Global markets were mixed overnight, as US markets (S&P 500 index -2%) failed to extend the recent bounce back from last week. Weak consumer confidence data for the month of May tumbled down to a 10-year low, reigniting fears of recession and spooking investors.
All sectors traded lower. Consumer discretionary and tech shares were the major drag on the market, with the NASDAQ down -3.1%, while energy was the only sector to post a gain as China eased covid restrictions, seen as a positive for oil demand. Walt Disney also gained +0.9% on news its Shanghai Disneyland theme park would reopen on 30 June.
Nike shares fell -7%. Despite reporting better than expected quarterly numbers, Nike management gave investors nothing to look forward to, providing weak guidance for the year ahead.
European Markets (Stoxx 600 index +0.2%) managed to end the session in the green, but gave away strong gains from earlier in the session as investors were undecided as to what direction to take.
CSL Limited (CSL:ASX)
CSL shares have been rangebound during recent market volatility.
Data on the ground is showing that prices for immunoglobulin products are steadily increasing, helping to offset higher costs incurred to acquire plasma from donors. Underlying demand for plasma products remains strong but supply is constrained due to low plasma collection volume. With plasma collections now back to pre-pandemic levels, we expect the market to shift its focus to the strong underlying plasma product demand. This should lead to strength in the CSL share price.
Unfortunately, an antitrust investigation against Vifor in Europe has begun in regards to restrictive competition for one of its products. While early days many believe this will not materially impact the CSL-Vifor deal.
We remain Buy rated on CSL.
Australia & New Zealand Market Movers
The Australian market was up yesterday (ASX200 index +0.9%), marking its fourth straight positive day in a row.
Most sectors were higher, with energy, materials and utilities leading gains, as commodity prices firmed.
Beauty products seller BWX crashed -40.6% after downgrading earnings guidance and launching a A$23.2m capital raise as rising inflation and interest rate increases have created a significant downturn in trading conditions. On the other hand, Collins Foods soared +11.5% after reporting an +11% increase in revenues for the 2022 financial year.
The New Zealand market (NZX 50 Index +0.2%) edged higher on Tuesday, on mixed trading which saw defensive names creep higher.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- Highlights this week include GDP, ISM manufacturing data out of the US.
- Locally, retail sales in Australia are due along with earnings from Metcash and Collins Foods while AGM’s will be held by Kiwi Property, CSR and Arvida.