Global markets were mixed overnight, with Wall Street moving between gains and losses but closing the session higher. A potential US debt limit extension deal, linked to aid to help Texas recover from Hurricane Harvey, and rising oil prices are underpinned positive sentiment.
News that President Donald Trump agreed to deal with Democratic leaders in Congress to increase the nation's debt limit and provide funding for the federal government until mid-December bolstered spirits on Wall Street. That news gave an added boost to Wall Street where US stocks were higher in early afternoon trading on Wednesday, helped by a bounce in energy stocks, but gains were limited due to worries over tensions on the Korean peninsula.
Closer to home, the NZ market traded higher led by dividend stocks, while the Australian market was lower following the release of weaker than expected economic growth (GDP) data.
Stock in Focus: Auckland Airport (AIA.NZ / AIA.AX)
As we touched on yesterday, shares in Auckland Airport are trading at an eight-month low. While AIA released a solid annual result last month (with total profit after tax up 26.9% to $332.9m) a number of analysts believe that AIA is over-valued.
Auckland Airport CEO Adrian Littlewood has said he remains confident in New Zealand's tourism prospects, with recent numbers indicating 120 million people in the world are actively considering a visit here. The airport, which is New Zealand's busiest gateway, recently embarked on a $1.9 billion infrastructure investment programme that includes a new runway by 2028 in order to cope with visitor growth.
While this news supports our tourism investment theme, AIA is investing heavily to keep up with growth and trades at a valuation premium. Accordingly we believe there are better value investments in the tourism space at the current juncture.
We are currently HOLD rated on Auckland Airport.
Members should look out for our full update on Auckland Airport to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was lower on Wednesday (ASX 200 index -0.29%) as stronger GDP figures failed to live up to recently revised economist expectations, with banks once again the biggest drag on the ASX's performance. Australian gross domestic product data which showed a reading of 0.8 per cent growth for the second quarter and 1.8 per cent on an annual basis, according to the Australian Bureau of Statistics.
The New Zealand market was slightly higher on Wednesday (NZX 50 index +0.2%) with Sky Network Television bouncing back from lows and A2 Milk advancing. Sky TV experienced a relief rally yesterday after the stock has dropped 43 percent this year and is down 12 percent since its earnings announcement in August, while reports last week that Amazon may bid on the sports rights it currently holds saw the stock drop to 18-year lows.
3 Things Markets Will be Watching this Week
1. The Reserve Bank of Australia makes an interest rate decision on Tuesday.
2. Australian economic growth (GDP) data is set to be released on Wednesday.
3. US politics as investors are concerned around the Trump Administration’s ability to pursue its pro-growth agenda.
Have a Great Day,
Team