Global markets were higher overnight, US Markets (S&P 500 Index, +2%) ended higher as it tries to recover from its 6-week losing streak.
US data helped investor sentiment, consumer spending for the month of April rose +0.9% indicating consumers were still well positioned despite elevated inflation. Manufacturing output increased +0.8% in April, matching March increase.
Fed Chair Jerome Powel said the US central bank will continue to keep pushing to a tighten US monetary policy until its clear that inflation is declining.
It was a broad-based rally, tech and material stocks leading gains, while consumer staples was the only sector in the red. Wallmart shares dropped -11.4% bucking a positive day after the retail giant reporting earnings miss because of rising prices, and guided weaker earnings going forward despite raising its sales forecast. Home Depot shares rose +1.7% following better than expected quarterly result, management lifting their full-year outlook – benefiting from a better placed consumer, and rise in remodeling projects.
European markets (Stoxx 600 index, +1.2%) closed higher as markets tried to build some positive momentum, basic resources leading gains with most sectors trading in the green.
James Hardie (JHX:ASX)
James Hardie shares were down -3.5% yesterday despite delivering a solid result, which missed markets high expectations. Revenue for year came in at US$3.6 billion up +24% from last year, fourth quarter sales rising +20%. James Hardie also reported a +42% lift in adjusted net income for the fourth quarter to US$178m, this helped boost the adjusted net income for the fiscal year by +36%, reaching US$621m.
Looking ahead, James Hardie reaffirmed its fiscal year 2023 adjusted net income guidance in the range of US$740m million to US$820, at the mid-point a +25% increase from the recent year.
We are BUY rated on James Hardie, and as highlighted earlier with a high-risk caveat given its valuation and being a growth stock which has been under pressure, but also economically sensitive. We believe markets will be volatile over the near-term and remain cautiously bullish on James Hardie over the medium-term assuming only a mild recession from the current rate hikes.
Australia & New Zealand Market Movers
The Australian market was up again yesterday (ASX200 index, +0.3%) on a mixed day of trade.
Energy, material and financial stocks helped offset losses from parts of the market. EV facing miners were the standout with Lynas leading gains up +6.6%, Pilbara Minerals (a Lithium miner) rose +5%, rebounding from recent selling and getting a boost from their respective commodity prices trading higher.
Brambles shares slumped -7.6% after CVC partners said it would no longer pursue taking over the pallets and container business, due to the current market volatility and inability to make an attractive offer based on current valuation.
The New Zealand market (NZX 50 index, -0.2%) dipped lower as recession jitters weigh down on the market.
Economically sensitive stocks led the selling Pushpay fell -4%, Tourism Holding was down -3.7%, and Fletcher Building slipped -2.7%.
Defensive names were generally higher, Ryman healthcare continues to be volatile as it climbed +4.4% yesterday after a heavy sell-off on Monday.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- Eurozone Inflation and employment figures
- Locally, earnings from James Hardie, Argosy Property, Briscoes, Goodman Property Group, Infratil, Oceania Healthcare and Ryman Healthcare