Global markets sold off overnight but recovered from lows over the trading session. The main negative news was that after the Chinese recount, the National Health Commission reported 14,840 new cases in Hubei, the Chinese province at the centre of the outbreak. For context, there were 1638 new cases reported in the province the day before.
Closer to home, it was another busy day yesterday in terms of earnings announcements from Aussie and Kiwi companies. We will provide full updates on all stocks under our research coverage in our weekly report.
Stock in Focus: TPG Telecom (TPM:ASX)
Mergers and acquisitions were behind a number major share price moves yesterday – as the $15 billion TPG Telecom and Vodafone merger was given the green light by the Federal Court, overruling a rejection by the Australian Competition and Consumer Commission.
While there remain a number of conditions to be met before the merger can be finalised, the combined business would increase pressure on Telstra and Optus. Telstra shares ended the day down on the potentially less favourable market backdrop.
Members should look out for a full update on TPG to be released in our weekly update.
We currently have a HOLD rating on TPG.
Australia & New Zealand Market Movers
The Australian market was in positive territory overall yesterday (ASX 200 Index +0.21%) after a sharp rise in early trade due to easing concerns about the coronavirus outbreak was retraced after confirmation of a spike in cases. Gold stocks rose on the news as oil and gas companies retraced earlier gains. In further takeover news, Canadian convenience store retailer Alimentation Couche-Tard lifted its takeover bid for Caltex Australia for a second time, to $35.25 per share. NAB shares closed 1.3% higher at $26.49 after the bank said cash earnings and profit had risen in the December quarter, albeit marginally, topping what had been expected by the market.
The New Zealand market was a touch lower on Thursday (-0.15%), led lower by Synlait Milk which fell -18% to 2-year lows after the dairy company slashed its earnings outlook, citing a weak infant formula market and the risk posed by the Coronavirus outbreak to its supply chain. Rubber manufacturer Skellerup Holdings fell -3% as the company, which supplies products to the dairy industry, reported a 10% decline in first-half profit. SkyCity Entertainment Group rose 2% as it company reported a 7.9% decline in underlying earnings, although the result was overshadowed by its insurance claim for the international convention centre fire. There was some relief as SKC shares had been hit hard on fears Coronavirus will hit tourist casino numbers.
3 Things Markets Will be Watching this Week
- Local earnings season starts across Australia & New Zealand this week.
- The Reserve Bank of New Zealand makes an interest rate decision on Wednesday.
- US corporate earnings season gets into its latter stages.
Have a Great Day,