US markets (S&P 500 Index -0.8%) fell for the fourth straight day on the last day of August. Wall Street markets moved approximately 4.0% lower over August, after scrubbing gains made in the first half of the month.
Markets are now under no illusion that the US Federal Reserve will not waiver in its commitment to raising rates at its current pace. The Feds sentiment seemingly holds regardless of whether the US is entering an official recession or not.
Technology stocks bucked the overall trend and helped the markets from registering an even larger loss. Meta booked a 3.7% gain, but was beat by two Chinese-based companies, Pinduoduo and Baidu, climbing 7.2% and 4.6%, respectively.
European markets (Stoxx 600 Index, -1.1%) suffered sharp losses on Wednesday, similarly posting their fourth day in the red. August inflation data for the Euro Area showed prices rising faster than expected and climbing to a new record high of 9.1%. Markets sold off, with the Stoxx 600 index finishing the month lower by 5.2%, on the expectation that the European Central Bank to deliver a big rate hike next week.
Harvey Norman (HVN:ASX)
Harvey Norman fell 2.3% on Wednesday after posting its 2022 full-year earnings.
Harvey Norman reported sales of $9.6 billion, a 1.7% fall on the prior corresponding period, while profit after tax came in at $811.5 million, a 3.6% decline.
Even so, the company lifted total retail sales in 2022 vs 2021 across 5 of its seven territories. Australia and New Zealand were the two exceptions being hit by stricter store closures over the year, although recent sales figures are more promising for these regions, as noted by the company. Australian sales are up 10.7% over the period for 1 July to 29 August, while New Zealand sales are up 5.0%.
We are Hold rated on Harvey Norman as a retailer we prefer to avoid and see the upcoming softening in the economy and discretionary ‘stay at home’ type spending likely to be hardest hit.
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index, -0.2%) remained effectively flat on the day but not without mining and energy companies taking a beating.
Mining stocks fell by -1.5% and Energy stocks fell by -2.9%. Leading losers include Woodside Energy falling -4.5%, and BHP Group both falling 2.8%, both falling on lower commodity prices.
Unlike US and European markets, the ASX 200 finished the month positively. gaining 0.6% over August.
The New Zealand market (NZX 50 Index, -0.4%) followed Wall Street indices and posted an almost half-percentage fall on Wednesday.
SkyCity Entertainment lead the way down, falling -2.4% with profit taking eating into the 6.0% gain it has experienced since June. A2 Milk also gave up some of its recent +9.0% gain, falling -2.0%.
What Markets will be Watching this Week
Monday
Australia: Earnings from Next DC, Fortescue and Minerals Resources
New Zealand: Earnings from A2 Milk and Restaurant Brands
Tuesday
Australia: Earnings from Woodside Energy, Harvey Norman
Wednesday
Global: Eurozone CPI (inflation data), and China Manufacturing data (PMI)
Australia: Earnings from DGL Group and Atlas
New Zealand: Earnings from Harmony
Thursday
Global: US initial jobs claim data.
Friday
Global: US non-farm Payroll data