Global markets were lower overnight, US Markets (S&P 500 Index -1.6%) as war between Russia and Ukraine escalates, with reports of a 64km long convoy of Russian military vehicles headed towards Kyiv, leading to fears of an imminent strike on the population centre.
Investors were risk off again the "fear" volatility index VIX rising to 35 again, reaching this level for a 3rd time in less than a month. Investors also flocked to safe haven US treasury bonds and gold, which rose +1.6% to US$1934/ounce. Another cause of concern is the price of oil spiking +10% to just over $105/barrel in light of current sanctions in place against Russia – a key global supplier and a cause of concerns for inflation around the globe, while also potentially weighing on economic growth.
All Sectors ended in red except for energy, benefiting from the spike in oil prices, with financials, materials and technology leading losses. Target shares surged +12.4% after its 2022 sales and profit forecasts beat market expectations, while Chevron was up +3.0% after raising its operating cash flow forecast and share buyback programme.
European Markets were down overnight (Stoxx 600, -2.4%), weighed down by Russia-Ukraine jitters and a wave of disappointing earnings.
Closer to home, the Reserve Bank of Australia (RBA )left the cash rate unchanged, and maintained a dovish tone amid the current volatility. The RBA stated they are willing to be patient and wait for its objectives of a return to full employment in Australia and inflation consistent with the target – acknowledging inflation has picked up more quickly than [they] had expected. The RBA also added that uncertainty stemming from the Ukraine situation is clouding its outlook. The market is still pricing in a RBA rate hike in the second half of the year with a less aggressive journey up over the next 2-years compared to other central banks.
De.mem (DEM:ASX)
As a growth stock, De.mem has been under heavy selling pressure lately, however managed a modest gain on Monday after reporting their 2021 full year result, despite not adding much extra following their update earlier. Total revenue increased +27% to $18.1m for the year, driven strongly by recurring revenue segments representing 70% of total revenue.
Operating earnings (EBITDA) came down to -$2.2m, which includes ongoing investment into Singapore membrane Technology R&D. Looking ahead De.mem are heading towards cash flow breakeven, with a number of projects having revenue recognised in 2022 – with covid-19 disruptions now behind them should pile on more projects in the coming year as opposed to 2021.
We are BUY rated on De.mem
Australia & New Zealand Market Movers
The Australian market was higher yesterday (ASX200 index +0.7%) as investors flock back to beaten up tech stocks.
Block led gains up +12.8%, following an upbeat report from Macquarie, which lifted sentiment across the tech sector, Xero climbing 7%, Wisetech Global up +4.7% and EML payments rising +10.4%. Sezzle shares rose +9.9%, a day after news broke out Zip would acquire the buy now pay later business.
Commonwealth Bank rose +1.5% after announcing the sale of its 10% stake in Bank of Hangzhou for $1.8 billion, lifting its banking peers.
Gold miners and utilities led losses are investors fled safe haven exposures and look to take profit.
The New Zealand market was up on Tuesday (NZX 50 index +1.8%) as it continues its 3-day recovery rally, as investor sentiment improved.
Risk on sentiment saw Pushpay lead the market higher up +6.5%, and Meridian rising +5%, both being heavily sold off recently. Air NZ and Auckland International Airport were both up strongly again, after the government announced on Monday that borders will reopen to NZ citizens without self-isolation requirements.
3 Things Markets will be Watching this Week
- Geopolitical Risks – Russia/Ukraine.
- Eurozone inflation figures and the latest manufacturing data in China.
- Locally, the RBA meeting will be a big focus along with Q4 GDP data in Australia.