Global markets were lower overnight on low volume as investors were mostly absent as the US market was closed for Labour Day holiday.
Geopolitics were back in the spotlight yesterday as tensions surrounding North Korea were heightened again on the back of the nuclear bomb test carried out by the regime over the weekend. The US ambassador to the United Nations said North Korea was "begging for war" by testing a nuclear weapon over the weekend and demanded the strongest sanctions possible to bring the Kim Jong-Un regime to heel.
While the news appears to have hit market sentiment, there was no major panic and losses were not large. It will be interesting to see how the US market trades when it opens tonight.
Stock in Focus: SKY Network Television (SKT:NZ / SKT:AX)
Shares in Sky TV hit an 18-year low yesterday as its shares continue to come under selling pressure.
While yesterday’s fall was exaggerated by the fact that holders lost rights to a its next dividend payment (shares traded ex a 12.5 cent dividend), there were further press reports that global internet giant Amazon is potentially interested in New Zealand's rugby broadcasting rights. At this stage the reports are speculation, although appear to be further hitting sentiment towards Sky TV. The news comes after Sky TV recently announced a -21% decline in profit as content costs increased while revenue and subscriber numbers fell.
We have held a negative view on Sky TV as it faces a number of structural pressures and challenges from “digital TV disruption”. There are further risks of fragmentation as SKT could lose more if its major TV rights longer term, in our view.
We are currently SELL rated on Sky TV.
Members should look out for our full update on Sky TV to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was lower on Monday (ASX 200 index -0.39%) in line with sentiment across Asian markets, after North Korea's weekend test of a nuclear bomb unnerved investors and sparked a surge in safe havens such as gold. Almost all sectors moved lower, save for gains in property trusts and a near-flat finish for telcos.
The New Zealand market was lower on Monday (NZX 50 index -0.18%) shares were mixed in subdued trading, with Sky Network Television leading the index lower on concerns about its rugby rights while Heartland Bank and Vista Group International gained. The upcoming general election and the Labour Day holiday in the US kept the local market quiet yesterday. Further as touched on above North Korean uncertainty did weigh on markets in the Asia-Pacific region, but there was no major panic.
3 Things Markets Will be Watching this Week
1. The Reserve Bank of Australia makes an interest rate decision on Tuesday.
2. Australian economic growth (GDP) data is set to be released on Wednesday.
3. US politics as investors are concerned around the Trump Administration’s ability to pursue its pro-growth agenda.
Have a Great Day,
Team