Global markets were lower overnight, US Markets (S&P 500 Index, -3.2%) slumped to a fresh 13-month low, and is now down -17% from its all-time high as the index nears bear market territory.
Weakening global outlook continues to weigh down on investor sentiment stemming from, China’s lockdown, rising interest rates, and rampant inflation – as well as number of weak earnings announcements.
The only economic data of note so far this week has been Chinese trade data which showed a softening trend in both exports and imports, albeit not as weak as the market had expected. Chinese export growth moderated to 3.9% year on year, potentially signalling signs softening global demand for Chinese consumer goods.
Weakening economic outlook saw price of oil slumping -7%, causing energy stocks to sell off hard to be the worst performing sector. Rising interest rates saw Real Estate, Consumer discretionary and tech stocks all sell off heavily as well the NASDAQ down -4.2%. Some of the biggest companies on the index were hit hard, Amazon, Apple and Netflix all fell more than 5%, 3% and 4%, respectively, while Tesla and Nvidia plunged more than 9% each. Plantir crashed -21.3% after providing weak revenue guidance.
European markets (Stoxx 600 index, -2.8%) were down with sectors trading in the red, as travel and tech stocks led loses.
Westpac (WBC:ASX/WBC.NZX)
Westpac shares was a top performer in a day full of red, jumping +3.2%, after delivering its 2022 half year result which beat expectations with cash earnings of $3.1 billion. Net interest margin which has been an ongoing headwind has been less server then anticipated, and was offset by the bank’s aggressive cost cutting initiates and most importantly reiterates its on track to achieve it $8 billion cost target by 2024.
We are BUY rated on Westpac as a benefactor to rising interest rates, and its proposed cost cutting programme makes it more attractively priced than its big 4 peers.
Australia & New Zealand Market Movers
The Australian market was down (ASX200 index, -1.2%) over concerns over the global economy.
Real Estate and tech stocks experienced heavy losses, as most sectors traded lower. Mining stocks were weaker with most commodity prices under pressure on concerns of a weaker economic outlook from a China, a major consumer of iron ore and other commodities.
The New Zealand market (NZX 50 index, -2.0%) was down on Monday, as the global sell off continues.
A2 Milk slumped -5.6%, given their exposure to China, while Ryman healthcare suffered heavy loss down -5.8%, as most stocks traded in the red.
There was a select few that ended in the green, Briscoes Group rose +2.1%, and Oceania healthcare was up +2% after acquiring two retirement villages.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- Inflation data from US and China (CPI and PPI)
- Locally, earnings from Westpac, Xero, Pushpay and trading update from CBA