Global markets rallied overnight with the S&P 500 hitting an all-time high, as technology stocks gained on growing optimism around US-China trade talks and a likely reprieve for Chinese telecoms company Huawei.
Monthly US manufacturing data (ISM survey) overnight fell to the lowest reading since October 2016 (at 51.7), from 52.1 in May. While a weak number, a reading above 50 still indicates expansion in the manufacturing sector and the numbers were ahead of market consensus.
Stock in Focus: CSL (CSL:ASX)
CSL shares have experienced a solid run this year, however pulled back slightly after announcing the first-year financial impact of transitioning to its own GSP (Goods Supply Practice) licence in China.
The license enables CSL to own and sell its products in the domestic Chinese market – over the last 30 years CSL had been importing albumin into China, which is then distributed via a third party. CSL had already advised on the transition but have now provided an update on the process and the estimate of one-off financial impact from the transition which was much larger than earlier anticipated.
This can be seen as a one-off impact and China represent a large growth market for CSL. CSL has proven to be a solid performer continuing to deliver growth as a defensive healthcare business.
We currently have a BUY recommendation on CSL.
Members should look out for a full update on CSL to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market started the week in positive territory (ASX 200 index +0.44%) after a trade truce between the US and China at the weekend's G20 meeting buoyed investor sentiment. The major miners led the market gains on Monday as stock levels of the bulk at Chinese ports extended their declines. Afterpay shares extended their heavy losses on Monday following an announcement last week that multinational financial services company Visa was set to enter the payment instalments technology market.
The New Zealand market retraced yesterday (NZX 50 index -0.35%) as several energy and infrastructure firms eased from all-time highs in a quiet start to the September quarter. Outside the benchmark index, Abano Healthcare jumped 19% after saying annual earnings will meet guidance and that efforts to consolidate Australia's dental sector have attracted "various" expressions of interest.
3 Things Markets Will be Watching this Week
- Trade related news flow is likely to remain in the headlines.
- The Reserve Bank of Australia makes an interest rate decision on Tuesday.
- Friday's US nonfarm payrolls (employment figures) will be the key event in terms of economic data.
Have a Great Day,