Global markets traded in a tight range once again overnight, with the US market drifting lower as President Donald Trump escalated the war of words with North Korea. Trump told reporters that North Korea "will be met with fire and fury like the world has never seen" if it threatened the United States again.
Despite the market move lower, volatility in markets remains remarkably low. In fact, over the course of 2017 the US market (measured by the S&P 500 index) has only fallen by more than 1% twice this year, and has not moved more than 0.5% cent since July.
Stock in Focus: PGG Wrightson (PGW.NZ)
PGW shares made gains yesterday as the rural services company today posted a 5.7% gain in full-year profit, meeting its guidance, as it benefitted from lower interest costs, offsetting stalled growth in revenue.
We have held a positive rating on PGW for some time now as a diversified agri-business which is set to benefit from our “dining boom” investment theme.
Profit rose to $46.3 million in the 12 months ended June 30, from $43.8 million a year earlier while sales fell to $1.13 billion from $1.18 billion.
The company warned investors in June that earnings would be at the low end of guidance thanks to wet autumn conditions that hampered the harvest in New Zealand and weighed on the performance of Wrightson's seed and grain business. Chairman Alan Lai said the company had been bracing for the impact of lower commodity prices but hadn't banked on unfavourable weather.
The company will pay a fully imputed dividend of 2 cents a share, bringing total payments for the year to 3.75 cents, which implies a healthy dividend yield of over 6% for investors.
We are currently BUY rated on PGW.
Members should look out for a full update on PGW to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market sold off on Tuesday (ASX 200 index -0.52%) with every sector down after the miners gave up earlier gains as Chinese iron ore futures eased. Earnings remain the focus for investors, and Utilities and industrial stocks weighed heaviest on the market, as investors were unimpressed with Transurban's annual profits announcement and James Hardie shares were whacked following a disappointing quarterly profit announcement. Mayne Pharma was the day's worst performer, plunging 9.6 per cent on an earnings downgrade.
The New Zealand market was marginally higher on Tuesday (NZX 50 index +0.14%) led by Ebos Group and Spark New Zealand, while Trade Me Group fell near a six-month low amidst Amazon fears.
3 Things Markets Will be Watching this Week
1. It’s all about corporate profits as Earnings season continues across the US and Australia.
2. Local earnings season kicks off in New Zealand.
3. The Reserve Bank of New Zealand releases an interest rate decision Thursday, with it being Governor Graeme Wheeler's last monetary statement.
Have a Great Day,
Team