Global markets rallied late overnight as Wall St extended a rally on a reported trade deal between the US and the EU.
President Donald Trump said he and European Union boss Jean-Claude Juncker reached an agreement to lower trade barriers, which looks to have come as a big surprise to the market. Investors also continue to digest US earnings. After hours however, Facebook shares were lower after reporting a miss in its monthly active users.
Locally it has been a relatively quiet period in terms of stock news before Australian/NZ companies start to report earnings next month. A number of Aussie agricultural companies have provided profit warnings however as adverse weather conditions will be likely to hit near term profits. These include agribusiness Elders (ELD) and agri chemical company Nufarm (NUF) which both experienced large share price falls after announcing an exceptionally dry season in many parts of Australia would impact business in 2018.
Almond producer Select Harvests (SHV) has also been hit as the sector has taken a recent hit. Once again, these risks are largely unavoidable for the agriculture sector and we would largely recommend that medium-term investors look through short term risks such as droughts/bad weather.
Stock in Focus: Select Harvests (SHV:AX)
In other recent news, SHV has announced that it plans to launch into the China market with its Lucky nuts brand.
SHV has entered into a five-year trademark license and distribution agreement with PepsiCo Foods (China) for the brand. The products will be produced and supplied by Select Harvests, but PepsiCo China will be responsible for marketing, sales, and distribution. The deal looks like an attractive opportunity for Select Harvests, especially with an experienced company like PepsiCo China handling the marketing, sales, and distribution.
We currently have a BUY (High-Risk) rating on SHV.
Australia & New Zealand Market Movers
The Australian share market was lower yesterday (ASX 200 index -0.29%) with major financial stocks weighing on the index as inflation figures missed expectations. An overnight base metal rebound was positive for the major miners on Wednesday although mining sector gains were not enough to lift the broader market into positive territory.
The New Zealand market continued to move higher on Wednesday (NZX 50 index +0.37%) with gains led by A2 Milk and Sky Network Television. In stock news, Abano Healthcare rose as it reported a 16% lift in annual profit on record revenue as its dental network improved performance in both Australia and New Zealand. Agribusiness PGG Wrightson announced that operating earnings will be at the top end of prior guidance, although net profit after tax will be hit significantly by one-off items.
3 Things Markets Will be Watching this Week
1. US corporate earnings season continues as investors digest quarterly company profit announcements.
2. Trade anxiety is likely to remain with Trump now threatening to impose tariffs on all $US500 billion of imported goods from China.
3. Key economic news flow includes – Australian inflation numbers out on Wednesday and US GDP data published at the end of the week.
Have a Great Day,
Team