US markets (S&P 500 Index -1.1%) fell on Friday, ending the week down -3.3% and marking its third weekly decline as a robust job report confirmed the recent market fears that the Fed would keep aggressively hiking interest rates.
The ‘goldilocks’ nonfarm payrolls report showed some moderation in wage pressure and a surprise increase in the unemployment rate – August saw 315,000 new jobs created, a touch below 318,000 expected by the market. This saw the market increase the probability the Fed would raise its base interest rate by +75 basis points at its next meeting later this month.
All sectors sold off for the day, except for energy. Tech shares were heavily hit again with the NASDAQ Index down -1.4% suffering its 6th consecutive daily loss.
European markets (Stoxx 600 Index, +2%) closed higher on Friday, capping off another volatile week down -1.6%.
With earnings season over, markets will be focused on another busy week with announcements from central banks across the globe. The Reserve Bank of Australia is making their announcement on Tuesday, Bank of Canada on Thursday, and the European Central Bank on Friday, all expected to make sizeable rate hikes this week.
EBOS (EBO:NZX)
EBOS delivered a solid result for the 2022 financial year. Net profit after tax grew +21% from last year to A$228.2m. The result was driven by strong growth across the business both organically and via recent acquisitions. LifeHealthcare being the most significant of late, completed in 31 May 2022 with only a 1-month contribution to the group result delivering $9.5m in earnings (EBIT).
EBOS did flag supply chain and costs inflation are causing some concerns, but the outlook continues to remain positive, with plenty of capital expenditure planned to fuel further growth.
We are Buy rated on EBOS taking into account a full-year contribution from LifeHealthcare – EBOS is still reasonably priced trading at a forward price to earnings multiple of ~21x.
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index, -0.3%) was lower Friday, closing out its worst week since June declining -4.1%.
It was a mixed day of trade with heavy losses from material and tech stocks, offset by gains by financials and healthcare.
The price of iron ore slipped -5% as China continues to battle with covid and another major tech hub city Shenzhen with a population of 18m enters into a lockdown, weighing down on major miners.
The New Zealand market (NZX 50 Index, +0.2%) edged higher on Friday.
Defensive names and exporters both ended the session higher, the latter benefitting from a weakening kiwi dollar.
What Markets will be Watching this Week
Monday
Australian PMI and retail sales data
Tuesday
Reserve Bank of Australia cash rate decision.
Wednesday
Eurozone employment and second quarter GDP data. Australia’s second quarter GDP data.
Thursday
Bank of Canada interest rate decision
Friday
European Central Bank interest rate decision and China (consumer) CPI and (producer) PPI inflation data.
