Global markets were mixed on Friday as European markets continued to slide on geopolitical concerns, while the US market ended the session slightly higher. As we touched on last week, the war of words between the US and North Korea has halted a remarkable period of calm for the US market in particular, with the VIX (a measure of US market volatility) jumping sharply.
For the week ahead geopolitics will remain in focus for investors, and it will be interesting to watch China which is seeking to defuse increasing tension between the US and North Korea.
This week also sees corporate profit reporting season get into full swing across Australia and NZ, while we enter the tail end of US quarterly profit announcements.
Stock in Focus: A2 Milk (.NZ / A2M.AX)
While most shares were down on Friday, A2 Milk continues to defy gravity as shown by the chart below (the stock has appreciated by a massive +127% so far this year).
The stock continues to make new record highs with the recent rally coming after several brokers upgraded their expectations for the stock. At the same time A2 milk and Synlait milk announced they are confident with their application to export A2 platinum infant formula into China from 1 January 2018. The new Chinese regulation requires infant formula manufacturers to register their brand and recipe in order for their products to be allowed to be imported into China from 1 January 2018, with China being the key growth market for A2.
We are currently HOLD rated on A2, and will wait for its profit result to be released on the 23rd of August before reviewing our recommendation.
Members can login to read our latest reports on A2 Milk.
Australia & New Zealand Market Movers
The Australian share market was lower on Friday (ASX 200 index -1.18%) as the escalating war of words between the US and North Korea weighed heavily on the ASX. In stock moves, shares of Australian Agricultural Company were sharply lower, presumably on the back of the resignation announcement from its managing director and CEO.
The New Zealand market sold off on Friday (NZX 50 index -0.91%) following global moves lower. Fisher & Paykel Healthcare and Sky Network Television hit hardest while Hallenstein Glasson Holding rose on positive earnings. Clothing retailer Hallenstein Glasson posted a 7 percent increase in annual sales and said profit was about 25 percent higher than the previous year, which saw its shares rise 3%.
3 Things Markets Will be Watching this Week
1. Corporate profits will be in focus as earnings season continues across Australia, NZ and the US.
2. The geopolitical situation as tensions remain high between the US and North Korea.
3. The Reserve Bank of Australia release minutes from its last meeting n Monday.
Have a Great Day,
Team
