Global markets were mixed overnight, as Wall Street fell on news the planned corporate tax cut may take five years to implement. A report by Bloomberg that Republican tax writers are considering a five-year period for cutting the corporate tax rate to 20 per cent from 35 per cent knocked the wind out of the rally earlier in the day.
Separately, there have been reports that Trump plans to announce on Thursday (Friday AU / NZ time) his choice for the next Federal Reserve chair, with Jerome Powell remaining the front runner.
With the third-quarter US earnings season more than half-way through, nearly 74% of the S&P 500 companies to report so far have topped profit expectations, compared with 72% overall the past four quarters.
Stock in Focus: Ebos Group (EBO:NZ / EBO:AX)
Healthcare and Pharmaceutical company Ebos Group recently held its AGM where it reaffirmed profit guidance. Ebos Group, which counts Australia as its largest market, has also recently seen share price support given NZ dollar weakness.
Ebos said earnings will rise about 10% in the current year after a strong first quarter for its healthcare and animal products divisions. The market reaction was muted implying the market was more or less expecting the news. We hold a positive view on Healthcare stocks such as Ebos given the ageing population investment theme.
EBOS has also announced that it has made an investment of A$10.5 million to acquire a strategic 14.1% shareholding in Australia’s leading digital medication management company, MedAdvisor Limited (ASX: MDR). EBOS' investment is part of a wider partnership with MedAdvisor that will seek to advance the commercial interests of both organisations by increasing the availability of digital health applications across EBOS' community pharmacy and institutional healthcare businesses.
We are currently BUY rated on Ebos.
Members can login to read our full reports on Ebos and should look out for a full update in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was higher yesterday (ASX 200 index +0.27%) as shares enjoyed solid buying throughout Monday, largely boosted by investor appetite for most of the banks and energy stocks though Myer suffered some investor displeasure. Myer ended the day lower after the retailer's largest shareholder, Solomon Lew threatened legal action against the company over the department store chain's alleged lack of disclosure.
The New Zealand market rallied on Monday (NZX 50 index +0.73%) buoyed by exporters Scales Corp and Synlait Milk, while Mainfreight and Air New Zealand fell as investors weigh up possible policy changes from the new government. Tourism Holdings advanced further as Chinese investment manager Citic Capital, which oversees US$21 billion of assets, has boosted its stake in the motorhome operator to almost 11 percent having emerged as a substantial shareholder earlier this month.
3 Things Markets Will be Watching this Week
1. Quarterly US corporate profit announcements, with the level of the market making the current earnings season as important as ever.
2. The US Federal Reserve has a meeting this week and Donald Trump is expected to make a decision as to who is the next Fed Chair.
3. Monthly US employment data is released at the end of the week.
Have a Great Day,
Team