Keeping you up to date with the latest market moves, in association with Investment firm Jarden
NZX Market Wrap:
Tech stocks had a good day with ikeGPS up 14.3 per cent after its institutional placement closed oversubscribed. Plexure continued to rise after yesterday's ASX teaser, up another 12.1 per cent. Pushpay also continued to quietly recover on its last few weeks' losses, up 1.8 per cent.
Large-cap outperformers included Mainfreight (+2.8 per cent), A2 Milk (+2.7 per cent) and gentailers Contact (+2.5 per cent) and Meridian (+2.1 per cent).
AFT Pharmaceuticals had a second consecutive day of gains after announcing it has signed an exclusive Maxigesic IV licensing and supply agreement for six new eastern European countries with a combined population of over 53 million, through its existing partner Medochemie.
Kiwi Property Group was again the most traded index stock of the day, reporting total sales at Sylvia Park, The Base and The Plaza shopping centres up 0.5 per cent compared to June 2019.
When adjusting these figures to exclude cinemas, travel and foreign exchange, which are more strongly affected by Covid-19, growth is even higher at 7.5 per cent. S&P has reaffirmed Kiwi Property Group's bond ratings at BBB (stable).
Mainfreight summarises excellent performance
Mainfreight released a strong trading update, reporting growth in revenue of 5 per cent (ex-FX) and profit before tax growth of 18 per cent for the first 17 weeks of this financial year.
This trading period includes almost all of New Zealand's lockdown. When compared to the trading update for the first seven weeks of this financial year, which had revenue growth down 0.3 per cent (Ex-FX) and profit before tax down 42 per cent vs the previous period, the latest update is extremely positive. The only downside to the update was the reduction in revenue growth in the Americas, a decline of -3 per cent compared to 0 per cent for the first seven weeks of trading.
Recovery for EROAD
Logistics tech-specialist EROAD held its AGM yesterday, while also providing a quarterly update. The company advised that its New Zealand business is recovering to near normal growth levels, although the US and Australian businesses have had challenging operating conditions given the additional Covid-related lockdowns those jurisdictions are currently facing.
Despite the slowdown, EROAD continued to grow, adding 2326 units during the months of April, May and June. However, New Zealand's growth made up 1938 of these units, whereas its primary target for growth is its business in the US, which the company estimates has an addressable market more than 18 times larger than New Zealand's. The impacts of Covid-19 to EROAD's growth continue to be uncertain - should further lockdown restrictions continue to be put in place, the company may struggle to see out its ambitions.
EROAD has risen substantially since its positive 2020 full-year result, in which it reported it had increased revenue by 32 per cent and ebitda by 73 per cent year on year. The company has advised its market outlook remains unchanged for the current financial year.
International markets: US GDP drops 32.9 per cent
Chinese markets end the day slightly down, however, Shenzhen remains up 3.5 per cent for the week, while Shanghai is also up 2.3 per cent for the week.
This is on the back of news that 12 democratic candidates in Hong Kong have been disqualified. At the time of writing the Dow Jones was down 0.8 per cent and the S&P 500 was down 0.35 per cent. The Nasdaq was up 0.52 per cent, pushed higher by large tech firms who are reporting after the bell today (Amazon, Facebook, Apple and Alphabet).
Proctor and Gamble, Yumbrands and PayPal all beat earnings estimates, by US$0.15 per share, US$0.54 per share and US$0.19 per share respectively. This continues the trend of large companies being able to weather Covid-19 lockdowns better than analysts could expect.
Covid-19 hits US GDP numbers
US GDP faced its largest quarterly fall, down 9.5 per cent – and down 32.9 per cent on an annual basis. Not even the Great Depression featured such a decline.
Additionally, US jobless claims rise for a second week to 1.4 million, along with the continuous claims rising to over 17 million.
However, this nominally catastrophic economic news has hardly interrupted market momentum.
Arguably investors have priced in this short-term fall and may now be hoping for a smooth recovery.
Given the magnitude of the GDP trough, there arguably remains a disconnect between the real economy and an optimistic share market. Concern remains that changing sentiment may result in a pull-back.
Mastercard challenged by Covid-19 headwinds
MasterCard (-0.4 per cent) reported in line revenue figures of US$3.34 billion for the quarter, down from US$4.11b last year.
Although MasterCard was significantly challenged by a lack of international travel payments and volumes, which were down 45 per cent, it saw good growth in cybersecurity and data analytics tools, up 12 per cent and 14 per cent respectively.
The company will benefit from an overall increase in e-commerce living as more tap less payments will be made online rather than using cash in stores, therefore, once cross border travel can begin, MasterCard is likely to see growth again.
At the time of writing Oil was down heavily (-2.6 per cent) to US$40.16 a barrel, while Gold also lower at US$1945 an ounce. Gold ends the month of July up US$176 per ounce (+9.2 per cent). The US 10-year yield continues to decline, now sitting under 0.55 per cent.
ASX Market Wrap:
A solid performance from the ASX yesterday as the market ignored signs of a worsening virus in Victoria, closing the day at 6051.1 points and up 0.7 per cent.
ALS Limited, who provide analytical testing services to the mining sector, was the strongest performer, rising 6.5 per cent to A$8.83. Credit Corp Group rose 6 per cent to $19.19 as it continued to perform strongly following the release of its results earlier in the week.
IOOF Holdings expects to report NPAT of A$128-$130m, which is 2-4 per cent below consensus, dragging its shares down 7.8 per cent to $4.86. Technology (+2.4 per cent),
Consumer Staples (+1.5 per cent) and Health Care (+1.4 per cent) were the strongest sectors, all showing impressive gains. Insurance Australia Group was the best performer of the Top 20, rising 3.0 per cent, while all the banks reversed some gains made Wednesday to close slightly down.
Supermarket retailer, Coles and electronics retailer JB Hi-Fi both recorded 52-week highs rising to A$18.46 and A$45.59, respectively.
Infrastructure firm, Cimic Group reported net profit after tax was down 14% year on year to A$316.6 million. No dividend was reported as management continue to monitor the effects of the pandemic on the firm's performance.
Gold miner, OceanaGold cut its full-year production guidance due to a first half loss of US$57.4 million.
Genesis Energy will be releasing their fourth quarter sales and revenue numbers today. The figures will let analysts fill out Genesis' full year earnings for the 2020 financial year and may cause the stock price to move if not in line with market expectations.
Origin Energy and global asset management firm Janus Henderson release their 2020 financial result to round out the week.
Large day of Economic data out in the US tomorrow: Consumer spending, core inflation, personal income, Chicago PMI and Consumer sentiment index.
The US ends the week off with Exxon Mobil Corp and Chevron being the two big names reporting.
For more information on the latest market moves, get in touch with Jarden.
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.
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- NZ Herald