Global markets were slightly lower overnight, as the recent market rally took a breather. US stocks were mixed as videogame makers reported disappointing revenue forecasts, while investors waited for more clarity on US-China trade developments.
Closer to home, local earnings season has kicked off in Australia, and it was a mixed bag of results from the likes of CBA and IAG as highlighted below. A more neutral speech by Reserve Bank governor Philip Lowe on Wednesday also encouraged investors and prompted fall in the Australian dollar as it opened the door to a possible interest rate cut.
Stock in Focus: Select Harvests (SHV:ASX)
Shares in almond producer Select Harvests were +4% higher yesterday as it released an encouraging update on the back of a very favourable growing season.
While the drought in Australia has impacted many Australian agriculture stocks, the dry conditions are favourable for growing almonds (although water shortages are still an issue). SHV continue to expand into key markets like India and China, and exports to China from Australia are booming, particularly as China has been raising tariffs on US almond imports – which makes Aussie a much more attractive trading partner.
Things look to be improving after what was a difficult 2017 for the company, with everything possible going against them – and business fundamentals remaining strong, in our view. We see SHV as an interesting way for investors to gain exposure to global agricultural and health conscious consumer trends.
We currently have a BUY (High-Risk) rating on Select Harvests
Members should look out for a full update on SHV to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market continued its run in Wednesday (ASX 200 index +0.34%), advancing for a third straight session as better-than-expected results offset losses made by the major banks.
In stock news, Insurance Australia Group shares climbed despite the company reporting a net profit fall of 9.3 per cent to $500 million in the first six months of the fiscal year. The company moved to reassure investors following the result, saying $262 million worth of one-off hits had disguised a 16.2 per cent increase in underlying performance. The major banks led the market losses on Wednesday after Commonwealth Bank reported a lower profit number than some analysts had been expecting. The bank said its net interest margin had been hit by higher funding and the performance of its core retail division had fallen.
The New Zealand market was closed yesterday for Waitangi Day (NZX 50 index 0.00%).
3 Things Markets Will be Watching this Week
- US corporate earnings season continues this week.
- Local earnings season also kicks off in Australia this week, with CBA among the heavyweights to release profit figures.
- The Reserve Bank of Australia makes an interest rate decision on Tuesday.
Have a Great Day,