Global markets were mixed overnight as the US market moved between small gains losses.
The US Technology sector remains under pressure, after a sell-off was sparked by a Facebook led fall. News that the Trump administration is considering a crackdown on Chinese investments in technologies sent a technology sector already battered by revelations around data practices reeling. In specific Tech sector news, Amazon dropped after Trump reportedly indicated he wanted to rein in the company. At the same time Tesla shares plummeted after it was downgraded by credit rating agency Moody’s.
Both the Australian and NZ markets have followed the US markets lower recently. Once again, we reiterate it is important for investors to remain calm during period of heightened volatility.
Stock in Focus: Sky TV (SKT:NZ / SKT:AX)
Sky TV (SKT) shares fell -7.9% yesterday on news it likely will not win the broadcasting rights for the 2019 Rugby World Cup.
Sky TV said it is not the preferred bidder and may miss out on the broadcast rights for next year's Rugby World Cup. Speculation emerged last year that US internet giant Amazon was moving into sports broadcasting and may start competing for rugby rights, while it has also been reported that Spark New Zealand and TVNZ have made a joint bid and are the preferred bidder. The news comes shortly after news that chief executive John Fellet plans to retire within the next year, after 17 years at the helm.
We have a negative view towards Sky TV as it continues to struggle with the challenges of “digital disruption”. While losing the Rugby World Cup may not be the end for the company, we view Rugby rights generally as a crucial component of Sky’s business.
We currently have a SELL rating on SKT.
Members can login to read our full reports on SKT.
Australia & New Zealand Market Movers
The Australian share market was lower on Wednesday (ASX 200 index -0.73%) as shares fell for the second time in three sessions as another surge in risk aversion sent investors shying away from equities. The growth-sensitive resource sector was under pressure and the banks also sold off. In stock news, mining giant Rio Tinto continues to sell down assets, and said it has agreed to sell its 80% stake in Queensland's Kestrel underground coal mine for $US2.25bn to a group including EMR Capital and PT Adaro Energy.
The New Zealand market sold off yesterday (NZX 50 index -1.41%) with A2 Milk & Sky TV leading heavy losses across the market. A2 Milk dropped -6.5% to $12.94 as Nestle has confirmed it is "currently launching an A2 product" under its Illuma brand, with the product said to be called Atwo and sold in China. We had highlighted there was potential competition for A2 looking to come from the US, and it now appears that A2 will not have the market to itself – Nestle is a major company with strong distribution channels and deep pockets.
3 Things Markets Will be Watching this Week
1. Global politics remain in focus as risks of a potential Trade War between the US and China grow.
2. A number of US Federal Reserve members due to make speeches this week, and investors will be looking for clues around the outlook for further interest rate hikes.
3. US GDP data and personal inflation data is released on Wednesday
Have a Great Day,
Team