Global markets rallied overnight as President Donald Trump’s comments on restarting trade talks with China added to optimism of a more accommodative US Federal Reserve. Interestingly, Facebook announced it will create a cryptocurrency called Libra, a payments system powered by blockchain and a digital wallet, as a precursor to moving into lending.
Closer to home, rising expectations of further interest rate cuts drove Australian shares higher, as the Reserve Bank's minutes from its June meeting revealed the possibility of two rate cuts before the end of the year. The news also saw the Aussie dollar approach a 10-year low,
Stock in Focus: G8 Education (GEM:ASX)
G8 Education (GEM) shares have had a volatile ride in recent times, as earlier this year the childcare centre operator announced 2018 net profit after tax fell -10.8% from last year, despite lifting revenues by +7.7%, while most of the year GEM struggled with lower occupancy rates.
A lot of recentl volatility has been attributed to the Australian election, as the Labour government who were favourites announced they would make early childcare education free for low-income households, with G8 shares sinking after the surprise National government victory. G8’s AGM was also not so positively received – and despite being on track with a recovery with the worst appearing to be behind them, the path back to growth appears to be slower than the market had anticipated.
We currently have a BUY (high Risk) recommendation on G8.
Members should look out for a full update on G8 to be released in today’s weekly report.
Australia & New Zealand Market Movers
The Australian share market rallied yesterday (ASX 200 index +0.60%) following the release of dovish minutes from the Reserve Bank of Australia’s latest policy meeting. All sectors finished the day in positive territory but technology and healthcare shares led the charge.
In stock news, Coles shares rose after the company announced it would undertake a $1 billion cost-cutting program by 2023. The supermarket said it planned to also reinvest in its stores and supply chains to deliver long-term profit growth. Webjet advanced as it reiterated its earnings guidance for 2018-19. The booking company also introduced Respayments, a payment-card industry compliance solution that will improve the business's compliance and related costs. BlueScope Steel closed lower after it cut its earnings forecasts for 2018-19, citing softer US steel margins.
The New Zealand market was in positive territory on Tuesday (NZX 50 index +0.21%) led higher by Tech stock Vista Group, which develops cinema analytics software. Spark New Zealand shares were higher after Spark said it will offer free access to streaming coverage of the Rugby World Cup for customers who sign up to certain mobile or broadband contracts.
3 Things Markets Will be Watching this Week
- Trade War headlines are likely to remain drivers of investor sentiment.
- On Tuesday, the Reserve Bank of Australia will release the minutes of its last meeting, when it cut interest rates.
- The key event to watch for the week will be the latest US Federal Reserve policy meeting with an announcement set for Thursday morning AU/NZ time.
Have a Great Day,