Market Overview
After a difficult December and 2018 in which most global markets fell, January proved to be a risk on month for markets with the S&P500 and Nasdaq +9.7% and +7.9% respectively and the main Australian, European and Japanese indices up around 3 to 4%. The drivers of this rally were the US Federal Reserve talking down risks of an imminent rate rise and a more conciliatory tone in US/China trade relations. Against this backdrop the NZX50 was a relative underperformer +2.0% in January and was outperformed by the Australian market.
In New Zealand, top performers were the a2 Milk Company, PushPay and Z Energy; while Kathmandu, Air New Zealand and Tourism Holdings were the weakest. PushPay announced they had broken even on a monthly cash flow basis by the end of 2018, and Z Energy upgraded earnings guidance during the month (reversing the guidance downgrade in Q4 2018). Kathmandu and Air New Zealand were both weak on earnings warnings for each company. In Australia, Energy was the best performing sector (Oil bouncing), followed by Tech and Communications. Financials dragged the chain, as the market remained nervous ahead of the release of the report from the Hayne Royal Commission (which actually turned out not as bad for the sector as feared when the report was released on February 4th).