Global markets were mixed overnight as a boost from the energy sector helped offset losses in chipmakers and rate-sensitive shares ahead of an expected Federal Reserve interest rate hike.
Investors are awaiting tomorrow morning’s Fed policy meeting announcement. The US Fed is widely expected to lift rates by 25 basis points and investors will be looking closely at the Fed’s rhetoric following the decision. As we have discussed in the past, the pace of rate hikes is an important factor to watch in terms of driving markets at the current juncture.
In other news, the price of oil continues to rally, as Brent crude oil pushed beyond $US80 a barrel and hit a fresh four-year high. Saudi Arabia and Russia ruled out increasing production immediately in response to the rising price despite calls from the US to raise global supply.
Stock in Focus: Nike (NKE:NYSE)
Nike edged past analysts’ estimates for first-quarter revenue overnight as new launches of footwear and apparel fuelled sales in North America.
Taking an initial look at the numbers, Quarterly sales rose 6 percent in North America, its second straight rise, showing signs of recovery after competition from rivals Adidas and Under Armour eroded sales in three out of the last four quarters. Revenue rose 9.7 percent to $9.95 billion, just beating consensus estimates of $9.94 billion.
We are encouraged by the result and the US turnaround, and have held a positive view on Nike as they continue to deliver new and innovative products that customers want.
We currently have a BUY recommendation on Nike.
Members should look out for a full update on Nike to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was basically flat yesterday (ASX 200 index -0.01%), with the financial sector weighing on the market and offsetting strong gains from commodity-related stocks. Woodside Petroleum was among the market leaders on Tuesday, while Santos, Oil Search, and Beach Energy also advanced. The large material stocks also traded higher despite some softening in industrial metal prices. The major banks were lower as they trade defensively ahead of the delivery of the interim report from the royal commission, set to be released later this week.
The New Zealand market was little changed on Tuesday (NZX 50 index +0.09%) as investors wait for the upcoming round of annual meetings for a clearer steer on company outlooks. Air NZ will hold its AGM today, which will be closely watched after the national carrier told customers over the weekend it plans to pare some international routes, blaming engine issues with some of its Dreamliner fleet among the challenges it's faced. In other news, New Zealand Oil & Gas increased slightly after it started drilling an exploration well near New Plymouth.
3 Things Markets Will be Watching this Week
1. Trade related news-flow is likely to continue to feature in headlines.
2. The US Federal Reserve makes an interest rate decision Thursday morning AU/NZ time.
3. The Reserve Bank of New Zealand also makes a monetary policy statement on Thursday morning.
Have a Great Day,
Team