Global markets were mixed on Friday, with shares on Wall Street ending flat as gains by Intel, real estate companies and utilities offset a drop in Facebook after the social media network disclosed a security breach. Tesla sank 13.9%, its worst day since November 2013, after US regulators sued Elon Musk, accusing him of fraud in a lawsuit that seeks to remove him as CEO.
The NZ market added to gains in September, with the NZX 50 market index adding +0.4% for the month and trading at all-time highs. In contrast, the Australian market retraced from 10-year highs, with the ASX 200 market index losing -1.77% in September.
The NZ benchmark index rose 4.3% in the quarter, following a 7.5% gain in June. So far this year the NZX 50 is up 11%, outperforming its peers across Asia. The ASX 200 index closed up +0.2% for the quarter, with the index having now advanced a mere +2.4% for the year. It was a turbulent three months for the Aussie market, which initially rallied on the back of a positive earnings season before falling 3.5% in the two weeks following, as trade tariff uncertainty and an emerging market crisis hurt investor sentiment.
Stock in Focus: EBOS Group (EBO:NZ / EBO:AX)
EBOS was one of the best performers in our NZ Model portfolio in September, up +8% for the month.
In terms of recent news flow, EBOS released an in-line with expectations result – as the pharmaceutical and animal health products company boosted annual underlying earnings +10.3%. Shares also seem to be continuing to benefit from the prior announcement that it won a bid for a distribution deal with Australia’s Chemist Warehouse which it said could bring in A$1 billion of revenue in its first year. The deal was made possible with prior capital investment and will make them the dominate scale player in the Australian wholesale pharmacy industry, giving it a sustainable cost advantage over the competition.
We currently have a BUY recommendation on EBOS.
Members should look out for a full update on EBOS to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was up on Friday (ASX 200 index +0.43%) as the banks rallied on the release of the royal commission's interim report. A relief rally in Australian bank stocks could be short-lived as several fund managers warn the outlook for lenders remains unclear. AMP is bracing for possible criminal charges after the banking royal commissioner suggested the wealth manager may have misled the regulator about charging fees for no service.
The New Zealand market rallied on Friday (NZX 50 index +0.70%) led higher by blue-chip stocks such as Spark New Zealand and Ryman Healthcare. In stock news, Orion Health shareholders voted on whether to approve carving up the company and signing off on a capital return. The final results haven't been published but the proxies indicated it would get over the line. Shares in Hallenstein Glass rose after affirming a 58% gain in annual profit and saying sales rose 7.2%in the first two months of trading in the new year.
3 Things Markets Will be Watching this Week
1. Trade related news-flow is likely to continue to feature in headlines.
2. The Reserve Bank of Australia makes an interest rate decision on Tuesday.
3. Important monthly US employment data (payrolls) is published on Friday.
Have a Great Day