Global markets were higher overnight, as a tech rally led by Apple pushed Wall Street’s main indexes higher, offsetting losses in US lenders after the Federal Reserve indicated they do not intend to raise interest rates again this year.
Closer to home, NZ economic growth (GDP) data released yesterday showed the economy grew less than the central bank expected in the fourth quarter but economists don't expect the data to spur any change in the Reserve Bank's message at next week's policy review. NZ GDP expanded 0.6% in the three months to Dec versus a 0.3% rise in the September quarter and was 2.3% higher than the same quarter a year earlier.. Economists had expected GDP to expand 0.6% on the quarter and 2.5% on the year, according to the median in a Bloomberg poll. It is widely expecting the RBNZ will keep the official cash rate on hold at a record low 1.75% at next week's monetary policy review and will reiterate that the next move could be up or down, depending on how the data unfolds.
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Please note we will be releasing a full update on Metro Glass next week.
Stock in Focus: Synlait Milk (SML:NZX / SM1:ASX)
Synlait Milk shares have experienced a strong run in recent times, primarily on the back of the amazing success of A2 Milk. However, its shares dipped this week after the dairy company reported weaker earnings, disappointing investors who had anticipated another strong result. The milk processor reported a 9.7% decline in first-half profit as a new pricing arrangement with A2 Milk and restrictions on Chinese imports squeezed margins.
We are in the process of preparing full research coverage on Synlait.
Australia & New Zealand Market Movers
The Australian share market was a touch higher on Thursday (ASX 200 index +0.03%) following a late rally as volatile trading in global markets seeped into the local sharemarket following a more dovish tone from the US Federal Reserve. The major miners lifted the market on Thursday despite iron ore prices sliding. In stock news, Sigma Healthcare fell after reporting a 34% slide in reported full-year net profit, citing restructuring, litigation and due diligence costs associated with the recently rejected takeover offer.
Interestingly, data yesterday showed the Aussie unemployment is at an eight-year low, although several economists suggesting the rate will soon rise and the RBA could be forced to cut rates as a result.
The New Zealand market was in positive territory yesterday (NZX 50 index +0.27%) as investors digested local GDP data and the latest news form the US Federal Reserve. In stock news, Michael Hill International shares fell after long-time shareholder Fisher Funds Management announced it has sold its stake in the jewellery chain. Air NZ shares remain under pressure following their recent profit warning, while Auckland Airport continues to slip from all-time highs after shedding its dividend rights.
3 Things Markets Will be Watching this Week
- The US Federal Reserve makes an interest rate decision Thursday morning AU/NZ time.
- Thursday also sees the release of official NZ economic growth (GDP) figures.
- Tuesday sees the release of minutes from the Reserve Bank of Australia’s last meeting, as well as Aussie house price data which is expected to confirm a suspected slowdown.
Have a Great Day,