The Australian share market rallied on Monday (ASX 200 index +0.49%) posting another day of gains on advancing bank stocks. Market watchers had been predicting a modest open to trading as investors remained cautious ahead of a wave of trading updates due this week. The banks leading the charge may be an indication that the sector is now oversold, as concerns around the recent royal commission into the industry become overplayed. ANZ and National Australia Bank post half-year results this week.
Read more about the Balance Sheet’s of Australian Banks
The New Zealand market was higher on Monday (NZX 50 index +0.87%) as shares rallied across the board, with Mercury and Kiwi Property Group leading the index while Scales Corp and Comvita dropped. In other stock news, it appears that Bounty Holdings (which has recently announced a takeover offer for Tegel) has managed to acquire 51% of the shares on issue. As indicated by Bounty, the Filipino based chicken business will accept a 50% stake in NZ’s largest chicken producer
Stock in Focus: Elders (ELD:AX)
Shares in diversified agri-business Elders (ELD) have been one of our top performing ASX agriculture exposures as its shares trade close to all-time highs.
Earlier this month ELD’s updated the market with new acquisition and divestment plans. Elders has entered into a binding agreement to buy all the shares in agricultural chemical company Titan Ag Pty Ltd, expecting to generate around $7m additional earnings (EBIT) in the first year of ownership. The acquisition is expected to be completed on May 1. On the same day, Elders will also complete the acquisition of Victoria-based livestock company Kerr & Co.
While expanding in Australia, Elders will divest its Indonesian feedlot and processing assets, which ceased being profitable due to high cattle costs and changing local policies. CEO Mark Allison said Elders will continue to have a presence in Indonesia, China and Vietnam and intends to grow in these countries through retail meat distribution.
Global Markets Digest:
Global markets ended lower overnight after opening higher, as shares on Wall Street were lower in afternoon trade. The market was weighed down by healthcare stocks, while surging oil prices added to worries about rising costs for companies. On the flipside, strong earnings reports from McDonald’s and a number of merger announcements lifted sentiment early.
Despite the fall overnight, the US market managed to eke out a gain for April (+0.3%) as markets stabilised after a very volatile February and March. Closer to home the Australian market surged +3.8% in April, while the NZ market was +1.5% higher for the month.
While markets were lower overnight, The Bloomberg US Dollar Index advanced another 0.3% to the highest in more than 15 weeks as the US dollar continues to show strength. The US Federal Reserve begins a scheduled two-day rate meeting tomorrow which will be a key event for investors this week.
3 Things Markets Will be Watching this Week
- Corporate earnings season continues in the US this week.
- The Reserve Bank of Australia makes an interest rate decision Tuesday.
- The US Federal Reserve holds its latest monetary policy meeting mid-week.
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