US markets (S&P 500 Index +1.5%) rose strongly to end the week on a positive note, as markets recovered from a three-week slide.
All sectors were in the green, with heavily beaten down stocks making the strongest gains as the most-shorted names were the best performers. Docusign rose +10.5% after its earnings beat estimates, Kroger also jumped+7.4% after lifting its annual forecast.
European Markets (Stoxx 600 Index, +1.6%) were also up, as mining, tech and banks shares led the rally, the latter getting a boost from ECB’s 75 basis point rate hike. Mining stocks got a boost, following China revealing another weak inflation print and another wave of government stimulus – contrary to the rest of the world.
For the week ahead, US CPI (Inflation) Data for August will be watched closely by investors.
Fonterra Shareholder Fund (FSF:NZX)
Fonterra shares rose +4.3% on Friday after lifting its earnings guidance for 2023 to 45 to 60 cents per share, up significantly from previous guidance of 30 to 45 cents. This comes despite the expectation milk volumes will come in a touch lower from last year. as it benefits from strong demand for its dairy products globally improving prices and raising margins across their portfolio of goods.
We were Sell rated on Fonterra. Now at current levels given a more favorable pricing and earnings outlook we change our rating to HOLD, as the downside risk is minimal (even if dairy prices were to ease from current levels), but due to the nature of Fonterra’s structure we would not be Buyers.
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index, +0.6%) was up on Friday on a mixed day of trade.
Miners, energy and tech were strong performers, as commodity facing stocks all benefiting from increased stimulus spending in China to support commodity prices.
The New Zealand Market (NZX 50 Index, +0.7%) was up as it followed global rebound with Fonterra leading gains on its earnings upgrade.
What Markets will be Watching this Week
Monday
Tuesday
US CPI (Inflation) Data for August, James Hardie investor Day, NZ August housing data from REINZ
Wednesday
US PPI (Producer Inflation), Data, UK CPI and PPI data
Thursday
US retail sales data, Australian employment figures and NZ 2nd Quarter GDP data
Friday
Eurozone CPI data.