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Australia (ASX) & New Zealand (NZX) Market Movers – 12th June – Stock in Focus: Wesfarmers

Australia and New Zealand Market Movers is provided by: Australasian Trading Management.

The Australian share market was closed yesterday for Queen’s Birthday Holiday (ASX 200 index 0.00%).

The New Zealand market was in positive territory once again on Monday (NZX 50 index +0.24%) as shares were mixed with light trading given the Australian market was closed. Tegel shares were higher yesterday as the poultry group posted a -24% drop in annual profit and maintained its final dividend pay-out at 4.1 cents per share. More importantly, the Tegel Board recommended shareholders accept a $437.8 million takeover offer from Philippines poultry company Bounty Fresh Foods. There are still hurdles to pass before the takeover is finalised, and we would point out that investors have until late August to accept the $1.23 offer (once accepted you cannot change  your mind).  We will release another full update on the Tegel decision in tomorrow’s weekly report.

Global markets were generally higher overnight as investors shrugged off the weekend’s contentious meeting of the Group of 7 nations and focused on the historic United States-North Korea summit Tuesday morning in Singapore.

As we discussed yesterday, it is an event heavy week this week and geopolitics will continue to keep markets on edge with the meeting between Trump and Kim Jong Un being watched for signs around tensions between the two nations. Later in the week there are also important meetings of the US Federal Reserve and European Central Bank.

In other news, European shares lifted overnight after Italy’s new finance minister said the country was keen to retain the euro.

Stock in Focus: Wesfarmers (WES:AX)

Shares in conglomerate giant Wesfarmers appear to have broken out of a multi-year trading range. Shares were higher last week following the company’s investor day where chief executive Rob Scott said that the company’s focus was investing in itself rather than seeking acquisitions.

The rally in Wesfarmers has also been driven by the news it is aiming to de-merge its supermarket chain Coles, which will be a top-30 listed company in its own right. This is a positive given we have held a strong negative view towards WES’s supermarket business Coles (given intense competition from the likes of German retailer Aldi). However, at the same time we see other business divisions struggling, particularly Target and Bunnings UK, and we also anticipate star performer Bunnings AU/NZ will begin to lose steam with their respective property markets entering a cooling period.
3 Things Markets Will be Watching this Week

1.  Geopolitics as US President Trump meets with North Korean Leader Kim Jong-un on Tuesday.

2. The US Federal Reserve makes an interest rate decision Thursday morning (AU/NZ time)

3. Trade tensions with the US remain in focus following the G7 summit over the weekend.

Australia and New Zealand Market Movers is provided by Australasian Trading Management. ATM is an independent research house covering stock analysis across major markets including the ASX, NZX and US markets. We make our research easy to understand and concise, taking complex issues and simplifying them so that you can make informed and accurate decisions. We have no conflicts of interest and our only goal is to generate positive returns for our members. We run transparent model portfolios to track performance and invest where we see the most value, in companies of all sizes across all industries, and often in smaller companies.

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Categories: Australian Stocks, New Zealand Stocks

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