Global markets were lower overnight, as the US market (S&P500 -0.5%) rally paused as investors shifted their attention to US inflation (CPI) data due on Friday. There hasn’t been much news overnight to drive markets, but it appears the market is awaiting more scientific findings on Omicron and major central bank meetings, including the Fed, next week in order to gauge the track around interest rates heading into 2022.
Most sectors were down, those sensitive to a high inflation print were lower with Consumer Discretionary, Real Estate, and Tech stocks leading losses.
Tesla shares fell -6.1% after The National Highway Traffic Safety Administration raised concerns about a software update that allows video games to be played while driving. Italy’s antitrust watchdog fined Amazon €1.1b for abuse of market dominance causing the stock to falling -1.1%.
European Markets (Stoxx 600 index -0.1%) were lower as investors continue to watch covid developments and await key economic data for the end of the week. The UK has enforced tighter covid restrictions in an effort to prevent a spike in hospitalisation and deaths over the winters.
Elsewhere, Chinese property developer Evergrande has been declared to have defaulted on its debt payment. While this was initially a concern for markets, the news has been largely shrugged off and seen as contained to the Chinese economy, with Chinese authorities also steeping in to calm investor nerves.
EBOS Group (EBO:NZX / EBO:ASX)
EBOS shares were put into a trading halt yesterday as it announced the Acquisition of LifeHealthcare, a large independent distributor of third-party medical devices, consumables and capital equipment.
The purchase price of $1.2 billion equates to 11.5x enterprise value (company value) to earnings (EBITDA) multiple, and the deal with be funded by a placement of A$642m shares which was successfully raised and A$100m via a retail shareholder offer and the remainder via debt, leaving adequate headroom for further acquisitions.
Eligible investors who hold EBO shares will be able to participate in acquiring new EBOS shares at $34.50 – we recommend eligible shareholders take up the offer.
We remain BUY rated on EBOS as a quality healthcare company which is still reasonably priced and EBO management have a great track record of successful acquisitions which we continue to back .
Australia & New Zealand Market Movers
The Australian market was down yesterday (ASX 200 index -0.3%) easing back from its four-day rally.
Most sectors were down except for Utilities and Healthcare, with losses experienced for a number of blue-chips weighing down on the market.
Buy now pay later stocks were heavily sold down after Z1P’s US growth was slowing down faster than expected.
Sydney Airport rose +2.7% after ACCC gave its approval for the IFM-led acquisition.
The New Zealand market was down on Thursday (NZX 50 index -0.8%) giving back some of Wednesday’s gains.
Stocks that recovered the strongest recently were once to suffer biggest losses yesterday, Genesis falling -2.8%, and Fisher and Fisher and Paykel down -2.7%.
Pacific Edge ended the day up +0.8% after announcing its first commercial agreement of scale in Australia with Northern health – a similar size to the Canterbury DHB.
Sky TV extended its gains up another +2.7%, as Vodafone announced it would axe its TV services next year.
Fonterra Shareholders' Fund Units climbed +2.8% after the co-op's famer shareholders voted in favour of a new capital structure capping the fund at 10% of all co-operative shares.
3 Things Markets will be Watching this Week
- Key events this week US and China CPI (Inflation) data, and trade Data from China.
- Developments around the Omicron variant of covid will be dominating headlines.
- Locally, the RBA meets to review its cash rate, earnings release from Metcash, and AGM’s held by Bank of Queensland and Pendal.
