Pre-Open Data
Key Data for the Week
- Thursday – US – Gross Domestic Product shrank by an annualised 1.5%, worse than expected, which represented the weakest quarter since the pandemic-scarred Q2 2020.
- Friday – AUS – Retail Sales
- Friday – CHINA – Industrial Profits
- Friday – UK – Nationwide House Prices
Australian Market
The Australian sharemarket broadly weakened on Thursday, down 0.7%, as all sectors except Information Technology (1.0%) closed in the red. Widespread losses came as China warned of lower June quarter growth, which reinforced anxiety felt by markets regarding global growth prospects.
A major contributor to the Information Technology sector’s performance was the data company Appen, which surged 29.2%, after news that it received a $1.2 billion takeover offer from Canadian Telus International. Meanwhile, sector heavyweights WiseTech Global (2.4%) and Block (1.2%) also performed well.
On the other hand, the Consumer Staples sector was the primary detractor in yesterday’s session, down 2.5%. Important movers included supermarkets Woolworths (-2.6%) and Coles (-2.2%), alongside Metcash (-1.9%), which all retraced gains made on Wednesday. Some insight into sector sentiment was provided by Endeavour Group’s investor day presentation, which stated management, “expect inflation to increase wages, rent, cost of goods sold and in combination with rising interest rates, may reduce customer demand”. The company’s share price subsequently sank 6.0%.
The Materials sector finished down 1.0%, after a dip in the price of iron ore led all major miners lower. BHP and Rio Tinto shed between 0.9%-1.1%, while Fortescue Metals Group fell 3.7%.
The Australian futures market point to a 0.96% increase today, following a strong lead from international markets overnight.
Overseas Markets
European sharemarkets advanced on Thursday, as retail stocks outperformed, up 4.7%, supported by the British Government’s announcement of a £15 billion fiscal policy package to support UK households. Luxury stocks also benefited from the rally in consumer sentiment, with Louis Vuitton owner LVMH ahead 3.7%. Other notable movers included major UK banks Barclays and Lloyds Banking Group, which both gained ~2.3%. By the close of trade, the UK FTSE 100 added 0.6%, the STOXX Europe 600 gained 0.8% and the German DAX advanced 1.6%.
US sharemarkets rallied on Thursday, also buoyed by retail stocks after positive earnings guidance from Macy’s (19.1%), Dollar General (13.7%) and Dollar Tree (21.9%). Additionally, investor risk appetite was boosted by chipmaker Broadcom’s US$61 billion acquisition of cloud computing company VMware. By the close of trade all sectors advanced, except REITs which edged 0.1% lower. The Consumer Discretionary sector dragged the market higher, broadly up 4.8%, followed by the Information Technology (2.5%) and Financials (2.3%) sectors. Notable gainers included Target (4.3%), Costco (5.7%), Meta Platforms (4.2%) and Citigroup (2.6%). The Dow Jones index added 1.6%, the S&P 500 rose 2.0% and the NASDAQ rallied 2.7%.
CNIS Perspective
Former Australian technology darling Appen entered a trading halt on Thursday afternoon following developments concerning a purported $1.2 billion takeover bid from Telus International.
This would see Telus acquire the company at a price of $9.50 a share, a 48% premium to Wednesday’s closing price, however at a 28.5% discount to the stock’s price a year ago, before Appen’s revenue woes began.
Appen’s shares soared 29% to a high of $8.64 yesterday post the announcement, before the trading halt took effect, which will allow management to adequately consider the proposal.
This is the first major piece of calculated acquisition activity that we have seen in the Australian market following recent market volatility, and may well set the tone for other susceptible publicly listed companies, especially in the potentially oversold Information Technology sector.
Should you wish to discuss this or any other investment related matter, please contact your Wealth Management Team on (02) 4928 8500.
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