Global markets were down on Friday, with US markets (S&P 500 index, -1.9%) falling as investors digest higher than expected inflation prints. To add to the mix, geopolitical tensions between Russia & the Ukraine remain elevated – on Friday the US warned Russia could take offensive military action against Ukraine as early as this week.
The US tech index NASDAQ slumped -2.8%, as technology and discretionary stocks led losses as consumer sentiment looks to be waning in a high inflation environment, with real chances of a 0.5% interest point rate hike in March for the US. Energy was the only sector in the green rising sharply, as Russia’s invasion threatens oil supply and saw the WTI crude oil price jump +4.5% to US$93.90/ barrel.
European Markets (Stoxx 600 index -0.6%) were down as investors digest US inflation data and rising geopolitical tensions in Ukraine.
Locally earnings season heads into full steam with a large number reporting this week across Australasia, with key names including: Contact Energy, Sky City, Boral, JB Hi Fi, Telstra, Ansell, BHP Billiton, EBOS Limited, Fletcher Buildings, Skellerup, Vicinity Centres, CSL Limited, Goodman Group (Australia), Fortescue Metals, Wesfarmers, Woodside Petroleum, Crown Resorts, QBE Insurance and Cochlear.
Pushpay Holdings Limited (PPH:NZX / PPH:ASX)
Pushpay shares have been beaten down heavily recently, as technology shares globally get repriced lower on the back of higher interest rates, adding to the selling pressure after its weak result late last year. Last week, the negative sentiment increased with insider trading allegations on shareholders reported in 2018 – which do not effect the current business or current shareholders.
While Pushpay does not report this earnings season, they might be due for a trading update which is better than the negativity priced into its share price. Based on its current valuation Pushpay looks attractively priced trading at forward price to earnings ratio of 19x, and revenue multiple of 3.9x, a large discount to ASX peers. PPH is profitable and generating cash for further bolt on acquisitions. While competition is no doubt heating up in the giving market, we think there is solid valuation support – with the stock trading at low valuation levels not seen since the depth of the COVID market sell-off.
We remain BUY rated on Pushpay.
Australia & New Zealand Market Movers
The Australian market was down on Friday (ASX200 index -1.0%), with all sectors trading lower except for materials.
The major miners and some banking stocks were a select few trading higher, the former benefiting from iron ore price exceeding US$150/tonne, while strong banking profit results throughout the week supported gains across some of the banking sector.
The sell off was broad-based technology and real estate leading losses, both being most sensitive to rising interest rates.
Magellan Financial group fell -4.9%, after updating the market that funds outflow for the month of January was $5.5 billion, however February could be just as bad in response to recent governance changes.
The New Zealand market (NZX 50 index -1.9%) was down on Friday, following the US hot inflation print sending most of the market lower.
Growth orientated and interest rate sensitive stocks fell hardest, A2 Milk (-4%), Fisher and Paykel Healthcare (-3.9%), EBOS (-3.9%), Pushpay (-2.8%), and Pacific Edge (-3.7%).
Kathmandu was part of the select few bucking the trend up +0.7% after delivering a mix trading result, earnings will be down -81% from last year due to longer lockdowns which was expected by the market, while sales across its group was still encouraging.
3 Things Markets will be Watching this Week
- The Latest US Fed meeting minutes, US housing and retail sales data.
- GDP data from Eurozone.
- Locally earnings season heads into full steam, with names reporting including Contact Energy, Sky City, Boral, Jb Hi Fi, Telstra, Ansell, BHP Billiton, EBOS Limited, Fletcher Buildings, Skellerup, Vicinity Centres, CSL Limited, Goodman Group (Australia), Fortescue Metals, Wesfarmers, Woodside Petroleum, Crown Resorts, QBE Insurance and Cochlear.