Global markets were generally higher overnight as the main US markets advanced in late afternoon trading but a fall in technology stocks capped gains on the Nasdaq. The Price of gold fell to its lowest level in 6-weeks as a large sell order hit the market.
Closer to home, there were quiet trading sessions across the ASX & NZX, with both local markets starting the week with gains. The main news flow came on the regulatory front which we discuss below.
Stock in Focus: Sky TV (SKT.NZ / SKT.AX)
Sky Network Television fell after the pay-TV operator and Vodafone New Zealand terminated their merger agreement, although it did pare some of its losses over the session as more detail came to light.
SKT and Vodafone had aimed to create the country's largest telecommunications and media group, and have withdrawn an appeal against the Commerce Commission's rejection of the plan. Sky TV chief executive John Fellet said the decision to cancel its and Vodafone's merger appeal was a mutual one, with the costs likely to outweigh the benefits. The deal was primarily blocked around Sky's monopoly on premium sport content.
While it was looking unlikely the deal would go through, this has now been confirmed. SKT faces a number structural pressures and challenges from “digital TV disruption”. There are further risks of fragmentation as SKT could lose more if its major TV rights longer term, in our view.
We are currently HOLD rated on SKT given risks that the merger would not go ahead (which now has been confirmed) and as SKT struggles with the challenges of “digital disruption”.
Members should lookout for a full update on SKT to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market managed to end Monday in positive territory (ASX 200 index +0.08%) as the Big Bank shares were mixed in a day relatively lacking in big-ticket corporate or economic news. The standout performer was grocery wholesaler MetCash, which released better than expected annual profit numbers and said it will resume paying dividends. In other news, fuel retailer Caltex Australia has won regulatory approval to expand across the Tasman and buy Gull New Zealand in a roughly $325 million deal expected to be completed by July 3.
The New Zealand market was higher on Monday (NZX 50 index +0.55%) led by Z Energy and Spark New Zealand in relatively light trading. In other stock news, NZ King Salmon Investments raised its earnings forecast on the back of strong demand for its products and affirmed its projected profit for the following year. Pro-forma operating earnings is forecast to be between $20.5m and $2m in the year ending June 30, up from the $19.2m predicted in it offer documents when the company listed on October last year.
3 Things Markets Will be Watching this Week
1. Whether the Oil price stabilises after falling for 5 straight weeks
2. US Fed Chair Janet Yellen speaks in London on Tuesday.
3. NZ trade data is released Tuesday.
Have a Great Day,
Team