Global markets were mixed overnight and at the time of writing the US market was in positive territory. Concerns about whether President Donald Trump will proceed with imposing tariffs on steel and aluminium tariffs continue to keep investors on the defensive.
There are reports that economic adviser Gary Cohn will leave his White House job if Trump decides to go forward with tariffs on imported steel and aluminium. Goldman Sachs have delivered a comprehensive critique of Donald Trump's planned metal tariffs, saying they risk damaging the world's biggest economy by raising costs just as price pressures build, hurting allies (Canada, Mexico, EU) more than others (China, Russia), and creating a two-tier global market.
Closer to home, the Reserve Bank of Australia left its cash rate unchanged at 1.5% in March as widely expected. The statement covered familiar themes and while the next move remains up for the cash rate, the use of the word 'gradual' three times likely implies that there is no hurry to hike interest rates.
Stock in Focus: Wisetech Global (WTC:AX)
Shares in software as a service company Wisetech Global have pulled back sharply recently as its recent result announcement failed to match lofty market expectations.
Growth market darling WTC shows that even some of the fastest-growing stocks are no match for unrestrained market optimism when valuations are tested. WTC reported a 31% rise in first-half revenue to $93.4 million and an 8% rise in net profit to $15.6 million, which while solid numbers disappointed the market. WTC’s forward looking earnings guidance also failed to measure up to market expectations.
WYC’s chief executive Richard White said he was not concerned about the share price fall, "I don't follow the share price, I am building a company of great value in the long term," he said. While we do like WTC’s business, we had expressed concerns over its excessive valuation and are watching developments closely.
We currently have a HOLD rating in WTC.
Members should look out for a full update on WTC to be released in today’s weekly report.
Australia & New Zealand Market Movers
The Australian share market jumped to its best one-day advance since mid-February on Tuesday (ASX 200 index +1.14%) as investors moved back into equities with miners leading the advance. In stock news Telco Vocus climbed 6.2% after it said that former Telstra chairman and founding Optus chief executive Bob Mansfield will replace Vaughan Bowen as its chairman. Retail Food Group fell another -12%, extending a steep slide made yesterday when trading resumed after a brief hiatus and the release of Retail Food's results and restructuring plan.
The New Zealand market was higher yesterday (NZX 50 index +0.58%) as fears eased over US President Donald Trump's new tariffs on metals, renewing demand for equities across the world. Chorus and Mainfreight gained, while Metro Performance Glass and Sky TV fell to record lows. In other news, Dual-listed Michael Hill International gained after the jewellery chain said it plans to close 24 Emma & Roe branded stores at a cost of up to A$7.9 million.
3 Things Markets Will be Watching this Week
1. Local AU/NZ company earnings season moves into its latter stages.
2. Global politics as details around trade tariffs to be implemented by the Trump Administration are announced.
3. The Reserve Bank of Australia makes an interest rate decision on Tuesday.
Have a Great Day,
Team