Global markets were little changed overnight as Wall Street struggled to hold on to early gains as losses in industrial stocks including Boeing and Caterpillar offset gains in chipmakers and technology companies. Worries about the impact of President Donald Trump's decision to impose metal tariffs further weighed on industrial stocks including Boeing and Caterpillar.
As we touched on yesterday, the other key focus for markets at the current juncture is inflation data as it will likely drive the actions of the US Federal Reserve and interest rates. The latest monthly US inflation data will be released overnight.
Closer to home, yesterday saw resource giant BHP announce it has decided not to pre-empt Woodside Petroleum's $US744 million buyout of ExxonMobil from the large Scarborough gas field off Western Australia but has made sure the door is open for a possible increase in its 25% stake in future.
Stock in Focus: Woodside Petroleum (WPL:AX)
Woodside Petroleum will become operator of the undeveloped Scarborough gas field under a deal struck with stakeholder BHP. The move follows Woodside’s agreement last month to take a 75% stake in the offshore North West field by acquiring ExxonMobil’s stake. WPL shares have come under pressure as the oil and gas producer announced a $2.5bn capital raise to fund its Scarborough acquisition and further projects that will expand LNG supply capacity to meet future demand growth.
Woodside chief executive Peter Coleman said the agreement with BHP strengthens "alignment and certainty" for the Scarborough development. WPL also recently posted a solid earnings result with net profit after tax of (NPAT) of $1024m for the 2017 financial year, which was up 18% from last year (although it appears this was overshadowed by the $2.5bn rights issue). WPL remains our preferred energy sector pick with growth set to be driven by increased production and as oil and gas prices seem to have stabilised at relatively favourable levels.
We currently have a BUY rating on WPL.
Members can read our recent full update on WPL.
Australia & New Zealand Market Movers
The Australian share market was higher on Monday (ASX 200 index +0.55%) but the ASX 200 market index failed to close over the 6000 mark after an early advance faded during the afternoon. The two heavyweight sectors of the ASX, the banks and miners, led the advance on Monday. Miners climbed, with investors deciding that the stronger US economic growth and restrained inflation expectations in the US jobs data was positive for most commodities. In stock news, Newcrest fell after the gold mining giant revealed that it will take a financial hit from a dam wall breach at its Cadia gold mine in New South Wales but also noted that it is still too early to say how big that hit will be.
The New Zealand market rallied yesterday (NZX 50 index +0.88%) led higher by A2 Milk Co on index inclusion speculation, with Pushpay and Kathmandu Holdings up. A2 reportedly gained due to its potential index inclusion on an MSCI index in the future, possibly replacing one of the existing New Zealand names. In other stock news, Briscoe Group was unchanged as it coped with a margin squeeze in the latest financial year to deliver a new record profit of $61.3 million as sales growth continued to underpin earnings. Sales rose 3.5% to $603.1 million, offsetting a contraction in gross margin to 40.49% from 41.07% a year earlier
3 Things Markets Will be Watching this Week
1. Global politics as details around trade tariffs to be implemented by the Trump Administration are announced.
2. US inflation data is released Wednesday morning (AU/NZ time).
3. NZ economic growth (GDP) data is published on Thursday.
Have a Great Day,
Team