Global markets were lower on Friday, US Markets (S&P 500 Index, -0.6%) marking its 6th weekly loss, as an upbeat jobs data reiterate the case for the Fed to continue its aggressive rate hike programme.
April’s nonfarm payrolls increased by a higher than expected 428,000, while the unemployment rate held constant at 3.6%, and average hourly earnings were up by a more modest than expected +0.3% month on month. The report saw bond rates rise, 10-year US Treasury rate lifting to 3.13%, and nearing 2018 peak of 3.26%, and increases the probability of the Fed to increase its base rate by 50 basis points in June and July, followed by 25-point hikes onwards.
Most sectors were lower expect for energy and utilities. Tech stocks were weak the NASDAQ fell -1.2% hitting fresh 12-month lows. Sports retailer Under Armour crashed -23.8% after providing disappointing profit guidance for 2023citing supply chain issues and renewed covid restrictions in China.
European markets (Stoxx 600 index, -1.6%) as a similar interest related sell-off continues coupled by weak earnings which saw tech and retailers lead losses. Adidas fell -2.3% after reducing their 2022 outlook.
Macquarie Group (MQG:ASX)
Macquarie’s shares slumped on Friday after their delivering their 2022 full year result.
Despite a strong result, it missed the market’s high expectations, and management expressed concerns around the economic outlook and failure to provide guidance. The current result and performance would be hard to match, which did not bode well with investors.
Net profit after tax rose +56% from last year to $4,706m, driven by a much stronger second half, as the market facing business profit grew +95% from last year benefitting from higher level of corporate activity and higher commodities trading related income – assisted by more volatile market conditions.
We remain HOLD rated on Macquarie at current levels. We still view it as a quality business and would consider upgrading our rating to a BUY at more attractive levels.
Australia & New Zealand Market Movers
The Australian market was down on Friday yesterday (ASX200 index, -2.2%) suffering its largest daily loss since the onset of the Ukraine Invasion.
All sectors traded lower as markets worry about the economic impact of an aggressive rise in interest rates globally to tame inflation. Technology and real estate stocks led losses being most sensitive to rising rates.
Despite commodity prices rising, the major miners were also weaker, as investors took a risk-off attitude.
The New Zealand market (NZX 50 index, -1.2%) was down on Friday joining the market wide sell off.
A select few managed to avoid the carnage, Fisher and Paykel Healthcare rose +2.1% being less sensitive to a weak economic outlook and as the stock found some support following its recent decline.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated given the Russia/Ukraine conflict.
- Inflation data from US and China (CPI and PPI)
- Locally, earnings from Westpac, Xero, Pushpay and trading update from CBA