Global markets bounced overnight led by the trade-sensitive technology and industrial sectors, as China sounded hopeful on trade negotiations with the United States, easing concerns that more combative stances could stoke a recession. A spokesman for China’s commerce ministry said that escalating the trade war won’t benefit either side and that it was more important to discuss removing the extra duties.
Closer to home, the domestic earnings season enters it last day today, and across Australia & NZ it has been a mixed bag of profit announcements. Once again, we will be reporting full updates on stocks under our coverage in our weekly report.
This week's stock market movers podcast discusses A2 Milk, The South Pacific Stock Exchange & Dissecting Insider Buying at RFF. To listen CLICK HERE.
Stock in Focus: Next DC (NXT:ASX)
Data centre operator NEXTDC released its 2019 full year result yesterday, which failed to inspire the market as it reported a bigger net profit loss than the year prior despite lifting revenue.
Although NEXTDC reported a 15% increase in revenue to $179.3 million and a 13% lift in underlying earnings to $85.1 million, investors appear disappointed that it posted a $10 million loss after tax. In the 2020 financial year management continue to expects solid operating earnings growth of 17.5% to 23.5%.
While the result disappointed at the margins, over the medium term we remain positive on Next DC given the powerful tailwinds behind the explosion of data.
We currently have a BUY recommendation on Next DC.
Members should look out for a full update on Next DC to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market was a touch higher on Thursday (ASX 200 Index +0.10%) extending its recovery from Monday's sell-off.
Woolworths was in the red for most of the session before a late rally saw its shares close higher - while the group reported weaker food gross margin and a fall in earnings for its Endeavour Drinks business, it lifted its dividend and said it had made a robust start to the new financial year. Ausdrill also added to the market gains after beating its earnings guidance for the third consecutive year and forecasting a stronger result for the 2019-20 financial year. On the flipside, tech darling Appen disappointed market expectations despite posting a solid half-year result.
The New Zealand market was lower yesterday (NZX 50 Index -0.43%) led lower by Vista Group International, which was punished for dialling back its expectations for revenue growth.
Vista slumped to a seven-month low after scaling back its projections for revenue growth to 10-12% and reported a 23% slide in first-half profit. The cinema software analytics firm has lifted revenue by more than 20% in each of the past five years and there were high expectations placed on the recent market darling.
NZ King Salmon shares were higher after reporting an 8% increase in annual revenue despite a dip in its harvest. Profit fell as the fish farmer deals with higher mortality rates, which has prompted an increased investment programme – although this was well-flagged to the market.
3 Things Markets Will be Watching this Week
- Trade War related news-flow is likely to dominate headlines.
- Australasian company reporting season moves into its latter stages.
- Escalating geopolitical tensions between Hong Kong & China are also creating nervousness.
Have a Great Day,