Global markets were higher on Friday, as US markets (S&P 500 index +1.1%) started the first trading day of the new quarter with a positive tone following its worst first half year in 50-years.
Weak manufacturing data wasn’t able to deter investors as the Institute for Supply Management said manufacturing activity in June was weaker than expected, dropping to 53 for the month, the lowest reading since June 2020. Gains were broad-based, led by consumer discretionary, and real estate stocks.
European Markets (Stoxx 600 index) were flat as investors favoured defensive names ahead of an expected economic slowdown, which offset the decline in riskier assets. European headline inflation hit a new record of +8.6% year on year for the month of June, well up on the 8.1% reading the previous month and slightly above market expectations.
Closer to home, the Reserve Bank of Australia (RBA) makes its July cash rate decision tomorrow, which is tipped to be another 50 basis point increase.
Tourism Holding (THL.ASX)
Tourism Holding slipped lower after proposing to divest certain assets in order to gain regulatory approval from the competition authority. This helps to increase the likelihood of the takeover being approved but reduces some of the upside. A partial deal is still viewed to be more favourable than a no-deal, and most of the cost synergies should be in place.
We are BUY rated on Tourism Holding as our preferred tourism exposure. We see current share price levels as supportive if there is no deal or if the partial divested deal were to go through.
Australia & New Zealand Market Movers
The Australian market was down on Friday (ASX200, -0.4%).
Most sectors were in the green however heavy losses for energy and material stocks dragged the market down as commodity prices slipped.
The New Zealand market (NZX 50 Index, -1.1%) was down on Friday on light turnover, as risk assets led losses.
3 Things Markets will be Watching this Week
- Highlights this week include US nonfarm payrolls (employment data), Fed meeting minutes and the latest inflation data in China.
- Locally, the RBA meets with a 50bp lift to the cash rate expected, which would take it to 1.35%.
- Home loans and building approvals in Australia are also due this week along with Goodman Property’s AGM and a Q2 sales update from Summerset