Global markets were lower overnight as energy stocks spiked while the rest of Wall Street fell after weekend attacks on Saudi Arabia’s oil facilities added to investors’ concerns about geopolitical risk and a slowing global economy.
Crude oil prices rose as much as 19%, before settling at up just over 10% as the attack news reversed recent sentiment. Markets had taken a negative view on oil with investors spooked by the ongoing trade war between the US and China, a slowing global economy and perceived oversupply in the oil market.
There were plenty of oil-related movers on Monday, with airline Qantas & Air NZ falling as investors worried about higher fuel bills. Stocks in the energy sector jumped such as Beach Energy, Oil Search, and Woodside Petroleum.
Stock in Focus: Bellamy's Australia (BAL:ASX)
Infant formula company Bellamy's saw its shares jump yesterday as it has recommended shareholders vote in favour of a proposed $1.5 billion takeover by Chinese company Mengniu. The potential takeover offers a significant 59% premium to the last closing price for Bellamy's shares.
A2 Milk and Synlait Milk were buoyed by the prospect of a takeover in Australia, as investors speculate there could be further takeover activity. Clearly a takeover of A2 would be a slightly more difficult proposition than Bellamy's given its larger size and strong growth rates.
We do not have full research coverage on Bellamy's.
Australia & New Zealand Market Movers
The Australian market was a touch higher yesterday (ASX 200 Index +0.06%) with the muted index move concealing some large movements on the individual stock level. Infant formula maker Bellamy's Australia surged after a takeover offer from Chinese giant China Mengnui Dairy Company, while metal recycler Sims Metal slumped -13% after warning of a "materially lower" fiscal first-half result.
The New Zealand market was lower on Monday (NZX 50 Index -0.29%) as higher oil prices on the back of the Saudi situation weighed on transport stocks including Air New Zealand and Mainfreight. Auckland International Airport as it said international passenger numbers fell 1.2% in July from a year earlier, although domestic numbers were up 1.6%. Dividend paying stocks such as the power generators and property stocks also continued to experience profit taking after a move higher in US interest rates.
3 Things Markets Will be Watching this Week
- Trade War related news-flow is likely to continue to feature in headlines.
- The US Federal Reserve makes an interest rate decision on Thursday morning AU/NZ time.
- Oil related news-flow is likely to feature in headlines following the drone strike on Saudi Aramco
Have a Great Day,