Global markets were weaker overnight, with US markets (S&P 500 index -0.4%) ending the session lower. Stocks did claw back sharper losses earlier in the session as investors assess rising tension between Russia and Ukraine, following a “dramatic acceleration in the build-up of Russian Forces on the Ukraine’s border”. However, President Putin staged a televised meeting with his foreign and defence ministers showing that he was aiming for a diplomatic solution and was not preparing for war.
St Louis Fed President Bullard was at it again, making hawkish comments in a CNBC interview, reaffirming his view that the Fed should tighten by raising interest rates by 1.0% over the next three meetings that would include one 0.5% move. With broadening and possibly accelerating inflation, he said that relative to previous cycles “we need to front-load more of our planned removal of accommodation…our credibility in on the line”.
Energy stocks led losses followed by financials, both pulling back from a strong run on Friday, despite WTI futures increasing another +2.6% over the session to above US$95/barrel. Most sectors were lower as investors took a risk off approach. In saying that, the US Tech Index NASDAQ edged higher up +0.1% as a number of large cap tech stocks reported modest gains, some partially recovering from Friday’s sell-off.
European Markets (Stoxx 600 index -1.8%) tracked rising Ukraine-Russian tension, with bank stocks leading losses as all sectors and major bourses traded in the red.
Crown Resorts (CWN:ASX)
Crown Resort shares rose +2% yesterday after the board recommending its shareholders vote in favour of Blackstone $8.9 billion takeover offer, which equates to $13.10 per share a 32% premium on crown’s share price on 18 November prior to receiving the acquisition proposal.
Shareholders are expected to vote on the bid in the June quarter.
We are still HOLD rated on Crown, and the share price is now reflecting the likelihood of the takeover going through.
Australia & New Zealand Market Movers
The Australian market was up yesterday (ASX200 index, +0.3%).
Gold and oil stocks lead the market higher benefiting from higher commodity prices as oil surged to fresh 7-year highs and investors flock to safe-haven gold amongst the current volatility., utilities and financials also performed well.
Beach Energy lead the market higher up +8.4% after reporting higher half year profit buoyed by higher realised gas and ethane prices.
Bendigo and Adelaide banks jumped to 5-month highs after posting improved profitability. Westpac rose +4.8% leading the major banks after completing tis $3.5 billion share buy back.
JB Hi Fi rose +5.4%, after announcing it would return $250m back to shareholders via off-market share buyback, with its half year results which did not provide any surprises given earlier updates.
The New Zealand market (NZX 50 index -1.8%) was down on Monday, joining the global sell-off, with most shares trading lower, growth and interest rate sensitive stocks continue to be beaten down.
Contact Energy was one of a handful of stocks to end the green edging up +0.1%, after delivering a sound half year result which didn’t contain too many surprises strong operating earnings (EBITDAF) of $322m in-line with recent update due to solid energy generation in the South Island, and guided to pay a full year dividend of 35 cents per share.
Sky City shares fell -3.7%, posting a -$33.7m loss after being adversely affected by lockdowns, and could not provide guidance due to current restrictions but said debt covenants remain supportive with $258m of available liquidity.
3 Things Markets will be Watching this Week
- The Latest US Fed meeting minutes, US housing and retail sales data.
- GDP data from Eurozone.
- Locally earnings season heads into full steam, with names reporting including Contact Energy, Sky City, Boral, Jb Hi Fi, Telstra, Ansell, BHP Billiton, EBOS Limited, Fletcher Buildings, Skellerup, Vicinity Centres, CSL Limited, Goodman Group (Australia), Fortescue Metals, Wesfarmers, Woodside Petroleum, Crown Resorts, QBE Insurance and Cochlear.