Week Ahead, US Payrolls | Select Harvests

7 October 2019

​​​​Global markets ​rebounded on Friday as shares on Wall Street jumped​ as ​moderate jobs growth in September offered relief from a spate of dismal economic data ​last week​. 

​The​ US jobs data ​was a goldilocks number, not too strong to deter the US Fed from potentially lowering interest rates, while not too weak as to spur further concerns around a recession, with the unemployment rate low at 3.5%. 

The week ahead will be less data driven than last, with a focus returning to the US-China trade war as negotiations are set to renew in Washington​. There will also be a focus on the US central bank with minutes from policymakers' September meeting and a speech by chairman Jerome Powell.

 

Stock in Focus: Select Harvests (SHV:ASX)

​​Shares in almond producer ​SHV have been on a strong run after another well received crop update, announcing the 2019 harvest is expected to be 22,500 MT (+43% higher than last year’s) due to better crop management and higher than expected yields. Market conditions also improved as demand from China continues to remain strong, pushing the price of almonds higher up to $8.60 to $8.70 per kilo. 

Earlier, Select Harvest released their 2019 first half result, and showed a strong turnaround in performance after a troublesome 2018, benefitting from higher sales volume and better almond pricing – which lifted net profit after tax by +96% from last year to $20m. After what has been a challenging three-year period for SHV, things are starting to turn around dramatically for the almond producer. 

SHV is also benefitting from a weaker Aussie dollar, which we expect to remain weak. We continue to see SHV as an interesting way for investors to gain exposure to global agricultural and health conscious consumer trends​.​
 
We currently have a BUY (High-Risk) rating on SHV.
 

 

  
Australia & New Zealand Market Movers

​The Australian market managed to close in positive territory on Friday (ASX 200 Index +0.37%) but still ended the week down -3%, for its worst week since mid-November. Every sector except financials were up on Friday, with health care leading the way on the back of strong gains by pharma giant CSL. Tech stocks were the second-biggest gainers, with Xero and Appen rallying. A report has shown accounting software firm Intuit's latest numbers suggest it may have overtaken arch-rival Xero in Britain and that it is growing fast in countries Xero has yet to target.
 
 
The New Zealand market rebounded on Friday (NZX 50 Index +0.66%) after two days of decline, amid a volatile international market. Outdoor retailer Kathmandu helped move the market higher. Shares in Kathmandu were up as the outdoor clothing retailer completed a bookbuild to fund the purchase of Australian brand Rip Curl. Kathmandu will raise $145 million in the offer, having offered shares at $2.55 a piece. Its largest single shareholder Briscoe Group didn’t take up all its rights in the offer, and shares in that company were down a touch. The move dilutes Briscoes’ shareholding in the retailer from 20% to 16%.​ ​Interestingly, New Zealand retirees are increasingly turning to reverse mortgage options, according to Heartland Bank, after the lender's New Zealand reverse mortgage book grew by 11.4%.

 

3 Things Markets Will be Watching this Week

  1. ​​​​Trade War related news-flow ​will remain a feature with negotiations between the US & China set to restart.​
  2. ​Minutes from the last US central bank ​meeting will be released, as well as a speech by chairman Jerome Powell.
  3. Australian business conditions & confidence figures are released on Tuesday.

 

Have a Great Day,
 

Team

The​ US jobs data ​was a goldilocks number, not too strong to deter the US Fed from potentially lowering interest rates, while not too weak as to spur further concerns around a recession.

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