Global markets started the week off on a higher note as trade-sensitive industrial and technology stocks lifted Wall Street after the United States and China agreed on a temporary trade truce. In saying that, the initial burst of enthusiasm faded somewhat as White House advisers squared off on their interpretation of what happened over the weekend.
Cooling trade tensions allayed fears of slowing global growth and boosted stock markets across Asia, with the ASX and NZX up strongly. This “risk on” rally also saw the Kiwi and Aussie dollar move to multi-month highs. Oil prices also surged ahead of a meeting this week by producer club OPEC that is expected to result in a supply cut.
Stock in Focus:Tourism Holdings (THL:NZX)
Tourism Holdings (THL) shares managed to climb back to the $5 mark yesterday after negotiations for a potential sale of some New Zealand assets ended when the suitor unsuccessfully tried to get a lower price.
The rental campervan operator won't sell its Kiwi Experience unit and the Black Water Rafting, Ruakuri and the Waitomo Homestead from its Discover Waitomo division after the parties couldn't agree to a price in the final stages of negotiation. It is pleasing to see management are being disciplined in regard to their sale price.
A tourism boom across Australia & NZ remains one of our strongest medium-term investment themes. The cost of travel continues to become more affordable, and a rising middle class across Asia is spending more on travel with Australia and NZ being key tourist destinations.
We currently have a BUY recommendation on THL.
Australia & New Zealand Market Movers
The Australian share market jumped (ASX 200 index +1.84%) yesterday as the trade war concerns that have rattled markets for months took a backseat after the US and China agreed to a temporary trade truce. Miners, banks and energy stocks led the market higher.
The big stock move came as Graincorp shares soared +26% on news of a $2.4 billion takeover offer. Former Business Council of Australia president Tony Shepherd is behind the bold bid for control of GrainCorp which comes just as the agriculture giant was considering its own acquisitions. GrainCorp, the dominant force in east coast grain handling, has received a non-binding, indicative proposal from Long-Term Asset Partners that values its stock at $10.42 a share. Steemaker Bluescope Steel also surged +11% after announcing a $250 million on-market share buyback.
The New Zealand market started the week off on a higher note (NZX 50 index +0.60%) ed higher by exporter A2 Milk. A2 Milk rose 5% as it said it will meet China's new cross-border e-commerce requirements affecting its sales of Platinum infant formula. Government officials extended the grace period to let foreign firms comply by March 31 next year.
In other news, Z Energy fell after the government confirmed it will order the Commerce Commission to investigate the retail fuel market. Hallenstein Glasson was also lower after the retailer said it faced tough trading conditions. PGG Wrightson dropped after the Commerce Commission outlined competition concerns over the sale of its seeds unit to Danish cooperative DLF Seeds.
3 Things Markets Will be Watching this Week
- Several US Fed members make speeches this week, with Chair Jerome Powell set to make another speech on Friday.
- The Reserve Bank of Australia makes an interest rate decision on Tuesday.
- There is an OPEC meeting later in the week, which will be interesting given the recent drop in the oil price.
Have a Great Day,