New Zealand Market Movers
The New Zealand market (NZX 50 Index, +1.9%) rallied on Monday with Pushpay (+5.0%) accounting for a third of turnover. Large cap dividend stocks Chorus (+5.9%), Mercury NZ (+5.2%), Contact Energy (+3.4%), and Fletcher Building (+3.2%) all rose by more than 3 percent.
Exporters also performed well on the day, with notable gainers including Rakon (+8.0%), AoFrio (+6.1%), Serko (+5.1%), and Tourism Holdings (+4.2%).
Australia Market Movers
The Australian market (ASX 200 Index, +1.2%) also experienced a notable boost on Monday. Only Energy (-0.4%) was in the red, while all other sectors except Materials (+0.1%) advanced between +1.1% and +2.7%. Materials was affected by the continuing decline in Iron Ore (-5.3%).
Wheat (+6.4%) surged to a two-week high of $8.8 per bushel after Russia ended participation in an agreement that allowed grain exports from Ukraine. As such, agriculture stocks followed with gains of their own, with Graincorp (+7.9%) leading the pack.
The Reserve Bank of Australia delivers its latest interest rate decision at 4:30 pm today.
Europe Market Movers
European markets (Stoxx 600 Index, +0.4%) closed higher on Monday to notch their first monthly gain after three in the red. At the same time, annual inflation in the Euro Area broke another record high, jumping to 10.7% from 9.9%, far above expectations of 10.2%. GDP growth in the Euro Area also painted a bleak picture, growing at its slowest pace in six quarters, growing only 0.2% in the three months to September.
US Market Movers
US markets (S&P 500 Index -0.8%) closed lower on Monday, but the Dow still recorded its best month since 1976, up +14.0%, as investors drifted away from growth stocks and into traditional blue chips.
The pause in the US stock rally makes sense with the US Federal Reserve interest rate decision due on Thursday at 7:00 am. All sectors except Energy (+0.6%) closed in the red, led by Communication Serves (-1.7%) and Technology (-1.3%).
Stock In Focus
Pushpay (PPH.NZX)
As noted above, Pushpay climbed +5.0% on Monday after entering an agreement to be acquired for $1.34 per share by Sixth Street and BGH Capital, who currently hold 20.34% of shares outstanding. Pushpay’s board has unanimously recommended that shareholders accept the offer, the deal is now subject to shareholder and other regulatory approvals, and its earliest likely completion is the second quarter of 2023. The offer price of NZ$1.34 represents a +7.2% premium on the current share price of $1.25, which is on the low end of our expectations at the start of the year, but reflective of the weak trading update and higher interest rate environment.
We maintain our BUY rating on Pushpay as the underlying business continues to present an attractive investment opportunity into the giving space at current levels. The share price has well and truly adjusted for a slowdown in growth from new customer adds as well as adjusted to concerns over rising interest rates and the subsequent impact on growth stock valuations, in our view.
What Markets will be Watching this Week (UTC +13)
Monday
EA Inflation Rate Year-on-Year Flash OCT
Tuesday
AU RBA Interest Rate Decision
Wednesday
US Manufacturing PMI OCT
US JOLTs Job Openings SEP
Pfizer earnings
AMD earnings
Airbnb earnings
Thursday
US ADP Employment Change OCT
US Fed Interest Rate Decision
Estee Lauder earnings
Booking Holdings earnings
Friday
GB BoE Interest Rate Decision
Starbucks earnings
Saturday
US Non Farm Payrolls OCT
Berkshire Hathaway earnings
