Global markets were higher on Friday, as US markets (S&P 500 Index +1.9%) rose on the back of strong earnings results and upbeat retail sales data. The S&P 500 offset the previous sessions losses but the index still ended the week down -0.3%.
Banks have kicked off earnings season and there has been wide dispersion across results so far. Wells Fargo jumped +6.5%, despite its quarterly profits falling by -48% as the bank increases its bad debt provisions. Citigroup was the standout up +13.2% on its earnings beat (versus market expectations) as it benefits from rising interest rates. The bank results on Friday painted a less gloomy outlook for the economy compared to JP Morgan’s announcement a day earlier. It is another big week of US earnings this week with Bank of America, Goldman Sachs, Johnson & Johnson, Netflix, Tesla, Twitter and American Express all scheduled to report.
European Markets (Stoxx 600 Index +1.8%) followed Wall Street’s lead, trading higher despite weak economic data from China. It is another busy week ahead with data releases including the European Central Bank (ECB)’s interest rate decision, and the latest CPI (inflation) data for the Eurozone and UK.
China released its second quarter GDP figures showing that its economy shrank -2.6% from the previous quarter, a big miss from the -1.5% decline expected due to strict covid restrictions.
Locally, New Zealand second quarter inflation (CPI) data is released and we will see quarterly updates from BHP, Northern Star, Newcrest Mining, Evolution Mining, Santos, and Woodside.
Wisetech Global (WTC.ASX)
Wisetech shares jumped +3.4% on Friday, after the company lifted its 2022 full-year earnings guidance.
WiseTech advised that it expects 2022 full year revenue to be at the top end of its $600m to $635m guidance range, representing growth of ~21% at the mid-point. On top of that, Wisetech lifted their operating earnings (EBITDA) guidance to be between $310m and $320m, an increase of $35m from the previous guidance and up +52% at the mid-point from the previous year, benefiting from top-line growth and cost savings.
We are BUY (High Risk) rated on Wisetech.
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index -1.1%) was down on Friday.
Major iron ore miners were the major drag on the market sensitive to the economic outlook in China, and Rio Tinto warned demand may soften as rates around the world continue to rise. The price of iron ore tumbled to an 8-month low.
The New Zealand market (NZX 50 Index -0.6%) was down on Friday, as global sentiment remained deflated following a weak lead from Wall street, and disappointing economic data from China.
Most stocks were lower, while defensive names were generally up as investors remain cautious on the state of the economy.
3 Things Markets will be Watching this Week
- Major announcements this week include the European Central Bank rate decision and inflation data for the Eurozone, UK and Japan.
- US Corporate Earnings gets into full swing this week with Bank of America, Goldman Sachs, Johnson & Johnson, Netflix, Tesla, Twitter and American Express all scheduled to report.
- Locally, NZ Inflation (CPI) data and quarterly updates from Major Australian Miners and Energy companies.