Global markets rose on Friday as stronger-than-expected US job growth in April coupled with muted wage gains left investors upbeat about the outlook for the US economy and interest rates.
The US unemployment rate has dropped to 3.6 percent, the lowest in nearly half a century. However, wage inflation/gains remain remarkably subdued – and several US Federal Reserve officials voiced concerns about low inflation which saw the US Dollar weaken. The lack of significant inflation means there is no pressure on the US Fed to raise interest rates, which continues to boost investor optimism.
Adding to the upbeat mood, US President Donald Trump said on Friday the trade deal the United States is negotiating with China is going pretty well.
For the week ahead, the focus locally will be on the Reserve Bank of NZ (RBNZ) and Reserve Bank of Australia (RBA). Both Banks are set to make an interest rate decision, and there is a growing view that we will see rate cuts to record low interest rates sooner rather than later.
Stock in Focus: Macquarie (MQG:ASX)
Shares in Macquarie Group dragged on the market on Friday, falling sharply after warning it expected a more subdued performance over the next 12 months. MQG has been one of our best performing ASX stock picks.
Australia's dominant investment bank, Macquarie Group, powered to an ahead of consensus record full-year profit of $3 billion, buoyed by its global market and commodity trading businesses. But disappoint was guidance that 2020 financial year earnings ate likely to be lower than this financial year, which was more surprising given MQG's long track record of under promising and over delivering.
We currently have a BUY recommendation on MQG.
Australia & New Zealand Market Movers
The Australian share market was a touch lower on Friday (ASX 200 index -0.04%) as investors waited for US jobs data news. The Australian dollars is on track for a third straight weekly loss as speculators bet central bank (RBA) could cut rates as early as next week. Energy stocks recorded the largest losses after oil prices tumbled almost three per cent overnight. But ResMed shares soared almost 10 per cent after the sleep apnea products company reported its first-quarter profit was up 15 per cent.
The New Zealand market gave back some gains on Friday (NZX 50 index -0.27%) with the NZX falling from record highs. Z Energy shares fell on unusually large volumes. Spheria Asset Management has spent A$4.8 million building up a 5.3 percent stake in NZME to become the latest Australian fund manager to take a punt on the Kiwi media group. Outside the benchmark index, Moa Group rose as the boutique beer maker and hospitality group operator said it narrowed its second-half loss and was on track to breaking even.
3 Things Markets Will be Watching this Week
- The US first-quarter reporting season gets into its final stages this week, with some Aussie & Kiwi stocks also reporting.
- The Reserve Bank of Australia makes an interest rate decision on Tuesday afternoon.
- The Reserve Bank of NZ make an interest rate announcement on Wednesday.
Have a Great Day,