Global markets were mixed overnight with a choppy trading session on Wall Street. Investors grappled with escalating trade tensions and rising oil prices.
President Donald Trump said that China had become "very spoiled" on trade with the United States and cast doubt on the success of his efforts to rebalance the relationship with Beijing as high-stakes U.S.-China negotiations opened in Washington. In stock news, retail giant Walmart fell amid concern about declining margins.
The price of oil however continues to show strength, which saw the UK market (FTSE 100) hit a new high (given the large exposure of the market to the energy sector).
Stock in Focus: Pushpay (PPH:NZ / PPH:AX)
Shares in payments software company Pushpay (PPH) were volatile yesterday, dropping as much as -10% before ending the day down -5% after releasing full year annual results.
The full year 2018 result follows on from last month’s quarterly trading update, which was also initially received negatively by the market. As with the quarterly update, we were surprised to see such a sharp drop given most of the key numbers and issues were well flagged in the quarterly update (although clearly the announcement disappointed some investors in the market).
PPH annual earnings met its guidance as revenue rose to $70.2m from $34.3m in the previous year. PPH also once again highlighted its strategic focus is now on medium and large churches, and PPH’s app has gained traction in the US faith sector, where it is now in use in 54 of the top 100 churches and has transactions of US$3 billion based on annualised monthly figures. While the larger clients are harder to onboard, they are stickier once they become clients, and the the strategy makes sense to us.
We currently have a BUY recommendation on Pushpay.
Members should look out for a full update on Pushpay to be released in next week’s weekly report.
Australia & New Zealand Market Movers
The Australian share market was lower on Thursday (ASX 200 index -0.21%) led lower by Westpac (which went ex-dividend), CSL, and Treasury Wine Estates. Treasury Wine shares fell after The Australian Financial Review reported the company was facing a supply glut in China. The company also revealed sales in China were being hurt by new import verification requirements. In other stock news, Coca-Cola Amatil fell after its AGM where the softdrink maker warned earnings at its Australian beverages unit would be hit by the launch of a container deposit scheme.
The New Zealand market recovered losses yesterday (NZX 50 index +0.56%) as A2 Milk Co and Synlait Milk rebounded, while Pushpay fell after its full year result announcement. A2 Milk led the market's gains, though much attention was turned to the first Budget for the Labour-led government. Several market commentators have seen the budget as a conservative one, with nothing really jumping out with significant implications for financial markets. In other stock news, Infratil gained as the company beat its annual earnings guidance and said it expects profitability to increase in the future on the back of its recent investments.
3 Things Markets Will be Watching this Week
1. Corporate earnings season rounds up in the US this week.
2. Australian unemployment data is published on Thursday.
3. Minutes from the last Reserve Bank of Australia meeting are released on Tuesday as well as a speech from the assistant RBA governor.
Have a Great Day,
Team
