Global markets traded light overnight with some markets closed for Easter Monday, and US Markets (S&P 500 Index -0.02%) ended the session flat, as stocks whipsawed between gains and losses.
Investors appeared nervous on inflation as the 10-year US Treasury bond yield reached a 3.5 year high of 2.88%, as well as bracing for upcoming earnings results.
For the week ahead, US earnings season will be in focus, as investor attention shifts back towards quarterly company profit announcements. On the earnings front, a strong result from Bank of America relieved investors, as its earnings fell only -13% from the previous year, which was better than expected. Financials have done well early in reporting season and other major lenders traded higher. Energy was the best performing following a +2.4% increase in the price of oil reaching $109/barrel as outages in Libya deepened concerns over tight global supply.
Mega cap technology stocks were in positive territory, with Twitter climbing +7.5% after restrictions on Elon Musk’s ownership to be no larger than 15% for one-year following his hostile takeover offer. Tesla rose +2% as it prepares to reopen its Shanghai plant following its three-week lockdown.
Bank of Queensland (BOQ:ASX)
Bank of Queensland shares fell -6.3% on Thursday, despite its headline result being ahead of expectations cash profit rising +14% from last year to $268m. The beat was helped by lower-than-expected bad debts and one-off benefits.
Underlying trends were softer, notably revenues, and investors are worried about margin compression which was worse than expected given current headwinds of low interest rates are moderating.
We are Hold rated on Bank of Queensland, and prefer ANZ or Westpac.
Australia & New Zealand Market Movers
The Australian market was up on Thursday (ASX200 index +0.4%) with a positive tone from Wall street helping lift investor sentiment.
All sectors traded higher except for Financials, materials and technology stocks leading gains.
Travel stocks got another boost for a second day in a row, as borders to NZ reopened over the Easter weekend. Qantas rose +7.1% for its best single day performance since November 2020 as investors become more upbeat on the travel sector, gains were also helped by Moody’s upgrading its outlook on Qantas from negative to stable as favourable operating conditions return.
The New Zealand market edged higher on Thursday (NZX 50 index +0.1%), as markets tried to find a bottom after a couple of weak sessions as investors grapple with where inflation could possibly peak.
Stock moves were mixed again, as stocks generally beaten down regained some ground, Ryman Healthcare up +3.4%, Scales climbing +2.5%, and A2 Milk gaining +2%. Sky City rose +1.8% after providing a trading update that it can operate without any capacity limits under orange light and that visitation improvements meant the business is operating at cashflow positive.
NZ King Salmon slumped another -28% as investors had a full day to digest their capital raise and bleak outlook.
3 Things Markets will be Watching this Week
- Geopolitical risks remain extremely elevated with the Russia/Ukraine conflict.
- CPI (inflation) data in New Zealand and Eurozone
- US earnings from Netflix, Johnson and Johnson, Tesla Verizon, Proctor and Gamble this week. Quarterly updates from Australian miners and oil producers are due.