Markets Set to Start Week Higher

9 May 2017

Global stock markets were higher on Friday and there were a number of developments over the weekend.
 
In terms of the US markets, the S&P 500 market index reached a new record high close, as energy stocks bounced back along with oil prices. US job growth data was also solid as nonfarm payrolls showed 211,000 jobs were created last month, after a paltry gain of 79,000 in March, and the unemployment rate dropped to 4.4%, near a 10-year low.
 
Over the weekend there was also market positive news from the French elections. Centrist Emmanuel Macron easily defeated his opponent Marine Le Pen (who was seen as the non-market friendly, anti-European Union candidate), with around 65% of votes. The result is important in the context of a key political risk this year being instability in the Eurozone, with elections in Germany also set to take place.
 
Closer to home, shares Macquarie (MQG.AX) were up +3% in a falling market as it reported better than expected full year profits. 
 
Stock in Focus: Macquarie (MQG.AX)
Australia's biggest investment bank Macquarie Group has reported a 7.5% jump in full-year profit to $2.2 billion. The result beat market expectations, despite fairly flat revenue streams.
 

It was an impressive result by MQG, and particularly pleasing was the rebound of the capital-markets facing businesses over the second half of the 2017 financial year (which was up +12% on last year).
 
In terms of outlook, MQG’s CEO stated he currently expects FY 2018’s profit result to be “broadly in line” with this year’s effort. We have noted in the past that while MQG’s profitability is impacted on by volatile factors such as equity market conditions and the Aussie dollar, some of these drivers could continue to swing in MQG’s favour.
 
We are currently BUY rated on MQG as one of our only holdings in the Financial sector.  

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Global stock markets were higher on Friday and there were a number of developments over the weekend. In terms of the US markets, the S&P 500 market index reached a new record high close, as energy stocks bounced back along with oil prices.

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