Global markets were mixed overnight as investors on Wall Street await US corporate earnings season which kicks off this week. Analysts are expecting the first quarter of contracting US company earnings since 2016.
Stock in Focus: BHP Billiton (BHP:ASX)
Shares in mining giant BHP led the ASX higher yesterday, as the major resource stocks followed the price of oil higher.
In terms of recent news, BHP shares have been on a strong run thanks to favourable price movements from its majority commodities – particularities iron ore which contributes 40% of BHP’s earnings. Iron ore prices rallied strongly following a mining disaster in Brazil (January 2019), and since then stronger than expected demand from China and supply constraints have been pushing the iron ore price higher.
BHP also managed to deliver a better than expected result for the first half of the 2019 financial year – with the highlight being lowering debt to below their target range of $10 billion to $15 billion. We seen BHP as our top mining pick for sometime now, particularly given their diverse production base, large scale and a significantly lower cost structure.
We currently have a BUY recommendation on BHP
Australia & New Zealand Market Movers
The Australian share market rallied on Monday (ASX 200 index +0.65%) rebounding from a loss in the back-end of last week.
The major resource stocks led the market on Monday as oil prices edged to a five-month high, and both US and Chinese officials signalled solid progress in trade negotiations. BHP Group led the market, while Fortescue Metals Group, Rio Tinto, and South32 all advanced. The oil stocks such as Woodside Petroleum, Santos, and Origin Energy were also strong. In stock news, Resolute Mining shares jumped +7% on the back of a solid quarterly production report. The gold miner said production had increased by 33 per cent for the quarter and that the company had achieved record quarterly gold production at its Syama mine in Mali.
Lynas Corp rose slightly after Malaysia Prime Minister Mahathir Mohamad said on Friday Lynas would be able to continue processing its rare earths in the country, if it agreed to first decontaminate raw material before sending it there. Lynas said on Monday it welcomed the continuation of its operations in Malaysia.
The New Zealand market started the week off with a loss (NZX 50 index -0.51%) as the threat of a slowing property market was seen weighing on retirement sector stocks such as Summerset Group and Metlifecare. Summerset led the market lower for a second day, down -5% on a bigger volume than usual. The retirement village operator and developer reported weaker unit sales last week, citing slowing property markets in Auckland and Christchurch for the decline.
3 Things Markets Will be Watching this Week
- This week marks the start of the US first-quarter reporting season.
- The European central bank makes an interest rate decision Wednesday night (AU/NZ time).
- The Reserve Bank of Australia’s semi-annual Financial Stability Review is released on Friday.
Have a Great Day,