Global markets were volatile on Friday as US stock recouped some losses, but were on track to end the week in the red as investors fretted over a possible global trade war following President Donald Trump’s promise to impose import tariffs on steel and aluminium.
The tariffs are seen as the trigger point for a potential global trade war, and Trump has signalled his intent to adopt the protectionist trade stance he highlighted during his presidential election campaign. The European Union is considering applying 25% tariffs on around $US3.5 billion of imports from the United States if President Donald Trump carries out his plan to apply global duties to steel and aluminum, EU sources say.
Trade War concerns swept through the ASX and NZX last week as well, particularly given the reliance of both economies on trade. For Australia, steel tariffs are concerning given iron ore (a key raw material used to make steel) is the country’s largest export. More details are expected to be confirmed this week.
Stock in Focus: (EBO:NZ / EBO:AX)
EBOS recently reported solid profit figures for the 1st half of its financial year as the pharmaceutical and animal health products maker lifted profit by 12% as it reaps the benefits of a diverse portfolio and remains positive about the full year.
Looking at some of the detail, revenue slipped -0.4% to $3.94 billion on lower hepatitis C medicine sales while profits rose to a record $76.7 million. “Our record first-half results are in line with our expectations and reflect a consistent positive momentum across both our healthcare and animal care businesses”, said chief executive Patrick Davies.
EBOS have also said they continue to look at a number of acquisitions within the healthcare market as the company aims to build export momentum into Asia. We believe EBOS has a strong track record of delivering on growth opportunities and expanding through sensible acquisitions, while the company also fits into our healthcare investment theme.
We currently have a BUY rating on EBOS.
Members should look out for a full update on EBOS to be released in Wednesday’s weekly report.
Australia & New Zealand Market Movers
The Australian share market fell on Friday (ASX 200 index -0.74%) after fears of a trade war were sparked by US president Donald Trump's surprise announcement of tariffs on imports of steel and aluminium. Losses were led by resources and industrial stocks. While the news is clearly bad for Australian iron ore/steel exporters, Macquarie's trading points out that most Australian iron ore goes to China and 90% of Chinese steel production is consumed in China.
The New Zealand market sold off on Friday (NZX 50 index -0.65%) as NZ shares fell on global trade concerns after US President Donald Trump announced new trade barriers, with Synlait Milk giving up gains while Fletcher Building rebounded on debt waiver news. Fisher & Paykel Healthcare, which derives about half its revenue in the US fell as investors worried about potential tariffs.
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