Markets Back at Records | Treasury Wine Estates

24 April 2019

Global markets rallied overnight as shares on Wall Street are back near all-time highs as a clutch of better-than-expected earnings reports eased concerns of slowing corporate profits and sparked a broad-based rally. So far, almost 80% of S&P 500 companies reporting profit results have exceeded estimates.
 
Closer to home, the NZ market broke out to a fresh all-time high, while the Aussie market is within striking distance of a 10-year high. The NZX 50 market index broke the 10,000 mark, after it took five years to double from the 5,000 level, having taken five years to reach that mark from 2,500 in the fallout of the global financial crisis. NZX chief executive Mark Peterson said it was a great milestone for the market and compared well with its global peers.
 

Stock in Focus: Treasury Wine Estates (TWE:ASX)

​Shares in wine exporter Treasury Wine Estates (TWE) initially slipped after delivering an impressive 2019 interim result. The negative news that followed included a broker report stating that despite strong growth the share price may be overvalued, with the other news being the loss of their managing director of Asia and global travel retail to competitor Accolade Wines.

 
Back to the result, TWE managed to lift net sales revenue by +16% to $1507.7m, driven by solid growth from Asia and America. Earnings (EBIT) were $338.3m, on the higher end of guidance and up +19% from last year – with growth across all regions. TWE also reiterated +25% operating earnings (EBIT) growth for the 2019 full year, with solid double-digit earnings growth expected to continue through into the 2020 financial year.
We continue to believe TWE will benefit from demand as the Chinese consumer pallet evolves, as part of our dining boom investment theme – as the growing Asian middle class provides a demand tailwind for quality AU/NZ food products.
 
We currently have a BUY recommendation on TWE.
 

Australia & New Zealand Market Movers

​​The Australian share market rallied yesterday (ASX 200 index +0.95%) as energy stocks lifted the market in a second shortened week of trading. The Trump administration's decision not to extend waivers allowing Iran to export oil sent the world oil price to its highest in six months, lifting energy companies.
 
 
The New Zealand market broke out to a new all-time high on Tuesday (NZX 50 index +0.45%) with the NZX 50 market index closing the day above the 10,000 index level. Exporters were among the day's gainers, with Fisher & Paykel Healthcare and A2 Milk up as the kiwi dollar dropped below 67 US cents, which boosts the value of export receipts when converted back into local currency.
 

3 Things Markets Will be Watching this Week

  1. ​​The US first-quarter reporting season continues this week.
  2. ​US economic growth (GDP) data is released at the end of the week.
  3. Aussie inflation figures are published on Wednesday.

 

Have a Great Day,
 

Team

Global markets rallied overnight as shares on Wall Street are back near all-time highs as a clutch of better-than-expected earnings reports eased concerns of slowing corporate profits and sparked a broad-based rally.

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