Global markets were mixed overnight, as US Markets (S&P 500 Index, +0.6%) reversed earlier losses to end the session higher, following a sharp sell-off on Friday where the S&P 500 fell -2.8%. The US market is back to being in correction territory, down -10% year to date.
The sell-off has been induced by the Fed trying to front load its up coming rate hikes, with the market not only expecting a 50-point basis hike in May, but economists at Nomura predict that the fed could follow up with a 75-point rate hike in June and July which rattled markets. Concerns over global economic slowdown from aggressive rate hikes and covid outbreak in China had also lowered sentiment.
This saw a selloff in risk assets, and investors seek safety through treasury bonds, causing treasury yields to fall (when demand for treasury bonds increase as a safe haven asset, its yields falls). The latter encouraging the recovery in equity markets late in the session, with mega caps tech stocks reporting modest gains.
Twitter shares jumped +5.7% after the company announced it would accept Elon Musk’s $44 billion buyout deal.
Equity markets are now braced for the busiest week of earnings for the S&P500, with 160 companies due to report, including mega cap names Amazon, Apple, Alphabet, Meta Platforms and Microsoft – with market sentiment hinged on these key companies on delivering solid results
European markets (Stoxx 600 index -1.6%) fell as commodity stocks traded lower, over worries over increased covid-19 lockdown restrictions in China led to global economic growth concerns.
Pushpay (PPH:NZX / PPH:ASX)
Pushpay shares have soared +26% this morning, after announcing it has received an unsolicited binding and conditional expressions of interest or approaches from third parties looking to acquire Pushpay. Pushpay have appointed Goldman Sachs to assist as financial advisor and there is no certainty that these expressions of interest will result in a transaction.
Pushpay also reaffirmed its previous earnings guidance expected underling operating earnings (EBITDAFI) to be between US$61.5m to US$63.5m.
We are BUY rated on Pushpay and the takeover offer reaffirms our investment case thesis that PPH offers compelling relative value in the technology space.
Australia & New Zealand Market Movers
The Australian market was down on Friday (ASX200 index -1.6%) snapping its 5-day winning streak and suffered is largest fall in two months.
The broad-based sell saw all sectors trade lower except for healthcare amidst concerns of a hawkish interest rate cycle from the fed.
Materials and Energy suffering the largest losses, not helped by a bleak economic outlook and weaker than expected production updates. Technology shares being most sensitive to rising interest rates were heavily sold during the session.
The New Zealand market fell on Friday (NZX 50 index -0.4%), taking a weak lead from Wall Street. Growth names were generally weaker as the US Fed hinted towards a 50-basis point rate hike at the upcoming May meeting.
New Zealand King Salmon (+45%) and Air NZ (+4.7%) were the two biggest gainers while being in the process of performing capital raise and have been very volatile lately.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated with the Russia/Ukraine conflict.
- US first quarter GDP data and a huge week of earnings in the US with Alphabet, Meta, Apple, Ford, Amazon, Chevron and Exxon Mobil all due to report.
- Locally, Australian CPI (inflation) data trading updates from Australian Oil and Gas producers.