Global markets rallied overnight with US stock indices surging +2% as investors piled into technology and healthcare sectors after midterm elections led to a divided Congress, as expected, but allowed markets to move past a large uncertainty.
Democrats had a big night, but it was not as big as what they'd hoped for as they took control of the House of Representatives and lost seats in the Senate. Based on history, Republican presidents and a split Congress have been one of the best combinations for stocks. The election result also fuelled bets that tighter regulations would be harder to push through and some investors like checks and balances that can take extremes out of play. President Donald Trump said the election results were "very close to complete victory", offered to work with Democrats in the House and alternately threatened a "warlike posture" if they chose to investigate him.
Stock in Focus: Pushpay (PPH:NZ / PPH:AX)
Shares in Pushpay were lower yesterday as the digital church payments platform operator released its 2019 interim report. Pushpay said it expects to break-even for the first time in December this year and to post its first operating earnings (EBIT) figures in the year to March 2019.
Looking at some of the detail, Pushpay delivered on its revenue guidance, increasing total revenue to US$22.6 million for the period. Pushpay’s provided updated annual revenue guidance for the year ending 31 March 2019 of between US$97.5m and US$100.5m (which is down slightly from their prior guidance of $100m).
As a result of feedback received, Pushpay will phase out quarterly reporting with the last quarterly operational update to be provided for the quarter ending 31 December 2018. We are pleased to see this, as we had previously highlighted to the Pushpay managment that semi-annual reporting likely makes more sense given they are no longer pursuing a US listing.
It was a reasonable result, and we continue to have a positive medium-term view on Pushpay as a software as a service exposure with large potential.
We are currently have a BUY (High-Risk) rating on Pushpay.
Australia & New Zealand Market Movers
The Australian share market was in positive territory on Wednesday (ASX 200 index +0.37%) as the US midterm results were declared and landed in line with market expectations. In stock news, AMP shares closed lower as the embattled financial services company's largest shareholder BlackRock Group announced to the market it was ceasing to be a substantial shareholder in the company. Webjet shares fell sharply after resuming trading following a two-day trading halt for a capital raising to help fund the purchase of Dubai-based Destinations of the World.
The New Zealand market was higher once again yesterday (NZX 50 index +0.37%). Dairy companies such as A2 and Synliat fell as according to the Dairy Companies Association of New Zealand, news that the review of the China-New Zealand FTA is unlikely to result in improved dairy access is disappointing for the local industry. “Despite the close relationship that New Zealand and China enjoy, New Zealand dairy exports to China continue to incur over a $100 million in tariffs each year, with the safeguards regularly triggered in early January” DCANZ Chairman Malcolm Bailey said in a statement.
3 Things Markets Will be Watching this Week
- US mid-term elections take place on Wednesday (AU/NZ time).
- The US Federal Reserve makes a policy statement on Friday (AU/NZ time).
- The Reserve Bank of Australia makes an interest rate decision on Tuesday, while the Reserve Bank of NZ makes a monetary policy announcement on Thursday.
Have a Great Day