Global markets were lower on Friday as continuing concerns about whether the US will succeed in passing any tax reforms splashed cold water on markets ahead of the US Thanksgiving break later in the week (trading is often subdued at least the day before Thanksgiving and often the following day).
While the three US benchmarks pulled back over the weekend, it should be kept in mind that the S&P 500 remains up more than 15% this year. Further, while Wall Street slipped from record highs, it has now been 261 trading days since we have had a 3% or more pullback in the markets, the longest such streak in history.
One of the factors driving gains is that the US economy appears to be firing on all cylinders, and expectations are that the US economy may expand at a rate of around 3% in the last quarter of the year. This week investors will get a chance to hear from Fed chair Janet Yellen and to parse the minutes from the Fed's latest policy meeting. The focus is increasingly shifting on where rates are headed in 2018, as an interest rate hike in December is widely expected.
Stock in Focus: Sky Network Television (SKT:NZ / SKT:AX)
Shares in pay-TV operator Sky TV continue to remain under heavy selling pressure, as the company struggles with the challenges of “digital disruption”
Sky TV reiterated its falling subscriber numbers at its recent annual meeting. Chair Peter Marcourt, who was re-elected to the board, also told shareholders that directors are considering the trading performance and outlook on a regular basis to weigh up how quickly debt should be reduced and dividends paid. Mr Marcourt highlighted that the year “has again proven challenging for the media industry with an increasingly competitive operating environment”.
We have held a negative view on the outlook for Sky TV as a business, as we struggle to have confidence in the company’s ability to turn itself around.
We are currently SELL rated on SKT. Members should look out for an update on SKT to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market managed to end Friday in positive territory (ASX 200 index +0.23%) although the ASX 200 index remains below the 6000 level. Shares ended a dour week on an upbeat note on Friday after a solid night of trading on Wall Street, with pessimism around commodities weighing heavily on the ASX over the last week. In stock news, department store David Jones said sales have dropped by more than 5% so far this financial year, indicating potentially worse performance than rival Myer and fuelling negativity around the retailing sector.
The New Zealand market was higher on Friday (NZX 50 index +0.34%) led by gains from Mercury New Zealand and Genesis Energy, while Xero was flat on news its chief executive had sold 15% of his stake in the company. Xero founder Rod Drury sold 3 million shares for $94.5 million in a placement to institutional and professional investors at $31.50 apiece, in his biggest transaction since taking the company public in 2007. He remains Xero's largest shareholder with 17.7 million shares, or about 13%.
3 Things Markets Will be Watching this Week
1. The US Federal Reserve Chair makes a speech on Wednesday, with minutes from the last meeting released on Thursday
2. US Politics with Tax Reform taking centre stage.
3. The Reserve Bank of Australia releases minutes from its last meeting on Tuesday
Have a Great Day,
Team