Jarden Brief: Consumer confidence hits a high in US, tourism stocks take off

Delta Air Lines soared as an American consumer index hit highs not seen in almost 18 months. Photo / AP

Keeping you up to date with the latest market moves, in association with Investment firm Jarden.

International

US

US equities were pushed higher after a raft of macroeconomic data came in above expectations.

Durable goods orders were surveyed to increase 1.7 per cent in May versus an estimated fall of 0.9 per cent, while consumer confidence rose to its highest level since early 2022 as the Conference Board Consumer Confidence Index hit 109.7, much higher than the surveyed 104.0.

It was a strong morning for tourism-related stocks. Delta Air Lines (+6.5 per cent) increased full year earnings per share to US$6, at the upper end of earnings guidance – helped by strong demand from customers happy to front up for more expensive air fares.

Cruise liners curbed the negative start to the week thanks to Carnival Corp posting an optimistic second quarter result, lifting the rest of its cruise line peers.

Freight company Old Dominion Freight Line, one of the larger competitors to Kiwi-based Mainfreight in the US domestic freight market, found a healthy 6.5 per cent uplift during the morning’s trading.

The company filed its second quarter 8-K report (a current report to announce major events of importance to shareholders) before market open, with investors reacting positively.

In contrast, stocks in the red included healthcare company Walgreens Boots Alliance, losing 9.2 per cent at the time of writing.

The company was unable to meet analyst third quarter earnings estimates and also lowered full year earnings guidance, warning lower consumer spending hit it throughout the period and shifted some of the focus to cost-cutting for the foreseeable future.

Rest of the World

Following a headline inflation reading of 6.1 per cent in May, down from 7.0 per cent in April, European Central Bank president Christine Lagarde emphasising the war on inflation has yet to be won.

At a central banking event on Tuesday evening (NZT), Lagarde said inflation was still “working its way through the economy in phases” and that “we cannot declare victory yet” despite a clear cooling of inflationary data.

Other commentary from world leaders on Tuesday came from Chinese Premier Li Qiang who said the country was still on track to meet its annual growth target of 5.0 per cent, in contrast to expectations the economy may need further stimulus measures to prop up a slower than expected post-Covid rebound.

“From what we see this year, China’s economy shows a clear momentum of rebound and improvement,” Qiang said.

New Zealand

The NZX50 traded sideways for most of Tuesday’s trading to land up a meagre 0.1 per cent.

A weaker macroeconomic datapoint in the Westpac McDermott Miller Employment Confidence Index was posted early in the day, with the headline reading of 105.6 the lowest in almost two years.

Commentary suggests the measure can often be a lead indicator for the country’s unemployment rate.

Honey exporter Comvita updated the market after observing a record sales event in China, with the headline revenue number up 12 per cent versus the same event last year.

The company also held its full year guidance and finished the day down 1.8 per cent.

Government-owned NZ Post announced it would cut roughly 750 jobs over five years as it grappled with the move from paper postage to more online forms of communication.

The 750 staff represent around 20 per cent of the workforce, with profitability a main focus for the company that has struggled to find any meaningful earnings growth outside of its strategic holding in Kiwi Group Holdings (KiwiBank).

Freightways, a competitor in the small parcel delivery space, lost 1.2 per cent by the close of Tuesday’s trading.

Large cap freight company Mainfreight released its annual financial year 2023 report one month on from announcing its result. The report provided additional detail on the company’s performance as Mainfreight finished lower by 1.2 per cent.

Australia

Collins Foods, which operates close to 300 fast food restaurants in Australia, released its full year result to April 2023.

The company was able to beat analyst expectations at the revenue and earnings level with the stock jumping 17.6 per cent by the close.

Further, management cited cost pressures at its KFC outlets as inputs like wages, power and ingredients increased significantly in price over the last 12 months in line with headline inflation readings. Restaurant Brands operates a variety of similar outlets based in New Zealand and traded up 2.1 per cent on the news.

Insurer Medibank was down 3.9 per cent after the Australian Prudential Regulation Authority announced it would be enforcing a A$250 million excess capital requirement on the insurer for a data breach where close to 10 million customers had data stolen.

Other market laggards were Capricorn Metals and New Hope Corporation, sliding 2.8 and 2.6 per cent respectively.

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All market pricing and announcements are sourced from Refinitiv, NZX and ASX.