Global markets were mixed overnight as sentiment around the US market continues to be weighed on by concerns over the recent turmoil in the White House and simmering tensions between the United States and North Korea.
Later this week a key focus for traders and investors will be the gathering of top central bankers from around the world in Jackson Hole, Wyoming starting on Friday. The highlight events of this year's meeting, hosted by the Federal Reserve, will be speeches by Fed chair Janet Yellen and Mario Draghi, president of the European Central Bank.
As discussed yesterday, earnings season continues across Australia and NZ this week and corporate profits will likely remain a focus.
Stock in Focus: G8 Education (GEM.AX)
While the broader market was down, shares in G8 Education jumped +8.8% yesterday after the early childhood education company released its half-year report to the market.
The company reported revenue growth of 2.1% to $368 million, while net profit after tax (NPAT) jumped 23% to $30 million. On an underlying basis, which excludes refinancing fees and large currency gains last year, underlying NPAT was up 5% and underlying earnings per share fell 2% to 8.3 cents per share.
There was some concern as ‘like for like’ (LFL) or ‘same centre’ occupancy fell 3.4% to 77.2%, although on a positive note G8 has taken steps to strengthen its balance sheet, and paid down some debt and announced a cut to the dividend for 2018. In our last update on G8 a few months ago we highlighted the company looked attractive on valuation grounds, and had a dividend yield of over 7% at the time.
We are currently BUY rated on G8 Education and reviewing our recommendation.
Members should look out for our full report on G8 Education to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was in negative territory on Monday (ASX 200 index -0.37%) week as BlueScope Steel became this earnings season's latest victim, while selling in blue-chips Telstra and CSL also weighed on the ASX.
BlueScope Steel (which had been one of the ASX’s best performers in 2017) plummeted -22% after the steel manufacturer revealed its strongest profits since 2005 but warned of falling profit margins in its US business. On the flipside, Fortescue Metals has sharply lifted dividend and promised to sustain higher payouts for shareholders as a rebound in iron prices and lower costs helped it more than double full-year profit.
The New Zealand market started the week slightly lower Friday (NZX 50 index -0.07%) ahead of a busy week of corporate earnings, with Metlifecare and Sky Network Television dropping while Argosy Property and Air New Zealand gained. In other news, Michael Hill International shares were unchanged after reporting annual profits. The jewellery retailer boosted annual profit by two-thirds as its Michael Hill chain grew steadily in its main markets of Australia and New Zealand and recorded stronger growth in Canada. Still, it posted wider losses in its troubled US business and its fledgling Emma & Roe chain.
3 Things Markets Will be Watching this Week
1. Corporate profits will be in focus as earnings season continues across Australia and NZ.
2. The geopolitical situation as tensions remain high between the US and North Korea.
3. US politics as investors are concerned around the Trump Administration’s ability to pursue its pro-growth agenda.
Have a Great Day,
Team
