Global markets were higher overnight with gains on Wall Street led by industrials and a rebound in technology stocks, after a report that the United States and China hoped to resume talks to defuse a trade war between the world’s two largest economies.
Investors also continue to digest quarterly profit announcements in the US. As we have highlighted, another strong round of US profit announcements is a key reason to remain bullish on markets and we are watching developments closely. On the earnings front Apple shares were higher after hours after releasing what looks to be another strong result driven by sales of higher-priced iPhones.
Stock in Focus: Ardent leisure (AAD:AX)
As we touched on yesterday, shares in Ardent Leisure (AAD) have sold off this week after releasing a weak trading update.
AAD said the recovery in patron numbers is taking longer than expected and the Dreamworld theme park on Queensland's Gold Coast continues to struggle following the 2016 tragedy that claimed four lives.
Looking at some of the detail, AAD expects to report revenue of between $545 million and $550 million in the 2018 financial year. This compares to $585 million in 2017. The main driver of top line growth has been its Main Event business in the United States where AAD is expanding, although like for like sales were up +1.6%. This will partially offset weakness in the theme park business. It was a disappointing update although we do continue to see AAD as an exposure to the tourism boom as well as a weakening Aussie dollar.
We currently have a HOLD rating on AAD.
Members should look out for a full update on AAD to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was slightly higher on Tuesday (ASX 200 index +0.03%) with gains in the material and energy sector supporting the market. BHP Billiton shares climbed to a near-four year high despite workers at the company's Escondida mine in Chile voting on whether to strike this week after a rejecting a final contract offer. Tech stocks were generally hit hard following weak leads from Wall Street, with high-flying names stocks such as Wisetech Global, Altium, and Xero selling off.
The New Zealand market was virtually flat yesterday (NZX 50 index +0.00%) led higher by Freightways and Sky Network Television as the market remains quiet ahead of earnings season. In stock news, Evolve Education saw its shares plummet as it said it expects its 2019 annual earnings will be $3 million to $5 million lower and said it continues to see takeover interest.
3 Things Markets Will be Watching this Week
1. US corporate earnings season continues as investors digest quarterly company profit announcements.
2. Locally, investors in Australia and NZ will also turn their attention to corporate profit announcements which kick off this week.
3. NZ employment figures are released on Wednesday, the US Federal Reserve makes an interest rate decision on Thursday morning (AU/NZ time).
Have a Great Day,
Team