Global markets were higher overnight with shares on Wall Street lifted by Cisco and Apple, as investors shrugged off fears of rising inflation and hunted for bargains after last week's sell-off. Cisco shares jumped after the network gear maker posted upbeat results and forecast, while Apple rose after Warren Buffett's Berkshire Hathaway made the iPhone maker its top investment.
Once again, in 2018 we believe there will be higher volatility in markets relative to recent years as global central banks start to normalise policy.
Local earnings season continues across Australia & NZ and there were a number of profit announcements from companies yesterday which dominated news flow.
Stock in Focus: CSL Limited (CSL:AX)
Heading into the announcement we had expected a good profit result and the pharma giant did not fail to deliver – which has seen it shares jump to all-time highs.
Looking at some of the detail, revenue rose 13% to $4.1 billion which translated to an increase in net profit after tax of 35% to $1.1 billion. Sales growth was strong across major product lines and a number of new products approved in the half which drive the result. In terms of outlook, CSL see continued strong sales although second half profits may be lower due to the seasonality of the influenza business (there was a recent flu outbreak in the US). In terms of the Plasma division supply remains tight, and CSL is likely to continue to benefit from new plasma collection centre openings.
We have held a positive view on CSL for some time now as a solid defensive healthcare holding. We currently have a BUY rating on CSL.
Members should look out for our full update on CSL to be released in our next weekly report.
Australia & New Zealand Market Movers
The Australian share market rebounded on Thursday (ASX 200 index +1.16%) as Resources led shares higher amid a busy day of earnings results headlined by Telstra.
Telstra shares were a touch higher as the telco reported half-yearly earnings that showed the continued drag on its profits from the roll-out of the National Broadband Network. Insurer Suncorp slid after reporting a worse-than-expected 16% drop in half-year earnings as a result of higher claims from the Victorian hailstorms. Miner South32 announced a larger-than-forecast return of cash to its investors, but that was not enough to stop the stock from dropping on the day as the market weighed the capital management plans against a softening outlook. Healthscope shares were lower as the private hospital operator reported solid revenue growth although disappointed on the profit line.
The New Zealand market was more or less flat yesterday (NZX 50 index +0.05%) led higher by Sanford and Metro Performance Glass, with Fletcher Building extending its slide after yesterday's selloff. Outside the benchmark index, Skellerup Holdings jumped to a record $1.95 on intraday trading after the rubber goods manufacturer lifted first-half profit 31% thanks to a "standout" performance from its industrial unit which boosted earnings 40%.
3 Things Markets Will be Watching this Week
1. Local AU/NZ company profts as the earnings season continues.
2. US earnings season moves into its latter stages.
3. Closely watched US inflation data will be released Thursday morning (AU/NZ time).
Have a Great Day,
Team