Global markets were lower overnight, as US Markets (S&P 500 Index -0.7%) slid lower once again as investors try to assess the impact of the Ukraine Russia War.
The US banned Russian oil imports, the UK said it will do so by year-end, and the EU may agree to reduce its reliance on Russian energy at a summit later in the week. Commodity prices including oil continued to surge, with Brent crude briefly reaching US$132 per barrel fuelling concerns about a slowdown in global growth amid surging inflation. Nickel trading was suspended at LME post short squeeze that drove prices +66%. Gold continues to be supported as safe haven.
Energy stocks continue to be a standout, while travel stocks like airlines and cruise liners were also up bouncing back from their sharper fuel price induced sell-off.
European Markets were down (Stoxx 600 index -0.4%) on a more mixed day of trade as a jump in bank stocks helped offset broad-based losses.
Woolworths Group (WOW:ASX)
Woolworths half year result came inline of expectations given downgraded guidance in December. Woolworths reported an 8% increase in group sales to $31,894m but a 6.5% decline in net profit to $795m – the latter was ahead of expectations and includes $239m of covid related costs.
We remain BUY rated on Woolworth’s as it navigates past covid related costs and disruptions and its pricing power to offset any inflationary concerns.
Australia & New Zealand Market Movers
The Australian market was down yesterday (ASX200 index -0.8%) as US markets hit correction territory.
Despite oil surging further, energy and material stocks lead losses as investors took profit. Healthcare and consumer staples traded in the green as investors look for safe value.
The continued rise in commodity rise saw energy and material stocks the only two sectors in the green, as markets fret of supply shortfall.
The New Zealand market was down on Tuesday (NZX 50 index -1.5%) after ANZ predicted the OCR could hike rates 50 basis points in both April and May policy as well as stagnation fears bringing the market lower.
Air NZ was hard hit down -6.5% as higher oil prices are set to be a major headwind.
3 Things Markets will be Watching this Week
- Geopolitical risks remain extremely elevated with the Russia/Ukraine conflict.
- Highlights this week include the latest US inflation (CPI) print.
- The European Central Bank (ECB) meeting and trade data from China will be closely watched.