Global markets were mixed overnight, with Wall Street on track to experience another positive trading session. Global equities enjoyed solid buying support overnight as President Donald Trump spoke about trade on his Asia tour, while oil rocketed to its highest price in more than two years after a crackdown on corruption swept through Saudi Arabia.
As we touched on yesterday, the Australian market (measured by the ASX 200 index) Is trading at its highest levels since May 2015 and is once again within striking distance of the elusive 6000-point threshold.
While the 6000 mark represents a psychologically significant point for traders, other markets (such as the US and NZ) have hit record highs and are generally trading at high valuations on measures such as market price-to-earnings multiples. On these measures the Australian market's valuation is comparatively less stretched, with the ASX trading in-line with one and two year multiple averages.
Stock in Focus: CSL Ltd (CSL:ASX)
Shares of Healthcare Giant CSL are trading back at all-time highs, and the stock has been one of the key contributors to the ASX’s performance this year.
In terms of recent news, CSL have reaffirmed their profit guidance for 2018 as demand grows for its immunoglobulin and specialty products and margins continue to expand. There is also the potential for another boost to earnings to come from its Seqirus vaccines business (which was formed after it bought Novartis influenza vaccines business in 2015) as according to management the division is expected to become profitable in the near future.
We are currently BUY rated on CSL as a defensive healthcare holding.
Members should look out for a full update on CSL to be released in tomorrow’s weekly report.
Australia & New Zealand Market Movers
The Australian share market ended the day in negative territory (ASX 200 index -0.10%) as gloom over Westpac's disappointing earnings spread to the rest of the banking sector on Monday, pulling the index marginally lower as it retreated from the key 6000 level it came close to breaching last week. Westpac posted a 3% increase in annual profit to A$8.06 billion, which missed analyst expectations for stronger earnings growth. The news sent its shares down 2.2%, while the other major banks CBA and ANZ saw their shares fall 0.5%, and NAB lost 0.7%.
The New Zealand market moved lower on Monday (NZX 50 index -0.14%) as A2 Milk continued to retrace. Xero was also lower ahead of its earnings announcement on Thursday. Beaten up construction stocks Fletcher Building and Metro Performance Glass showed relative strength yesterday.
3 Things Markets Will be Watching this Week
1. We move into the tail-end of US corporate profit announcements, with the level of the market making the current earnings season as important as ever.
2. The Reserve Bank of New Zealand makes an interest rate decision Thursday.
3. The Reserve Bank of Australia makes an interest rate decision on Tuesday.
Have a Great Day,
Team