Global markets sold off on Friday as shares on Wall Street fell following renewed jitters over the US-China trade war, capping a week of trading that saw big swings and high volume. Trump warned that trade talks scheduled for next month with China could be cancelled and said “we’re not going to be doing business with” Huawei Technologies. Once again, we believe that US-China tensions are unlikely to be resolved in the short term and will continue to create volatility.
For the week ahead, the focus locally will be on corporate profit announcements across Australia & NZ. During earnings season, investor focus generally shifts away from broader issues and towards stock specific announcements.
Stock in Focus: James Hardie (JHX:ASX)
James Hardie was the biggest ASX200 gainer on Friday after the building materials company said it expected to make more profit this year than analysts had forecast.
1st quarter 2020 earnings were ~5% ahead of estimates, with earnings guidance for the full year of US$325-365m in line with consensus. There is increased confidence with strong 1st quarter North America volume and improvements expected to come. In saying that, the outlook for Europe remains soft. At the same time, the weaker Aussie dollar will be acting as a tailwind given JHX's offshore operations.
We currently have a BUY (High-Risk) rating on JHX.
Members should look out for a full update on JHX to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market was in positive territory on Friday (ASX 200 index +0.25%) after a volatile week. In stock news, AMP shares jumped +11% after emerging from a trading halt in a sign investors are backing a $1.3 billion turnaround of the fallen banking and wealth giant. Afterpay rose +6% after the buy-now, pay-later company said it now had more than two million US customers, up from 1.5 million in early June.
The New Zealand market was virtually flat on Friday (NZX 50 index -0.01%) as investors prepare for earnings season to kick into life this week. Contact Energy kicks off the reporting season proper when it announces its annual result this morning. SkyCity has launched its online casino as it attempts to compete with overseas rivals. It also settled the sale of the long-term concession on its Auckland car parks for $220 million.
3 Things Markets Will be Watching this Week
- Australasian earnings season kicks into full gear this week with a number of companies set to make profit announcements.
- Employment data in Australia will be released on Thursday.
- US inflation data is published Wednesday morning NZ/AU time.
Have a Great Day,