Global markets were lower on Friday as markets took a breather and US stocks halted a four-day rally, as renewed concern the coronavirus will slow global growth overshadowed fresh signs of a strong US labour market. The US Federal Reserve warned the Coronavirus outbreak posed a “new risk” to the economy.
The week ahead is dominated by corporate earnings announcements across Australia and NZ. Companies reporting this week under our coverage include: Macquarie, James Hardie, Sky Television, Woodside Petroleum, SkyCity Entertainment, Telstra, and Treasury Wines. During earnings announcement period, the focus of investors usually shifts back towards company profitability rather than broader issues.
Stock in Focus: Kathmandu (KMD:NZX / KMD:ASX)
Shares in Kathmandu jumped nearly 13% on Friday as Kathmandu provided 1st guidance for 40% operating earnings (EBIT) growth at its investor day.
KMD was more optimistic about Rip Curl synergies without quantifying their impact, while talking down the near-term impact from coronavirus. With Rip Curl doing better than expected (Rip Curl was acquired for A$350m late last year), it offset the core business tracking 1-2% below the prior period, as the retailer said same-store sales rose 1.5% in the 26 weeks to January 26, although margins have declined.
Members should look out for a full update on KMD to be released in our weekly report.
We currently have a HOLD rating on KMD.
Australia & New Zealand Market Movers
The Australian market was lower on Friday (ASX 200 Index -0.38%) as Australian shares ended the week marginally higher with steep losses for the oil and gas sector weighing on gains among health and technology stocks. Risk-off trade on Friday saw the gold companies finish the day higher but other miners lose ground.
In stock news, Flight Centre says the coronavirus outbreak will make it difficult to achieve its fiscal 2020 profit guidance. The travel services provider said the virus was affecting its early second-half travel patterns, particularly in Asia.
The New Zealand market rose on Friday (+1.35%) with a number of China-related stocks such as A2 Milk surging on relief around Coronavirus concerns. The NZX was also playing catch up as it was closed on Thursday for Waitangi day holiday.
3 Things Markets Will be Watching this Week
- Local earnings season starts across Australia & New Zealand this week.
- The Reserve Bank of New Zealand makes an interest rate decision on Wednesday.
- US corporate earnings season gets into its latter stages.
Have a Great Day,
