Global markets started the week higher after the United States dropped plans to impose tariffs on Mexican goods.
The technology sector led gains, as the market digested a couple of large M&A announcements, with United Technologies agreeing to merger with defence contractor Raytheon to create a $121bn company, while Saleforce.com is set to buy big data firm Tableau Software for $15.3bn.
Stock in Focus: Wisetech Global (WTC:ASX)
Shares in logistics software as a service company WiseTech Global (WTC) soared to new all-time highs after a well-received investor conference. Several Aussie tech darling stocks such as Wistech are trading at very rich valuations post an amazing share price run in recent times.
Surprisingly, WTC only reaffirmed its previous guidance (expecting revenue growth of 47% – 53% for 2019), suggesting the market may have anticipated a downgrade. WTC also released solid customer acquisition metrics and the importance and benefits of a integrated platform has over specialised fragmented software in the logistics industry.
To improve and expand WTC's product offering it must continue to invest into its software as well as acquiring business to improve its products integration. To continue to do this, WTC has successfully raised $335.9m from both institutional and retail investors. WTC is a quality company, however we are cautious around its valuation with the market pricing in a tremendous amount of growth.
We currently have a HOLD recommendation on WTC.
Members should look out for a full update on WTC to be released in tomorrow's weekly report.
Australia & New Zealand Market Movers
The Australian share market was closed on Monday for Queen's Birthday holiday (ASX 200 index 0.00%).
The New Zealand market was a touch lower on Monday (NZX 50 index -0.20%) in subdued trading, with an Australian holiday sapping activity on the local market. Fisher & Paykel Healthcare led the market lower, as a strong kiwi dollar hit sentiment given its significant export earnings. At the same time, the decision by the US not to impose tariffs in Mexico is a positive at the margins given Fisher & Paykel has a production facility based in Mexico.
3 Things Markets Will be Watching this Week
- Trade War headlines are likely to remain drivers of investor sentiment.
- Closely watched US inflation data will be released on Thursday.
- The latest monthly Chinese economic updates are published on Monday.
Have a Great Day,
