Global markets were mixed overnight as stocks swung between small gains & losses as US markets remain just below all-time highs.
This week's podcast discusses Comvita, Restaurant Brands, Kathmandu and Briscoes. To listen CLICK HERE.
Stock in Focus: Genesis Energy (GNE:NZX / GNE:ASX)
GNE shares continue to climb higher, as lower interest rates in NZ and around the globe continue to see funds flow into reliable dividend paying stocks.
In terms of recent news, Genesis delivered strong operating performance despite challenging conditions with electricity generation outages and gas constraints limiting production volumes. Operating earnings was $363m for the 2019 financial year, which was up +0.8% (or +$3m) from last year. Underlying net profit after tax was up largely due to improved retail earnings offseting weaker oil production from GNE's Kupe interests and a flat performance from its generation arm.
Interestingly, Genesis plans to cut the use of coal for energy production by 2020 despite continuing to remain heavily reliant on it as it doubled energy generation from coal to offset declines in hydro and gas production. Genesis Energy remains our top pick in the sector – primarily due to its diverse production base. But given a now relatively modest dividend yield of 5% we maintain our HOLD recommendation due to valuation.
Members should look out for a full update on GNE to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market rallied yesterday (ASX 200 Index +0.54%) as the ASX hit a 7-week high after the US Federal Reserve cut interest rates and as a rise in the jobless rate boosted the chance of the Reserve Bank of Australia cutting interest rates next month. Financial stocks paced gains in the local market, including the Big 4 Banks & Macquarie shares were particularly strong.
The Aussie dollar dipped against its US counterpart after the Australian Bureau of Statistics said the jobless rate climbed to 5.3% last month, boosting the chance of further interest rate cuts by the central bank next month.
The New Zealand market was in positive territory on Thursday (NZX 50 Index +0.24%) led by a recovery in fuel retailer Z Energy. Restaurant Brands New Zealand hit a record as the fast food operator's KFC chain continued to drive sales growth for the company, more than offsetting the loss of its lacklustre Starbucks Coffee chain.
Local data showed the NZ economy grew at its slowest rate since late-2013, with June quarter growth of 0.5% leading to a 2.1% year on year gain. In saying that, it was still a faster quarterly pace than predicted, as strength in the nation's services sector and agriculture more than made up for a contraction in construction and manufacturing.
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,