Powell Comments | Macquarie

14 February 2020

Global markets were up overnight as US stocks climbed to fresh highs as investors digested the latest views from Federal Reserve Chair Jerome Powell that the economic outlook continues to remain stable. Consumer discretionary shares pushed higher but gains were tempered due to weakness from Facebook and Microsoft after the Federal Trade Commission asked some of America’s biggest tech companies for information about acquisitions that may have eliminated new competitors.

European and Asian markets closed higher, despite the coronavirus outbreak, as the fact that central banks could ease policy in the event of a growth slowdown created some investor confidence.

Stock in Focus: Macquarie (MQG:ASX)

Macquarie shares were a touch lower yesterday down after releasing an operating update which 'only' reiterated its previous guidance that 2020 full year earnings will be slightly lower than the previous year – with the market anticipating a traditional upgrade.

Macquarie stated trading conditions over the December 2019 quarter were satisfactory across the group, as their 'annuity style' business continued to perform well, while their more volatile market facing business was down significantly as expected compared to a stronger corresponding period (which would be difficult to match).
The highlight being their mortgage portfolio of $48.6 billion which was up 11% compared to the previous quarter as a result of policy changes made in 2017 – including reducing pricing for customers with more than 30% per cent equity in their homes – and the 2013 decision to rebuild its technology system from scratch. 

Members should look out for a full update to be released in our weekly update.
We currently have a BUY rating on MQG.  


Australia & New Zealand Market Movers

Australia & New Zealand Market Movers The Australian market was up yesterday (ASX 200 Index +0.6%) reaching its highest level in more than two weeks, as investors disregarded the growing number of coronavirus deaths amid strong earnings results.

The biggest gainer being Challenger up +13.9% after it upgraded its full-year guidance following a solid first half result, with strong sales growth from its Japanese business. Telstra advanced two days ahead of its results later this week, likewise Woolworths and Wesfarmers firmed, and CSL continued to hit new record highs.

The New Zealand market was up  (+1.1%) on Tuesday, partly due to flow on effect of better earnings performance globally while stable income stocks become more attractive admits fears over the economic slowdown of the coronavirus. ASB Bank economists predict the outbreak will slow New Zealand's economic growth by 0.6 of a percentage point.
The market was led higher by Synlait with it's share up +4.6% on an upgrade. Contact Energy rose 3.5% despite reporting a 21% decrease in first-half earnings. Contact was bought by investors as it continues to offer attractive value as the market had not priced its potential for growth in geothermal energy, with risks of Tiwai Point Smelter closing reduced slightly. 


3 Things Markets Will be Watching this Week

  1. ​​Local earnings season starts across Australia & New Zealand this week.
  2. The Reserve Bank of New Zealand makes an interest rate decision on Wednesday.
  3. US corporate earnings season gets into its latter stages.

Have a Great Day,


US stocks climbed to fresh highs as investors digested the latest views from Federal Reserve Chair Jerome Powell that the economic outlook continues to remain stable.

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