Oil Continues to Slide | HSO, Westpac Falls

14 November 2018

Global markets were mixed overnight as European markets were higher but US stocks finished with slight losses. A bruised technology sector outperformed and industrial stocks gained on hopes of a U.S-China trade deal, but declines for Boeing and Home Depot weighed on the Dow.

Oil's slide accelerated, with both US oil and Brent shedding 6 per cent, due to ongoing worries about weakening global demand, oversupply and sell offs across other asset classes. The slump in crude prices "has been exacerbated by a steep rise in OPEC and US shale output ahead of the implementation of sanctions against Iranian crude, which were also met with the issuance of waivers to key consumers of Iranian crude.

Once again, volatility has returned to markets in a big way since October, and we once again reiterate that it is important for medium-term investors to remain calm during periods of heightened volatility. 

 

Stock in Focus: Healthscope (HSO:AX)

As we touched on yesterday, Healthscope held onto its gains after it previously announced it had received a takeover offer worth up to $4.5 billion for Brookfield Capital Partners.

The $2.455 a share offer bettered an offer from BGH Capital worth $2.36 a share. The company said it would now reject the due diligence request from BGH.

There has been a long running takeover attempt for HSO, and we believe it reinforces our view that HSO shares are attractively priced. We have a positive medium-term view on the private hospital company as part of our ageing population investment theme.  We believe that an ageing demographic across Australia & New Zealand will provide a multi-year tailwind for Healthcare stocks.

We are currently BUY rated on Healthscope.
 

Australia & New Zealand Market Movers

The Australian share market (ASX 200 index -1.80%) was sharply lower on Tuesday as investors wiped $32 billion from the ASX boards on the back of a slide in technology stocks on Wall Street. Westpac was the biggest weight on the market on, falling -5% as its $35 million settlement with ASIC was thrown out by the Federal court, and was set to be the biggest fine for breaching national credit laws in Australia's history. Technology stocks were among the market's worst performers, mirroring US counterparts.

 

The New Zealand market sold off yesterday (NZX 50 index -1.06%) after a sharp drop on Wall Street overnight spooked investors throughout Asia’s markets. In stock news, Infratil reported a 19% increase in half-year operating earnings and raised its full-year forecast. Port of Tauranga rose as the company told investors today it is budgeting on another year of strong container and bulk cargo growth and has started planning for expansion of its container berth and optimisation of its container terminal.

 

3 Things Markets Will be Watching this Week

1.              Trade relations between China and the US ahead of the G20 talks later this month.

2.              The latest US inflation data will be published on Thursday morning AU/NZ time.

3.              Aussie employment data is also released on Thursday.

 

Have a Great Day

Global markets were mixed overnight as European markets were higher but US stocks finished with slight losses. A bruised technology sector outperformed and industrial stocks gained on hopes of a U.S-China trade deal, but declines for Boeing and Home Depot

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