Global markets were higher again overnight as Wall Street turned positive following reports that Trump would hold off on imposing tariffs on imported cars and parts, easing slowdown fears after downbeat economic data.
There was optimism overnight that the US was close to resolving its steel and aluminium tariff dispute with Canada and Mexico. In addition, there were reports that the US would delay a decision on imposing tariffs on auto imports for another six months. Meanwhile, Treasury Secretary Steven Mnuchin said he will likely travel to Beijing soon to continue trade talks with China. For the moment, concerns have eased that the Trump administration was poised to ratchet higher its aggressive approach to trade – however, once again global trade tensions remain a key concern for markets right now.
Stock in Focus:Visa (V:NYSE)
Benefitting from the US market rally this year are Visa shares, which have been in recovery mode in 2019, rallying hard & recently hitting all-time highs as investor confidence returns to the market. Visa also delivered another solid result for the 2019 second quarter, with earnings beating market expectations again for the fourteenth consecutive quarter.
Visa managed to lift revenue by +8% from last year to $5.5 billion on strong payment volumes and transaction growth despite being adversely impacted by negative currency movements having a ~1.5% impact on revenue. Visa also anticipate a stronger second half to the 2019 financial year with April processing volumes accelerating strongly due to the timing of Easter, as well as margin expansion to drive earnings growth.
Visa has a great existing business and benefits from a clear thematic tailwind of growth as the move towards a cashless society accelerates. Visa also continually achieves strong double-digit earnings growth, as it grows revenue and widens its margins. Because of this, Visa is valued at a premium to the overall market due to its successful track record of continual growth and future growth prospects.
We currently have a BUY recommendation on Visa.
Australia & New Zealand Market Movers
The Australian share market rebounded on Wednesday (ASX 200 index +0.71%) recovering almost all its losses from the previous session, as upbeat comments from US President Donald Trump soothed investors' nerves. The major miners advanced after base metal prices rebounded in London on Tuesday, while Banks were mixed.
After a lengthy search for an acquisition, Australian gold miner St Barbara has branched out into North America, snapping up Canada's Atlantic Gold for $768 million as it looks to diversify and make the company "stronger for longer".
The New Zealand market bounced back yesterday (NZX 50 index +0.61%) following an improvement in global investor sentiment. In stock news, Goodman Property Trust increased as the property investor reported a 65 percent increase in net profit, driven by an uplift in property valuations, with its portfolio now worth $2.6 billion.
3 Things Markets Will be Watching this Week
- Mini reporting season across Australasia sees a number of Aussie & Kiwi stocks make earnings announcements.
- Trade War headlines between the US & China are likely to remain a feature this week.
- The latest Aussie employment data is released Thursday.
Have a Great Day,