Global markets were up on Friday, with US markets (S&P 500 Index +1.7%) experiencing a fourth straight week of gains – the longest run since November last year.
Data on Friday showed US consumer sentiment climbed to a three-month high and easing inflation boosted investor confidence, keeping open the possibility of a soft landing in the global economy, rather than a deep recession. The NASDAQ Index jumped +2.1%, pushing beyond its technical bull-market threshold following a surge of over 20% from June lows, keeping in mind it still remains down -16% for the year.
The recent rally in risk assets is being helped by liquidity entering the market (investors have been holding on to more cash), with portfolios sitting at their lowest allocation to equities since the GFC – according to Bank of America.
Earnings season in the US caps off soon, with 90% of companies reported so far, of that 78% have posted better-than-expected results. The major retailers Target, Walmart, and Home Depot report this week.
European Markets (Stoxx 600 Index +0.2%) closed higher on a mixed day of trade as investors digested economic data.
UK GDP data showed the economy contracted by -0.1% in the second quarter which was a marginally better result than economists had forecast – but the market’s focus is on the widely anticipated recession starting later in the year after energy companies are allowed to raise gas tariffs.
Another busy week ahead which includes inflation (CPI) data from the Eurozone and the UK, economic data from Australia, Reserve Bank of NZ’s cash rate decision (OCR), and local earnings.
Rocket Lab (RKLB:NASDAQ)
Rocket Lab shares surged up +21% on Friday after its second-quarter result came in better than expected and the company provided lifted its outlook for the current quarter. Revenue for the quarter came in at $55.5m, up 5-fold from the same corresponding period last year with loss of $0.08 per share.
It was a successful quarter of growth with momentum continuing into the next quarter, as management guided revenue to be between $60-63m, the majority being space systems revenue.
We are BUY (High Risk) rated on Rocket lab, as a service provider to the growing space tech sector. Members should look out for a full update to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index, -0.5%) fell on Friday but recorded its fourth weekly gain in a row.
Most sectors traded lower with real estate and technology leading loses, and energy bucking the trend to reporting healthy gains for the session.
Fisher and Paykel Healthcare’s rival ResMed fell -3.1% on its result despite reporting a US$250m one-off gain as outlook remains uncertain for the breathing mask producer.
The New Zealand market (NZX 50 Index, -0.3%) was down on Friday, capping off a quiet week as major exporters dipped on the softening of the USD over the week.
Fonterra shareholder Fund jumped +4.4%, after saying its earnings would be on the top end of guidance due to favourable supply dynamics.
Things Markets will be Watching this Week
Monday
Global: US NAHB Housing Market Index, China retail sales data
Australia: Earnings from Beach Energy, Bendigo & Adelaide Bank, JB Hi-Fi, Quarterly update from Westpac.
New Zealand: Earnings, Contact Energy
Tuesday
Global: Earnings from Walmart and Home Depot
Australia: RBA Minutes, Earnings from BHP, Challenger, Goodman Group, and James Hardie
New Zealand Earnings from Mercury and PGG Wrightson.
Wednesday
Global: US Retail sales data and Fed Meeting minutes release, Eurozone second quarter GDP and employment data, and earnings from Target.
Australia: Earnings from Brambles, Corporate Travel, CSL, Downer EDI, Magellan, Santos, Super Retail, Vicinity Centres.
New Zealand: RBNZ’s cash rate decision (OCR), and earnings from Fletcher Building
Thursday
Global: US Existing home sales data, US initial jobs claims, and Eurozone inflation (CPI) data
Australia: Employment data, and earnings from Blackmores, Evolution Mining, Transurban and Treasury Wine.
New Zealand: Earnings from Auckland International Airport, Precinct Properties, and Skellerup.
Friday
Australia: Earnings: Accent Group, AGL, Cleanaway, Cochlear, Inghams, and TPG Telecom.
New Zealand: Credit card spending data and earnings from Genesis Energy.