Jarden Brief: Discovery stock hit by Reddit-fuelled short squeeze

Reddit continues to have an impact on the stock market. Photo / Getty Images

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

New Zealand

The NZX50 was in the green ahead of a busy earnings season, closing 0.3 per cent higher.
All sectors except healthcare (-1.2 per cent) were up on the close. Financials led the way, rising 3.5 per cent.

The best performers of Monday's session were Westpac Banking Corp (+5.3 per cent to $28.28), media services provider Sky Network Television (+3.5 per cent to $0.18) and Oceania Healthcare (+3.0 per cent to $1.39). The retirement village operator shared today that it will announce its results for the 10 months leading up to 31 March 2021 on 21 May 2021.

Westpac released a strong half-year report for the six months leading up to 31 March 2021. The banking group recorded a net profit of $523 million for that period, 104 per cent higher than the same period last year. Furthermore, Westpac NZ CEO David McLean will retire on 25 June, after seven years in the role. Simon Power, current general manager of institutional and business banking and will take over as acting CEO until a permanent replacement for McLean is found.

Industrial manufacturer Skellerup Holdings (-3.2 per cent to $4.50) and port operator Napier Port Holdings (-2.0 per cent to $3.49) booked the biggest losses of the day. Air New Zealand decreased 1.7 per cent to $1.71, despite the Government announcing a two-way travel bubble with the Cook Islands on 17 May.

Last Friday, SkyCity Entertainment Group (+0.6 per cent to $3.60) launched a $125 million retail bond offer to pay down debt. The bonds will be BBB- rated in line with company rating. The offer is expected to open on 10 May 2021. The company also reiterated its 2021 earnings guidance – noting that it will be above last year's result, but still well below pre-covid levels.

- Jarden is a joint lead manager of the bond offer.

INTERNATIONAL
US Markets

US markets were a mixed bag this morning, with the Dow Jones Industrial Average up 0.8 per cent, the Nasdaq down 0.4 per cent, and the S&P500 up 0.8 per cent at time of writing.

Energy and Materials sectors led the way up, increasing 2.3 and 1.9 per cent, respectively.
The best performing stock of the S&P500 this morning was clothing retailer Gap, which rose 9.3 per cent to a new 52-week high. This came following news of strong US retail sales performance being released during last Friday, with consumer spending data in the US coming in at a record 21.1 per cent increase in March on the back of heavy stimulus support.

Baker Hughes was another outperformer, rising 9.1 per cent. The oil producer's positive stock performance was likely driven by rising oil prices as well as news of it adding a new oil rig to its line.

In contrast, Consumer Discretionary and Technology were the worst performing sectors at the time of writing falling 0.5 and 0.2 per cent, respectively.

Cosmetics giant Estee Lauder was the biggest underperformer, down 7.5 per cent. Estee Lauder fell following the release of its first quarter 2021 earnings which fell short of expectations. Earnings per share were reported at US$1.62, with revenue of US$3.68 billion.

Discovery Channel, a stock which saw some action as part of the Reddit-fuelled short squeeze, fell 5.0 per cent as another underperformed.

Rest of world:

Asian markets were in the red at the time of writing, possibly a symptom of investors keeping an eye on the Covid situation in India. The Hang Seng fell by 1.2 per cent, which the Shanghai Composite and Nikkei slipped 0.8 per cent each.

Commodities:

Among the main commodities today, Gold increased its value by 1.4 per cent to US$1,792.90 per ounce. Crypto movements include Bitcoin trading up 1.8 per cent and a surging Ethereum, which was up 11.1 per cent at time of writing.

The US 10-year bond is currently yielding 1.61 per cent, and oil is up 1.3 per cent to US$64.44 per barrel.

Australia

The S&P/ASX 200 traded relatively flat yesterday, with the index rising a slim 4 basis points to 7028.8 points.

Financials and Real Estate were the best performing sectors, making gains of 1.4 and 0.9 per cent, respectively. Meanwhile, Academic & Educational Services (down 4.1 per cent) and Industrials (down 1.2 per cent) were the performed poorly.

Gambling platform provider Pointsbet Holdings Ltd had the day's strongest performance, jumping 5.6 per cent. Pointsbet continues to trade favourably after its first quarter update last Friday was received positively by investors.

Similarly, telecommunications company TPG Telecom Ltd advanced 5.4 per cent ahead of its annual shareholder's meeting tomorrow.

Litigation funder Omni Bridgeway traded unfavourably (down 5.6 per cent) after settling for A$440 in its class action for damages caused by the Brisbane floods in March. The size of the pay-out was less than anticipated, causing an adverse share price reaction.
Credit Corp, another financial services firm, fell 5.1 per cent after releasing a quarterly update on Friday which appears to have disappointed investors.

April's PMI (Performance of Manufacturing Index) increased by 1.8 points on last month to 61.7, the highest monthly result since March 2018 and the highest growth rate since the index moved to a monthly format in 2001.

In other news, the Australian Government announced yesterday that it would be incorporating an extra A$1.7 billion in childcare spend within the federal budget. The increase in spending was pitched as an attempt to promote workforce participation, particularly for females as mothers will benefit from increased childcare subsidies. For more colour, the jump in spend is expected to add an extra 300,000 hours of work per week should feed around A$1.5billion a year into the economy.

Coming up Today:

No significant company announcements expected on either side of the Tasman, although the Reserve Bank of Australia will be announcing its interest rate decision. Most in the market expect the cash rate to be unchanged.

• For more information on the latest market moves, get in touch with Jarden.

Disclaimer: This Morning Brief has been prepared in good faith and reflects opinions and views at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation. We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission. This Morning Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm, a broker disclosure statement is available free of charge at www.jarden.co.nz. Jarden is not a registered bank in New Zealand. Full disclaimer available at: https://www.jarden.co.nz/limitations-and-disclaimera>