Global market turmoil continued overnight as investors weigh the latest coronavirus developments as a 'possible' global pandemic, following a rapid increase in cases from Italy to Iran and Japan, with a growing list of companies warning that profits will suffer as economies around the world suffer.
The US market (S&P500) fell another -3%, marking its largest four-day slump since August last year with losses accelerating after the US Centre for Disease Control and Prevention warned Americans to prepare for a coronavirus outbreak at home.
Japanese shares tumbled more than -3% as traders returned after a holiday, while European stocks continue to fall further.
Stock in Focus: Wesfarmers Limited (WES:ASX)
Wesfarmers (WES) shares were higher last week after releasing a strong result for the first of their 2020 financial year, which was well received by the market.
The Retail Conglomerate reported a +6% increase revenue up to $15.2 billion driven by strong sales growth across Bunnings, Kmart, and Officeworks. Net profit after tax (NPAT) from continuing operations was $1.13 billion, a +5.7% increase underpinned by a strong performance from the group’s largest businesses, Bunnings and Kmart.
The group is now heavily reliant on star performer Bunnings to offset challenges faced by other businesses which we believe may run out of steam soon.
We currently have a HOLD rating on WES.
Members should look out for a full update on WES to be released in our weekly report
Australia & New Zealand Market Movers
The Australian market ended Tuesday down -1.6%, recovering towards the end of the day after a sharper decline in early trade on concerns of a worsening economic hit from the coronavirus outbreak. Losses were felt across the market, dominated by predominantly blue-chip stocks on volume as BHP fell -2.1%, Commonwealth Bank slid 1.4%, Wesfarmers was down -3.6% and Westpac fell -1.7%.
WiseTech, Woodside, Flight Centre all hit 52-week lows as their businesses are more impacted by coronavirus Company specific news was light, as Treasury Wines fell after announcing it will no longer achieve its previous guidance for the full financial year of earnings growth between 5% and 10% due to the coronavirus outbreak
The New Zealand market fell yesterday (NZX50 -1.2%) largely due to the news that the coronavirus is spreading globally. The market was led lower by Summerset down -8.1% when the retirement village announced it was not expecting underlying growth this year due to rising expenses and falling margins.
The tourism sector was hit again as Air NZ, Tourism Holding and Auckland International Airport all slid further. Online travel booking company Serko dropped -6.3% yesterday after announcing it has seen a drop-off in bookings over the past week due to coronavirus.
3 Things Markets Will be Watching this Week
- Coronavirus headlines are likely to sway investor sentiment.
- Local earnings season across Australia & NZ continues this week.
- Overseas earnings season winds down.
Have a Great Day,