23 MAY 2022 – Monday Market Highlights – Transcript

Kate Power
Good morning. It’s Monday the 23rd of may and I’m Kate from Milford. This week we saw strong retail sales data in the US, which increased 8.9% month on month for April. The details showed more evidence of a rotation to services, with nominal sales for food and beverages places surging 50% Over the last three months. China retail sales, however, declined 11.1% In April, compared to forecast of negative 6%. This is the second consecutive month of negative growth. Further hawkish comments from Fed Chair Powell this week, where he stated the Fed won’t hesitate to tighten the cash rate beyond the neutral rate if needed to ensure price stability. Following Powell’s comments US equity markets finished sharply down on Wednesday, with the s&p having the worst session since June 2020. The NASDAQ was down 4.7% and the Dow was down 3.6%. The euro area core inflation print was up for the fourth consecutive month to 3.5% for April. Turning to the domestic market. The RBA minutes were released this week, where members discussed three options for the size of the rate increase moving forward, the options being raising the cash rate by 15 basis points, 25 basis points or 40 basis points. The meeting concluded the preferred option would be to increase the cash rate by 25 basis points to be consistent with conventional monetary policy moves, but also highlighted an argument for an increase of 40 basis points, given the upside risk to inflation and the current very low levels of interest rates. Australian unemployment data for April was released. It remained at a record low rate of 3.9% which was in line with expectations. And finally, the Australian Federal election was held on Saturday, where the Labour Party defeated the coalition government. At the time of recording the Labour Party had won 72 seats the Liberal Party had lost 20 seats, and the independents had won 11 seats. Anthony Albanese is expected to be sworn in today. Turning to equity news, private equity firm KKR and CO has confirmed its conditional offer to acquire Ramsey healthcare for at $8 per share, which is the next step for them to gain access to Ramsey’s books to conduct further due diligence. KKR stated they are on track to submit a binding bid early next month. Earlier in the week, another private equity firm CVC Capital Partners was seeking to take over brambles a large Australian pallets and crates company. The bid valued the company at $20 billion. However, a few days later, CVC walked away from the offer. Due to the rise in the brambles share price and the overall market uncertainty. Around aristocrat posted a strong half year result led by their land based business. With their strong cash position. aristocrat also announced a 500 million buyback and alluded to further investment in real money gaming sector. The outlook and guidance pointed to continued growth in FY 22 On the basis of increased share and fee per day in land based gaming and growth in digital bookings with user acquisition spend at the low end of their target range. Finally, my deal.com announced that it has entered into an agreement with Woolworths under which were worse will acquire 80% interest in my deal, and my deal will delist. The deal represents a 63% premium to the last closed price and is subject to conditions including a triple C and shareholder approval. Looking to the week ahead, in the US, the FOMC minutes will be released, which will detail the board’s discussions on the rate hike decision earlier this month. The US quarterly GDP growth rate will be released, which is forecast to decline 1.4%. Finally, the RBNZ fed press conference will be held on Wednesday, where the reserve bank is expected to raise the cash rate by another 50 basis points to 2%. Thanks for listening, and we’ll see you next week.