording its 5th straight gain, while the Kiwi market has been up 4 out of the last 5 trading days.


Stock in Focus: BHP Billiton (BHP:AX)

Mining giant BHP lifted the ASX into positive territory yesterday, after it said it would return $US10.4 billion ($A14.7 billion) to shareholders in the form of an off-market buyback and special dividend.

BHP announced how it would distribute returns to shareholders from its $US10.4 billion sale of its US shale divestment. Half of the money will be distributed via a special dividend expected to be paid in January 2019, while the remaining $US5.2 billion will be devoted to an off-market buyback.

We have been positive on BHP for some time now as our top mining sector pick, particularly given its diverse production base and as a late cycle play – given commodity prices usually rise with inflation late in the economic cycle. 

We are currently BUY rated on BHP.

Australia & New Zealand Market Movers

The Australian share market was in slight positive territory on Thursday (ASX 200 index +0.18%) lifted by mining stocks, as the market recorded its fifth straight advance. Shares in beleaguered wealth manager AMP jumped more than seven per cent following reports the country's largest investment bank, Macquarie Group, was considering a takeover for the firm. NAB shares rose slightly as the major bank announced its full-year cash profit fell -14.2% to $5.702 billion, which was in line with expectations. Woolworths rose despite the supermarket announcing its slowest like-for-like food sales growth in two years.


The New Zealand market rallied once again yesterday (NZX 50 index +1.05%), as shares rose for a fourth day in five as improving sentiment in global markets encouraged investors back into some favoured sectors, with A2 Milk leading the index higher. The biggest news on the market was Z Energy. The country’s biggest fuel retailer dropped -8% to a three-and-half year low of after reporting a -21% drop in first-half earnings and announcing a dividend about five cents less than investors were expecting. Fletcher Building after reporting a non-cash loss of up to $20 million on the US$39 million sale of the firm’s steel roof tile business to Canada’s IKO group. Homeware and sporting goods retailer Briscoe Group rose as third-quarter sales rose 1.4% on a same-store basis, and gross profit margins also improved despite subdued consumer confidence and higher pump prices.


3 Things Markets Will be Watching this Week

1.             US corporate earnings season for the 3rd quarter is underway, with a number of major companies set to report this week.

2.             Trade related news-flow is likely to continue to feature in headlines, and important monthly US employment figures will be released at the end of the week.

3.             Locally, in Australia some of the major Banks such as ANZ and Macquarie will be releasing updates.


Have a Great Day

Global markets have started the month on a higher note, with shares on Wall Street continuing to rally overnight. 

Do You Want Daily Market Insights?

If you’re interested in staying up-to-date with the latest news and analysis on stocks, be sure to sign up to BlackBull Research.

1 Month Free Trial

Access our expert stock market research Free of charge with no obligation

Free 1 Month Free Trial

Unlock this article & access our expert stock market research

ASX, NZX & USD Stock Buy, Hold, Sell recommendations. Model Portfolios. Daily news and more