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Genesis shares have held flat for the year, after their slide late last year as investors worried about the times of record low-interest rate environment would be over. Despite rates heading upwards aggressively this year, Genesis has held its value better as risk adverse investors appreciate its dependable dividend in-light of economic uncertainty. As seen below Genesis is fairly priced in our opinion at current levels as it offers an attractive dividend, while any levels below $2.60 would be considered oversold and tend to bounce back from that, and on the flipside above $3.25 can be viewed as an overbought level pushed by record low-interest rates (which pushes up asset prices higher, especially yield stocks) which was not permanent.

A2 Milk shares bucked the sell-off, jumping strongly after delivering a better than expected result for the 2022 financial year given challenging market conditions. Group revenue rose +20% from last year while operating earnings (EBITDA) lifted +47% from last year to $196.2m. Better inventory management saw gross margins normalise (following the previous year’s write-off), while profit growth was limited to increased marketing spending, which appears to continue to rise to achieve modest revenue growth. The surprise was how well China infant formula performed despite macro headwinds as birth-rate in China slumping -11.5% in 2021 and is expected to fall further in 2022 – the decline was partially offset by an increase in household penetration and consumption within the infant formula market. Strong cashflow generation and profitability in the past means A2 Milk is currently sitting on $816.5m cash on hand, with management announcing an on-market share buyback of $150m – was well received by the market.

US markets (S&P 500 Index 0.0%) were closed on Monday in observance of Labor Day. However, US Futures (S&P 500 Index Futures +0.3%) are currently trading slightly higher in anticipation of Tuesday’s opening. European stocks weaker as energy crisis continues to dominate headlines (Stoxx 600 Index -0.6%) as euro gas futures jumped +15% while the Euro fell through 0.99 versus the US dollar for first time in 20 years. Russia’s Gazprom announced that they would be indefinitely halting gas flows to Europe via the Nord Stream 1. Putin’s spokesperson said there would be no resumption in gas supply until sanctions are lifted. The loss that was incurred in the Stoxx 600 could have been worse if not for the gains made in energy sector stocks (STOXX 600 Energy +2.2%). 

Shares in data centre operator Next DC (NXT) fell heavily after delivering their 2022 full year result, the selling not helped by a broader tech sell-off for the week. Despite delivering a solid result on the top end of its previous guidance. Revenue rose +18% from last year to $291m and underlying operating earnings (EBITDA) increased +26% to $85m. The company experienced strong growth and ramped it its investment in expanding its installed capacity. Looking ahead, Next DC expects the growth to continue strongly into 2023, with revenue expected to rise +17% to 22% from last year, while operating earnings with grow by +12% to +17% softer than what the market had anticipated given. 

We initiate coverage of Walt Disney Co (DIS) with a BUY rating. The company hardly needs an introduction; its brands are amongst the most well-known in the world, from Mickey Mouse to Marvel and Star Wars. Its empire spans across several sectors — television and movies; sports (ESPN); parks (Disney World) and cruises. The company is a savvy aquirier of valuable assets, including Capital Cities/ABC, Pixar, Star Wars and the bulk of 20th Century Fox. There are few brands which can hold a candle to Disney. In terms of brand value it is perhaps only surpassed by Coca-Cola and Apple. The bulk of the company’s revenue comes from media (~2/3rds) and the remainder from parks and cruises.

US markets (S&P 500 Index -1.1%) fell on Friday, ending the week down -3.3% and marking its third weekly decline as a robust job report confirmed the recent market fears that the Fed would keep aggressively hiking interest rates. The ‘goldilocks’ nonfarm payrolls report showed some moderation in wage pressure and a surprise increase in the unemployment rate – August saw 315,000 new jobs created, a touch below 318,000 expected by the market. This saw the market increase the probability the Fed would raise its base interest rate by +75 basis points at its next meeting later this month. All sectors sold off for the day, except for energy. Tech shares were heavily hit again with the NASDAQ Index down -1.4% suffering its 6th consecutive daily loss.

US markets (S&P 500 Index +0.3%) rose in the final hours of trade overnight., recovering from a loss and snapping up a four-day losing streak. Energy and tech shares were the only sectors in the red, with the NASDAQ Index down -0.3% logging its first 5-day losing streak since February. Chip maker Nvidia fell -7.7% after the US government announced it would need special government licenses to sell two of its advanced semiconductors to Chinese customers. European markets (Stoxx 600 Index, -1.8%) fell extending losses, with all sectors in the red, Travel and Leisure stocks leading the decline.

US markets (S&P 500 Index -0.8%) fell for the fourth straight day on the last day of August. Wall Street markets moved approximately 4.0% lower over August, after scrubbing gains made in the first half of the month.  Markets are now under no illusion that the US Federal Reserve will not waiver in its commitment to raising rates at its current pace. The Feds sentiment seemingly holds regardless of whether the US is entering an official recession or not.  Technology stocks bucked the overall trend and helped the markets from registering an even larger loss. Meta booked a 3.7% gain, but was beat by two Chinese-based companies, Pinduoduo and Baidu, climbing 7.2% and 4.6%, respectively.

Oil and LNG producer Woodside Energy rose to a fresh 3-year higher after announcing a bumper dividend for the first half of the 2022 financial year. Net profit after tax jumped 5-fold to $1,640m, benefiting from higher oil and gas prices (double the same corresponding period last year) and a +19% increase in production volumes which included one full month of production from merged BHP assets. Woodside paid out an interim dividend of US$1.09 per share and now has a strong balance sheet following strong cash generation over the half.