Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Inside Investor daily report – markets up but is a recession coming?
Overseas on Wednesday reports suggest the US economy shrank at an annual rate of 4.8% in the first quarter, confirming the worst fears that the world’s largest economy is already in a recession. This was much worse than the 3.5% expected.
With less than one month of restrictions included in that figure the signs are worrying for Q2. However, President Trump’s Project Warp Speed gave investors hope, as did better news on Gilead’s drug treatment success.
The result?
Global market rallies. In the US, Thursday saw gains of 2.7% on the S&P 500, 3.6% on the NASDAQ and 2.2% on the Dow Jones. European markets were all up over 2.5% overnight amid their own earnings season. The strength was broad-based with four gainers for every laggard. All-important consumer spending fell 7.6% for the quarter, which clearly had an impact on Starbucks, reporting an 8.5% drop in same-store sales, the first fall in over 10 years.
Insights from the ASX
Closer to home the ASX followed US futures gaining 1.5% but remains around 25% below its high. Grocery retailer Coles Group Ltd (ASX: COL) reported incredible numbers, growing sales 8.2% in the quarter as hoarding increased. However, Coles stock was sold off as April sales were expected to normalise.
Inflation figures which have since become outdated saw the fastest growth in prices in six years as the bushfires hit prices of fruit and vegetables (6%) and seafood (2%). Australian cannabis and hemp product specialist Ecofiber (ASX: EOF) was one of the few companies to reiterate guidance for full-year profit after launching a hemp-based facemask during the quarter. Crown Resorts Ltd (ASX: CWN) also announced that global asset manager Blackstone had purchased a 10% stake in the casino operator clearly seeing the value in the burgeoning real estate assets.
Movers & shakers
Reporting season remains as mixed as expected with little real direction offered to investors. Farming products manufacturer Caterpillar announced a 20% fall in revenue and 40% drop in profit as inventories fell close to 80%, with management drawing down $3.88 billion in a debt facility to ensure they have sufficient cash. Its dividend was maintained.
Content delivery and cybersecurity business Akamai saw revenue increase 8% as more businesses moved online, and hacking events increased substantially. Akamai reported peak traffic on their network had grown 30% on the previous year.
Tesla Inc (NASDAQ: TSLA) reported a surprise profit its third consecutive quarter, fuelled by strong demand for the Model 3 and the sale of its clean energy tax credits. Finally, Facebook Inc (NASDAQ: FB) gained in after hours trading as revenue was in-line with expectations, and daily average users grew 11% to 1.73 billion amid the lockdown.
This update was written by Drew Meredith, Director of Wattle Partners.
