Global markets were mixed overnight as the Nasdaq Tech index fell, while a rise in energy stocks and a report of fresh US-China trade talks helped keep the other major US indices afloat.
The price of crude oil is back at multi-year highs, with West Texas US Crude at $70 a barrel and Brent Crude trading at $80 a barrel overnight.
The overnight jump came after a larger-than-expected drop in US crude inventories and as US sanctions on Iran added to concerns over global oil supply. Tariff concerns are also putting upward pressure on the oil price. The rise in oil prices overnight helped to lift the Aussie energy sector yesterday, with most of the sector's largest stocks leading the market gains such as Woodside Petroleum which we discuss below.
Stock in Focus: Woodside Petroleum (WPL:AX)
Shares in oil & gas producer WPL have been on a strong run on the back of higher energy prices. In terms of its recent result, Woodside delivered an increase in profit and dividends while upgrading its production guidance. What was impressive was that sales revenue and operating cash flow were both up +27% and +25% respectively from last year due to higher average sales prices and improved production levels.
WPL remains our preferred energy sector pick. WPL offers a healthy 5% dividend yield and has a solid balance sheet in our view, with growth being driven by increased production and as energy prices are holding at relatively favourable levels.
We are currently have a BUY recommendation on Woodside
Australia & New Zealand Market Movers
The Australian share market was a touch lower on Wednesday (ASX 200 index -0.06%) with many of the major insurers trading lower, as the banking royal commission into the financial services delves into the insurance industry. In stock news, Myer shares closed -4% lower after the retailer posted a $486 million loss in 2018. Underlying profit for the year was down 52.2% to $34.5 million, falling short of market forecasts.
The New Zealand market was lower yesterday (NZX 50 index -0.33%), giving back some of Tuesday’s strong gains. The NZX was led lower by Mercury NZ and SkyCity. In stock news, market operator NZX shares were higher as it signed a memorandum of understanding with the operator of the tech-heavy Nasdaq bourse to let top-tier American companies apply for a secondary listing locally. The deal is the latest effort by NZX to develop closer links with international peers as it seeks to promote local investment products and drive greater liquidity through its own platform.
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,
Team
