Global markets were higher on Monday (S&P 500 index +2.4%) as bond markets calmed after a month-long selloff.
Global indices were all in the green as government bond yields stabilized, giving growth stocks a breather, while political
progress on a US stimulus package, approval of J&J's new vaccine, better than expected manufacturing data and an optimistic shareholder letter from Warren Buffet boosted sentiment for cyclical stocks. The rally was broad based with all 11 US sectors in the green led by financials and utilities, with big tech names also recovering from last week's sell off.
Johnson & Johnson rose almost 1% as it began shipping its single-dose vaccine after it became the third authorized COVID-19 vaccine in the United States over the weekend.
Shares of wastewater treatment company De.mem were trading +3.3% higher yesterday after reporting their 2020 full year result.
Total customer cash receipts (revenue) for the year was $16.5m, up +41% with gross margin expansion from 26% in 2019 up to 31% in 2020.
Recurring revenue continues to growing strongly up +58% with the acquisition of Pumptech being a highlight, reporting +67% growth in customer receipts, resulting in positive operating cash flow for the December quarter of $544,000.
Looking ahead growth appears strong with ~$14m of visible cash receipts so far for the 2021 financial year (85% of 2020), comprising of $10m in recurring and $4m of water equipment sales contracted.
We continue to remain BUY rated De.Mem as a high growth small cap in the wastewater treatment sector.
Australia & New Zealand Market Movers
The Australian market rose strongly on Monday (ASX200 Index +1.7%) after a drop in bond yields calmed choppy markets as investors picked up major Aussie Blue Chips, with all sectors in the green.
There was mixed economic data for the day, with home loan values climbing +10.5% in January smashing expectations for a 2% rise, after an 8.6% rise in December.
The New Zealand market was higher yesterday (NZX 50 index +0.6%) with investors starting the new month on a positive note, as bond yields start to ease.
Fisher and Paykel Healthcare saw a bounce after being heavily sold off last week, while A2 Milk continued to sell off after its weak result last week.
Auckland Airport continued to rise as investors look forward to its recovery as vaccines start to roll out, shrugging off the latest lockdown.
With Auckland put into a 1-week lockdown again, this appears to be largely overlooked by the market as Air NZ rose +0.4%, while some lockdown sensitive stocks fell; Z Energy down -0.4%, Tourism Holding -1.8% lower.
3 Things Markets will be Watching this Week
- Unfortunately, COVID related news-flow continues to dominate headlines, both in terms of lock-downs and vaccine news.
- The Reserve Bank of Australia makes its latest cash rate call on Tuesday.
- Later in the week there is a raft of economic data, including closely watched US unemployment figures (nonfarm payrolls).