Markets at a glance 19 March

Around the grounds

The Australian share market is set to snap a two-day winning streak, as falls in banks and miners drag and caution reigns ahead of the US Federal Reserve’s policy decision tomorrow. Economic uncertainty state side has taken over sentiment which sent equities on Wall Street tumbling overnight.

All sub-indexes are trading in the red, with gold stocks down 0.2%, despite rising bullion prices which hit a record high. Tech stocks are also lower tracking a slump in the ‘magnificent seven’ shares on Wall Street.

Looking ahead, local attention is fixed on Thursday’s jobs numbers where any upside surprise could influence the RBA to keep rates steady for longer.

Across the ditch, New Zealand’s benchmark is tracking lower down around 0.4% at the time of writing.

In the news

Quick check on some of the stocks we’re watching in today’s trade. Australian listed shares of Myer (ASX: MYR) have slumped to a nine-month low after the company posted lower interim earnings, citing logistical challenges at a distribution centre in Victoria and strategic review costs. Net profit after tax for the 26 weeks to January 25 plunged nearly 19% on year to AU$42.4 million. Looking ahead, the department store owner has painted a gloomy outlook due to weak economic conditions.

The stock is down nearly 39% YTD, including today’s moves.

Rio Tinto (ASX: RIO) is in focus as the mining giant backed its dual-listed structure and asked shareholders to reject London-based hedge fund Palliser Capital’s resolution to review the company’s two listings in London and Sydney.

In December last year Palliser Capital and more than 100 other shareholders sought a resolution calling for Rio’s dual-listed model to be reviewed and urged the miner to only keep its Australian listing. Australian shareholders however were not in favour of the move, saying it would erode value.

Elsewhere, the WiseTech (ASX: WTC) saga continues, with founder and executive chair Richard White admitting he should have fully disclosed details of his personal relationship to the board, after a review found his statements were inaccurate, incomplete, and misleading. Australian listed shares of WTC have dropped over 30% since the allegations were first reported in October last year.

And Australian listed shares of Dicker Data (ASX: DDR) have taken a hit on news company CEO and Chair David Dicker sold 8.3 million shares for AU$8.10 per share. The proceeds from the sale will be used to fund Dicker’s final divorce settlement instalment, among others.

Finally, in the broker space and Morgan Stanley says Treasury Wine Estates (ASX: TWE) could benefit from potential tariffs on US wine. Last week US President Donal Trump threatened to slap a 200% tariff on wine, cognac and other alcohol imports from Europe. MS says Treasury’s Americas unit may stand to gain from lower supply and increased pricing power as most of the unit’s net sales revenue is domestically produced.

‘Overweight’ rating and price target of AU$12.90/share on TWE has been maintained. The stock is down over 11% YTD.  

Going global

Rounding things out on the global stage and the Asian region is muted, after those sharp falls on Wall Street overnight as a shifting geopolitical landscape kept risk appetite in check. Elsewhere, Indonesian stocks tanked to post their sharpest fall in nearly three years amid concerns over the government’s fiscal strategy and the country’s growth prospects.

On geopolitics, tensions have escalated in the Middle East as Israeli airstrikes hit Gaza killing over 400 people, shattering nearly two months of relative calm since a ceasefire began.

Adding to global unease, Russian President Vladimir Putin has agreed to temporarily stop attacking Ukraine energy facilities but stopped short from endorsing a full 30-day ceasefire.

The unrest has left investor sentiment fragile, with Japan’s Nikkei 225 half a per cent higher, while MSCI’s broadest index of Asia Pacific shares outside of Japan are down slightly.

To the currency market the yen is a tad softer ahead of the Bank of Japan’s policy decision, where it widely expected to keep rates on hold. The euro is hovering near a five-month high it reached yesterday after Germany’s parliament approved plans for a significant increase in spending.

The big dollar is steady, hovering near a five-month low, with focus on the FOMC tonight. The US central bank is tipped to keep rates on hold, with investor attention on the new economic projections from policymakers and of course comments from Chair Jerome Powell.  Traders are pricing in 58 basis points of easing this year from the Fed, with the first cut fully priced in for July.

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