Global markets were generally higher overnight as stocks on Wall Street rallied as Apple led a jump in technology stocks and a rise in oil prices lifted energy companies.
Meanwhile, emerging markets remain under pressure amid global trade tensions, a broadly stronger dollar and prospects of higher US interest rates (a lot of emerging market debt is denominated in US dollars). Turmoil in Turkey and Argentina is also triggering contagion fears for other emerging markets.
Closer to home, the local Australian and NZ markets rebounded yesterday after a period of selling. On the NZ market gains were led by market heavyweights, while energy stocks gained on the release of a sector report which allayed fears of tighter regulation on the electricity sector. Most electricity stocks made solid gains, including Genesis which we discuss below.
Stock on Focus: Genesis Energy (GNE:NZ / GNE:AX)
We are generally cautious on the power generator sector, especially in an environment of rising interest rates. However, Genesis Energy remains our top pick in the sector, primarily given its diverse production base (which includes oil) and attractive dividend yield.
In terms of its recent result, it was decent with an 8% increase in full-year operating earnings to $360.5 million after dry, still weather boosted demand for coal- and gas-fired generation from its Huntly site. The company has made a number of acquisitions in recent times lifted headline numbers, and had significant expenditure over the year including upgrades at Tekapo, Tuai and Tokaanu, integrating the new LPG business and new digital retail products.
We are currently have a BUY recommendation on Genesis.
Members should look out for our full update on Genesis to be released in today’s weekly report.
Australia & New Zealand Market Movers
The Australian share market snapped its 8-session losing streak yesterday (ASX 200 index +0.62%) as banks and Telstra, along with a handful of miners, helped the market take back some losses made amid ongoing China-US trade tensions and turmoil in emerging markets. The latest round of hearings of the Hayne inquiry into the financial services sector is zeroing in on the insurance sector, which saw IAG and Suncorp shares sell off.
The New Zealand market jumped on Tuesday (NZX 50 index +1.96%) in busy trading, led by A2 Milk, Contact Energy, and Fisher & Paykel. The market index's gains were being pushed by large stocks, with A2 Milk up +5% after an investor presentation by the firm in Hong Kong looks to have been well received. Fisher & Paykel Healthcare also gained, and yesterday filed another litigation complaint against its rival ResMed, alleging some of ResMed's masks used to treat obstructive sleep apnea infringe its patents.
3 Things Markets Will be Watching this Week
1. US-China trade tensions & whether Trump proceeds with the threats of a new tariff which would be imposed on virtually every Chinese good entering the US.
2. The Bank of England and European Central Bank make interest rate decisions on Thursday.
3. Australian employment data is published on Thursday.
Have a Great Day,