Global markets were mixed overnight, as US markets (S&P 500 Index -0.9%) slipped in cautious trade ahead of Wednesday’s (US-time) key US CPI (inflation) release, which is expected to be another hot print.
Most sectors traded lower, with energy companies leading the decline as oil fell -8% to $95/barrel on worries over global economic growth. OPEC oil production data also showed output continues to run below target in June. Bucking the trend were airline and travel stocks, after American Airlines said it expects total revenue in the second quarter to top 2019 levels.
In FX markets, the USD reversed post hitting fresh 20-year highs, after hitting parity with the Euro (1 Euro = 1 USD)
European Markets (Stoxx 600 Index, +0.4%) ended the session higher reversing earlier losses as investors watch a weakening Euro and economic data.
Costa Group (CGC:ASX)
Costa shares have slumped lower, prompting a trading halt with management explaining first-half earnings are in line with prior expectations. However, its citrus group would likely experience a troubling second half due to wet weather. These weather-related risks are part of investing in an agriculture company, however, given how well diversified Costa’s production base is these are mitigated somewhat.
We are Buy (High-Risk) rated on Costa. Its core produce offering should benefit from an inflationary standpoint and its defensive nature (selling fruit and vegetables) means better placed amidst an economic slowdown.
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index +0.06%) was basically flat yesterday, shrugging a weak lead from Wall Street in a mixed day of trade.
Investors sort out defensive stocks, with Utilities, consumer staples, and healthcare leading gains, which were offset by losses across materials and most tech stocks.
The New Zealand market (NZX 50 Index) was also flat. Despite a solid update from Spark regarding its TowerCo sales, its shares were up +1.9% as investors remained tentative across the market, especially ahead of RBNZ’s OCR announcement.
3 Things Markets will be Watching this Week
- Highlights this week include US inflation data and second-quarter GDP data from China.
- Locally, the RBNZ meets with a 50bp lift to the cash rate expected.
- Later in the week all eyes will be on US corporate quarterly earnings announcements, which kick off with the major banks on Thursday.