Global markets were mixed overnight with US stocks (S&P 500 index -0.2%) slipping from their recent highs as investors awaited the outcome of a key US Federal Reserve monetary policy meeting.
Interestingly, a global fund manager survey has crowned commodities as the asset investors are most piling into right now, dethroning Bitcoin from the prior survey. Elsewhere, the survey showed 72% of managers believe spiking inflation is transitory. Fund managers remain bullish on the global economy, with a net 75% saying they expect the global economy to improve, though that is 9ppts lower than the prior month.
Tech and Real Estate sectors were the weakest overnight, while Energy stocks were up, fuelled by a rally in oil price which jumped another +1.8%.
On the economic data front, the US producer price index rose +0.8% for the month and +6.6% over the year in May, while capacity utilization remained below the pre-pandemic level and the long-run average. US retail sales dropped by a bigger than expected -1.3% in May, (compared to expectations of a -0.7% decline) – with the mixed data points not much of a concern for the market.
European stocks were a touch higher (Stoxx 600 index up +0.1%) on a quiet session.
Scales Corp (SCL:NZX)
Scales shares were down a touch yesterday after announcing it would no longer be looking to buy winemaker Villa Maria – which would have relieved some investors, including ourselves.
We remain comfortable with our BUY rating on Scales with an upbeat medium-term view. Current valuation remains supportive of Scales existing business, which is still set to pay a ~4% dividend. We see growth potential for the business both organically and from potential acquisitions given the large amount of funds available (circa ~$250m) for reinvestment.
Australia & New Zealand Market Movers
The Australian market rose +0.9% to new all-time highs. Gains were broad based across the market, with a number of blue chips breaking into new all-time highs.
Healthcare was the best performing sector, with ResMed up +6.8% to reach all-time highs and healthy gains for Fisher and Paykel healthcare – both benefiting from their competitor Royal Philips NV recalling faulty products. The Tech sector was the next best performing sector extending its rebound. Commonwealth Bank rose +2.1% to hit fresh all-time highs as well, with the other banks performing strongly
The major miners were stronger as the price of iron broke past US$220 a tonne, Rio Tinto rising 1.2% and BHP up +0.6%.
The New Zealand market (NZX 50 index +1.1%) rose following a strong lead from Wall Street, with Fisher and Paykel healthcare leading the gains up +5.6%.
A2 Milk and Synlait both traded strongly, continuing its recovery as Aussie Investors returned back after their long-weekend.
3 Things Markets will be Watching this Week
- Key events this week include the latest US Federal Reserve decision.
- NZ 1st quarter GDP data is due on Thursday, as well as Australia's latest employment data.
- Both Auckland Airport and Sydney Airport are due to release monthly updates, while Pushpay and Z Energy are scheduled to host AGM’s this week.
