Global markets were lower overnight, US Markets (S&P 500 Index, +4.0%) posting one of its largest single day loss since 2020, and now on the edge of bear market territory (now down 18.6% from its record high).
Target suffered its worst single day loss since 1987, as it slumped -24.9% after reporting a weaker result and guided soft outlook ahead as demand for discretionary products dip and costs on fuel and wage rise – weighing down on bottom line. Lowe’s fell -5.3% after missing sales expectations in its first quarter report as shoppers bought fewer supplies for outdoor projects. This come after Walmart’s (down another -6.8%) delivered another weak result a day earlier hinting that the consumer is not as strong as expected and demand could start to wane off in light of current inflation, and hurt upcoming earnings.
All sectors traded lower, with retailers, hardest hit (both discretionary and consumer staples) in fears of weakening demand and rising costs. Tech stocks were also heavily sold off NASDAQ down 5.1% and it down 28% from its peak.
European markets (Stoxx 600 index, -1.1%) closed lower as inflation fears rattle market, with most sectors trading lower and tech shares leading losses.
Argosy Property (ARG:ASX)
Argosy shares jumped +3.3% after delivering an inline result benefitting from their tilt towards industrial property. Net property income came in at $105.1m for the year marginally down from the previous year, steady rental growth, and lower covid-19 rent relief was offset by disposals – particularly Albany Lifestyle Centre.
Net profit after tax held up at $236.2m, due to revaluation gains across the portfolio – benefitting from lower cap rates. Net tangible asset per share rising +13.7% from last year to $1.74 per share.
We have recently upgraded Argosy to a BUY as we feel more comfortable at its current valuation where it provides and attractive dividend yield, while trading at a large discount to its net tangible asset per share which would likely be under pressure over the next few reporting seasons as interest rates increase.
Australia & New Zealand Market Movers
The Australian market was up again yesterday (ASX200 index, +1.0%) following a strong lead from wall street.
Material and tech stocks lead gains, the heavy weigh iron ore miners doing most of the heavy lifting following a +2.2% lift in the price of iron ore prices.
The New Zealand market (NZX 50 index, +1.1%) was up on Wednesday, helped by lift in shares globally.
Meridian Energy the NZX’s second largest company jumped +4.7% after providing a positive trading update, which lifted gentailers higher as well.
Property stocks were also higher after Argosy’s result came in within expectations.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- Eurozone Inflation and employment figures
- Locally, earnings from James Hardie, Argosy Property, Briscoes, Goodman Property Group, Infratil, Oceania Healthcare and Ryman Healthcare
