Global markets were quiet overnight with the US market closed for Independence Day holiday. Local markets were also quiet yesterday with school holidays in Australia.
The end of the week is shaping up to be more eventful, with minutes from the last US Federal Reserve meeting released overnight, and as important monthly US employment figures are published at the end of the week.
Investors also appear to be opting for a somewhat more defensive position ahead of the planned imposition of tariffs by the US on China on Friday. China already is planning to match the dollar-value hit on US goods. It remains unclear how far the trade dispute between the two nations will widen, but a trade war is clearly a risk for global markets. The World Trade Organisation overnight signalled their concerns around the fact that protectionism is taking hold in global markets.
Stock in Focus: Nike (NKE:NYSE)
The latest quarterly update from Nike was exceptional, with stock of the retail giant surging on the announcement.
Looking at some of the detail, fourth quarter revenue increased 13% to $9.8 billion driven by strong double-digit revenue growth in international markets and NIKE Direct globally, and a return to growth in North America. The US turnaround was the story of the quarter after it had disappointed in recent updates.
On the bottom line, earnings per share also increased by +15% and Nike unveiled a massive $15 billion share buyback plan. Finally, we are also pleased to see traction in China also remains solid, an area where other large international companies have failed.
We currently have a BUY recommendation on Nike.
Australia & New Zealand Market Movers
The Australian share market sold off on Wednesday (ASX 200 index -0.43%) steered lower by losses among the big bank stocks with Macquarie experiencing the biggest pullback. AMP shares continued to come under pressure following a broker note which estimates the company could face fines from the corporate regulator and would have to fund the settlement of potential lawsuits which could hit pre-tax profit by $250 million. This could also force AMP to lower its dividends.
The New Zealand market gave back some gains yesterday (NZX 50 index -0.31%) in light trading, with Sky Network Television and Stride Property leading gains while A2 Milk fell. In stock news, Gentrack Group was in a trading halt after it said it will sell shares a 12% discount to raise $90 million to repay bank debt used to fund a recent spate of acquisitions, leaving the door open for more merger and acquisition activity. The utilities software developer says this raise will leave it with almost no bank debt and give it a strong enough balance sheet to make more acquisitions.
3 Things Markets Will be Watching this Week
1. Ongoing trade disputes, particularly as tariff measures between the US and China continue to sway investor sentiment.
2. The Reserve Bank of Australia makes an interest rate decision on Tuesday.
3. Important monthly US employment figures are published at the end of the week
Have a Great Day,
Team
