Global markets were higher on Friday, with the US market (S&P 500 index, +0.7%) climbing higher continuing to recover post last week's US CPI shock data (inflation concern led sell-off) despite weak economic data being released on the day.
The University of Michigan Consumer Sentiment Index dropped to 66.8, the lowest level in nine years, as consumers year-ahead inflation expectations rose to +4.9% from +4.8%.
Mega-cap technology names provided support to the broader market – Facebook-parent Meta rallied 4%, while Apple, Microsoft and Amazon each added more than 1%. Tesla shares dropped -2.8% after CEO Elon Musk sold a further US$1.2bn worth of Tesla shares on Friday. Johnson & Johnson rose +1.2% after announcing plans to divide its consumer healthcare and pharmaceuticals segments into two separate companies.
European Markets (Stoxx 600 index +0.3%) were in the green as central banks commented that inflation may decline more slowly than earlier thought, partly due to supply chain bottlenecks. A surge in Covid cases across Europe has seen renewed restrictions as the Netherlands head back into partial lockdown.
Infratil (IFT:NZX / IFT:ASX)
Infratil shares rose +0.9% on Friday, after delivering their 2022 half year result, which was boosted by Tilt renewable sale.
Looking ahead to the remainder of the year earnings guidance was softer down slightly to $500m $530m, to reflect lockdowns disrupting earnings on its diagnostic imaging and airport businesses. It appears the Vodafone NZ business is starting to deliver, and the CDC data centre division had a weak first half result, which we believe should reverse in the second half of the year,
With a sound balance sheet and ample funds to make further acquisitions or reinvest into existing businesses, we like IFT's new strategy of focusing on earlier stage businesses like data centres, and see it more of a private equity type play now, rather than "old-school" infrastructure assets. We remain BUY rate on Infratil as our preferred Infrastructure play due to the attractive growth sectors it invests in.
Australia & New Zealand Market Movers
The Australian market was up on Friday (ASX 200 index 0.8%), as Asian markets were buoyed by Chines Property developer Evergrande avoiding another default
This saw most sectors trade higher led by materials, which is most linked to China, and most commodity related stocks trading strongly. Followed by Aussie tech stocks also performing well, rebounding from Thursday's sell-off.
Supermarket chain Coles rose +1.8% following a broker upgrade. Ramsay Healthcare fell another -1.3% following its weak result.
The New Zealand market was down on Friday (NZX 50 index -0.9%).
Pushpay led losses falling another -8.1%, and is down -20% since reporting a soft half year result on Wednesday, which weighed down on other stocks yet to report this month.
Fisher and Paykel Healthcare fell -4.4% with its earnings due in two weeks as investors question how the company would operate post pandemic.
Higher interest rates continue to weigh down share prices, even in light of strong earnings. Mainfreight was down -4.4% following a strong result, while A2 Milk fell (-2.6%) after being excluding from the MSCI index at the end of the month and Genesis (-1.9%) also suffering losses.
Rakon managed to buck the trend jumping 7.4% after hiking its earnings guidance for the second time in the past three months.
3 Things Markets will be Watching this Week
- Key events this week include CPI (Inflation) and employment data across the Eurozone and UK, and third quarter GDP in Europe.
- A raft of US housing market data is due along with retail sales and a data dump in China (retail sales, IP and fixed assets investment).
- Locally, CBA will release its first quarter result, AGM’s and Investor days held by Aristocrat, Incitec Pivot, Ryman Healthcare, Afterpay, Seek, a2Milk, BlueScope Steel, Goodman Group, Resmed, Wisetech and Next DC.