Daily Market Insights
Global markets were generally higher overnight, as investors seem to have shaken off any jitters sparked by US politics last week. Wall Street extended gains as it was boosted by technology shares and as defence companies rose after the United States and Saudi Arabia signed a multi-billion dollar arms deal. Base metal prices also continued to recover on news that china has begun a crackdown on its steel sector.
Closer to home, Fisher & Paykel Healthcare (FPH.NZ / FPH.AX) dominated headlines again as it released its full year profit figures which we discuss below.
Risks around the property market continues to feature in headlines across Australia & New Zealand. The latest on this front has been a downgrade of all Australia’s banks (barring the Big 4) by ratings agency Standard & Poor’s due to perceived housing market risks. The agency said that growing imbalances fuelled by a rapid rise in private sector debt and house prices in Melbourne & Sydney had increased the prospect of a sharp correction in property prices.
Stock in Focus: Fisher & Paykel Healthcare (FPH.NZ / FPH.AX)
FPH released a solid full year profit result yesterday. In terms details the sleep apnea and respiratory device manufacturer posted an 18% gain in full-year profit to $169m, meeting its guidance amid record annual sales. FPH also increased its dividend by 17% to 19.5 cents per share. In terms of outlook, FPH expects sales may reach $1 billion in the year ahead, with is expected to translate into $180-$190m of profit.
We noted last week that while FPH is reaching record heights in terms of earnings, the litigation battle with ResMed does create uncertainty and is likely to remain an overhang on the stock for some time. FPH disclosed that they have spent $20m in legal fees in their battle with ResMed.
Further, FPH is sensitive to moves in the exchange rate, particularly given the large amounts of its sales generated in the US market.
Members should look out for a full update on FPH to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market rebounded yesterday snapping a losing streak (ASX 200 index +0.76%) as three of the four large Banks attracted some bargain hunting by investors and as Resource companies got a lift from improving commodity prices. Heavy weight miners BHP Billiton, Rio Tinto and Fortescue all made solid gains as investor sentiment around base metal prices stabilised. In stock news, APN Outdoor Group suffered the biggest fall on the ASX as its merger with OohMedia! Was blocked due to competition concerns.
The New Zealand market continued to move higher yesterday (NZX 50 index +0.24%) as companies including Spark New Zealand and SkyCity Entertainment joined a rally across Asia. Weighing on the market were shares in Kiwi Property Group – after posting a -43% fall in annual profit as the value of its property portfolio rose at a slower pace than a year earlier. The result was largely expected, with underlying earnings up 13% and as the company said it will pay a full-year dividend of 6.75 cents per share, in line with guidance.
3 Things Markets Will be Watching this Week
1. US political developments and whether they drive markets for another week.
2. Members of OPEC meet on the 25th to discuss the possibility of another oil production deal.
3. Minutes from the last US Federal Reserve meeting are released Thursday.
Have a Great Day,
Team