Deere & Company was the only stock to release earnings results on Wednesday, gaining 4.9 per cent ahead of its opening price. Photo / Michael Cunningham
Keeping you up to date with the latest market moves, in association with Investment firm Jarden.
Markets remain muted with thin trading volume in the days leading up to the Thanksgiving holiday. Investors await the Federal Open Market Committee meeting minutes to glean the direction of the Federal Reserve’s monetary tightening policy.
This is as the committee digests numerous economic releases, including Durable Goods and Initial Claims, S&P’s flash Purchasing Managers’ Index, Michigan Sentiment and New Home Sales reports.
Deere was the only stock to release earnings results on Wednesday, gaining 4.9 per cent ahead of its opening price.
Deere’s fourth quarter ends in October with the completion of the United States harvest, posting earnings of US$7.44 a share from US$14.4 billion sales, beating Bloomberg analyst consensus of US$7.09 a share from US$13.4 billion.
What exceeded the solid result was the outlook in earnings of 2023 coming in at a range of US$8.0 billion US$8.5 billion, ahead of Wall Street’s estimate of US$7.9 billion, on strong crop prices and positive farm fundamentals.
Nordstrom shares fell 5.8 per cent, having been down as much as 9.9 per cent as investors reacted to their third quarter earnings update, released after market close on Tuesday.
While sales fell 2.5 per cent in the quarter ending October, above analyst expectations, the profit outlook for the full year was revised down by 32 US cents to US$2.13 to US$2.45 a share, as they deal with heavy discounting at both its upscale department stores and discount chain.
Management cited a late holiday shopping season and decelerating trends in key geographies due to unseasonal warm temperatures affecting its ability to turnover excess inventory.
Rest of World
European markets closed on modest gains as investors looked to get a read-through on euro zone economic data, where travel and leisure stocks gained 1.9 per cent, retail and mining stocks ended on a positive note of 1.8 per cent and technology stocks were up 1.4 per cent.
The Purchasing Managers’ Index for the euro zone showed it has clearly entered a recession, but the downturn in business is decelerating.
Credit Suisse has forecasted a pre-tax loss of up to SFr1.5 billion in the fourth quarter and cited wealthy clients withdrawing up to 10 per cent of their assets since the start of October.
The bank has now flagged it has breached group and legal liquidity buffers. This level of outflow is comparable to the level of annualised outflow UBS experienced in the global financial crisis, but not in one quarter.
These outflows follow last month’s announcement of a restructuring plan and $4 billion capital raise, after it faced a SFr44 billion third quarter loss.
Commodities
Oil prices fell 3.9 per cent as G7 nations discussed a potential price cap on Russian oil of US$65 to US$70 per barrel above where it currently trades.
This would still allow Russia to make a profit to sell oil as production costs are estimated at US$20 per barrel and could prevent a supply shortage on the global market.
Gas prices have taken an opposite turn, seeing a rise of 7.3 per cent as Russian energy company Gazprom said it may further limit supplies into Europe next week through Ukraine, escalating the risk of a blackout this winter across the continent.
These cuts come as a threat to enforce larger cuts in supply as Europe now reassesses alternate supplies of liquefied natural gas.
Australia
The ASX was up 0.7 per cent on close, with the market being able to compare the RBA and (as of today) RBNZ’s interest rate hike momentums.
Qantas Airways shares rose 5.3 per cent after lifting profit guidance for 1H23, bringing the updated range to A$1.35 billion to A$1.45 billion, attributing the intensity of travel demand as consumers prioritise travel over other spending categories.
The strength of the pricing has been emphasised by the mention of fuel costs estimated to be a record A$5 billion for FY23 and an international capacity 30 per cent below pre-Covid levels.
The increased cash flow for this period will allow management to cut borrowings by A$900 million and defer a further A$200 million of capital expenditure to 2H23, increasing confidence Qantas will provide positive shareholder returns after garnering criticism of its ability to identify and capture the pace of the rebound.
Wisetech shares saw a 6.7 per cent drop, the lowest performer of the ASX 200 after reaffirming previous guidance for FY23 at its AGM.
This featured ranges for revenue of A$755 million to A$780 million, earnings before interest, tax and depreciation of A$385 million to A$415 million and a margin of 51.0 per cent to 53.0 per cent.
In previous years, the company had often upgraded guidance when releasing its AGM.
New Zealand
There was little surprise among the market when the RBNZ increased the official cash rate (OCR) by 75 basis points to 4.25 per cent.
This was the largest incremental increase since its institution as NZ’s primary monetary policy tool in March 1999 and the highest level seen since 2008.
What caught many off-guard was the strikingly hawkish tone of RBNZ’s assessment of the economic outlook.
This is best demonstrated by the 140-basis point upward forecast revision to the Official Cash Rate by the end of 2023, which would see it peak at 5.5 per cent, rather than the 4.1 per cent forecasted in August.
This has been justified as necessary to combat rising inflation expectations. The RBNZ stated a recession is forecast sometime next year with four quarters of negative Gross Domestic Product, a 1.0 per cent fall from peak to trough.
The NZX closed 0.8 per cent down yesterday.
NZX indices for energy, healthcare and real estate all took a hit, closing down 2.1 per cent, 1.9 per cent and 1.4 per cent respectively.
Leading the 33 of 50 stocks that ended in the red were retirement operators Ryman Healthcare, Arvida Group and Summerset Group - which lost 8.1 per cent, 5.9 per cent and 5.0 per cent respectively.
Serko released its half year result for 2023 and reiterated its guidance towards doubling revenue from the previous financial year, benefiting from a strong rebound in managed travel volumes in New Zealand and Australia.
Management has stated their priority is moving towards profitability and cashflow breakeven. With current market conditions, they intend to return to a cashflow positive position during the financial year of 2025. Serko shares were down 0.4 per cent on market close.
Coming up today
Cancer diagnostics company Pacific Edge, pharmaceutical company AFT Pharmaceuticals and technology company Rakon are to release their half-year earnings this morning.
In the Australian market, companies across infrastructure, energy and mining will host AGMs – these include Qube Holdings, Karoon Energy, Evolution Mining, New Hope Corporation and De Grey Mining.
For more information on the latest market moves, get in touch with Jarden.
All market pricing and announcements are sourced from Refinitiv, NZX and ASX.
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