Global markets rallied on Friday as shares of Apple hit an all-time high to lead the technology sector higher. Apple's stock jumped after famed investor Warren Buffett revealed that he had bought 75 million shares, boosting his stake in Apple by nearly 50%.
The key US news was that the jobless rate slipped last month to its lowest since 2000, pointing to continued labour market strength. At the same time, wage growth came in lower than expected, easing concerns about inflation. In terms of being positive for markets, this was about as good as it gets, in our view. The data affirms expectations that the US Federal Reserve will continue to gradually lift interest rates, with the focus on the June policy meeting.
Closer to home, this week sees the release of the Australian Federal Budget on Tuesday, while the Reserve Bank of New Zealand makes an interest rate decision on Thursday morning.
Stock in Focus: Macquarie (MQG:AX)
As we discussed last month, Macquarie (MQG) appears to be the shining light in the Australian financial sector, unphased by the negative sentiment around the sector. On Friday MQG released a set of record profit numbers for the year end 31 March 2018.
Looking at some of the detail, net profit for the year was $2.557 billion, up 15% on last year. This saw the payment announced for a final dividend per share of $3.20 making up total full year dividends of $5.25, up from $4.70 in 2017. MQG continues to reap rewards as the investment bank benefits from its transformation to a more stable annuity style business. The annuity-style asset management and banking services businesses now represent around 70% of total income, with Macquarie Asset Management remaining the core performance driver due to its sheer scale as much as anything else.
As we have discussed in the past, while MQG’s business is sensitive to volatile factors such as equity market conditions and exchange rate moves, conditions have continued to swing in MQG’s favour.
We currently have a BUY (High-Risk) recommendation on MQG.
Members should look out for a full update on MQG to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was lower on Friday (ASX 200 index -0.58%) ending a five-session winning streak. In saying that, the ASX 200 market index managed to post its best weekly advance for more than a year as investors welcomed some robust corporate earnings updates. Gains experienced by Macquarie helped limit the downside with the investment bank touching an all-time high after revealing a bumper profit before pulling back and ending the day up 0.2%.
The New Zealand market was more or less flat on Friday (NZX 50 index +0.02%) with A2 Milk pulling the index up while Gentrack Group, Spark and banking stocks dropped. In stock news, Delegat Group, New Zealand’s largest listed winemaker announced it had a record harvest this year, driven by an increase in New Zealand grapes, while its Australian harvest fell. The 2018 harvest amounted to a record of 40,059 tonnes, made up of the New Zealand harvest of 38,012 tonnes (up 10% on the 2017 vintage) and the Australia harvest for Barossa Valley Estate of 2,047 tonnes (compared to 2,760 in the previous year).
3 Things Markets Will be Watching this Week
1. Corporate earnings season enters its final stages in the US this week, with around 80% of stocks having released profit results.
2. The Reserve Bank of New Zealand is widely expected to keep interest rates on hold at 1.75% on Thursday.
3. This week sees the release of the Australian Federal Budget on Tuesday.
Have a Great Day,
Team
