Jarden Brief: Transtasman bubble optimism boosts travel stocks

Hopes of a transtasman bubble were given a major boost this week. Photo / File

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

New Zealand:

Yesterday, the NZX 50 closed at 12,496 points, decreasing 1.2 per cent.

Film software and technology firm Vista Group rose by 8.4 per cent to $2.20, making it the top performer of the day.

Tourism Holdings was up 4.0 per cent at $2.60, making further gains on the back of this week's news about a transtasman travel bubble. The possibility of borders opening between Australia and New Zealand also benefitted Auckland International Airport (+ 2.1 per cent to $7.76) and Restaurant Brands New Zealand (+ 1.7 per cent to $13.56).
Fishing company Sanford increased 3.3 per cent to $4.65, a slight correction of the previous' day drop. The drop was a reaction to the company's market update published Wednesday morning, outlining challenging market conditions for Sanford.

The bottom three of yesterday's session were Meridian Energy, down 4.7 per cent to $5.46, Genesis Energy (- 4.0 per cent to $3.60), and healthcare giant EBOS Group (- 3.8 per cent to $28.55).

Statistics New Zealand GDP data release yesterday showed a 1.0 per cent drop in the last quarter of 2020, which was worse than expected. This concludes a 2.9 per cent decrease over the whole year, the worst calendar year GDP decrease in New Zealand to date. Construction activity and retail trade and accommodation made the biggest losses compared to the September 2020 quarter. Since the summer months are usually peak season for the tourist industry, this decline in GDP provides an indication about future development of activity. The lack of tourists in New Zealand is felt by many businesses and is outweighing activity gains made in the transport, postal, and warehousing industry, and the business services industry.

INTERNATIONAL MARKETS:
US:

At the time of writing, the S&P 500 was down 0.6 per cent, the DJIA was up 0.3 per cent and the NASDAQ had fallen 1.7 per cent.

Yesterday the result of the US Federal Reserve Policy meeting was announced. Despite increasing their expectations of economic growth, the policymaking committee voted to keep short-term borrowing rates near zero, currently 0.25 per cent, until 2024. Domestic Product (GDP) in the US is expected to be 6.5 per cent this year with inflation slightly higher than their normal 2 per cent target, at 2.2 per cent. Investors could have expected higher inflation with the US$1.9 trillion stimulus package being rolled out. The choice by the Federal Reserve to keep interest rates low will also continue to provide economic stimulus.

The top performing sector was Financials up 2.2 per cent, with the worst performing sector being Energy, down 2.5 per cent.

Today's top performing stocks are Hartford Financial Services Group, consisting of insurance and financial subsidiaries, up 11.7 per cent, and entertainment company, Viacom, up 5.9 per cent.

Hartford Financial Services Group shot up during today's trading session after reports of a takeover deal with insurance provider, Chubb.

The stocks performing the worst overnight were Enphase Energy, an energy management solutions provider, down 6.4 per cent, and Dollar General Corp, a discount retailer, which had fallen 6.2 per cent at the time of writing.

Rest of the World:

Asian markets were all in the green yesterday with the Shanghai index up 0.5 per cent, the Nikkei up by 1.0 per cent, and the Hangseng up 1.3 per cent.

This optimism follows the Federal Reserve March meeting result. The Bank of Japan's Monetary Policy Meeting continues today.

Commodities:

Gold recovered yesterday's losses today, up 0.2 per cent, at US$1730.20 per ounce. Oil prices were in the red for the fourth day today, falling a significant 5.3 per cent to US$61.10 a barrel. Of the cryptocurrencies, Bitcoin rose 2.4 per cent today and Ethereum fell 0.8 per cent.

Lastly, despite reluctance from the Federal Reserve to increase interest rates, the US 10-year treasury yields shot up overnight, rising 10 basis points to 1.74 per cent. During the session they reached 1.75 per cent, their highest point since the 24th of January 2020.

Australian Markets:

The Australian Bureau of Statistics (ABS) reported labour force figures for the month of February yesterday. Key indicators were the total number of employed people increasing by 88k (0.7 per cent) while the unemployment rate fell from 6.3 to 5.8 per cent. These results were encouraging as both measures of employment and unemployment were better than forecasted, economists had job increases up only 50k and expected the unemployment rate to remain flat around 6.3 per cent.

Despite this relatively up-beat news, the S&P/ASX200 dipped 0.73 per cent. Academic & Education Services along with Healthcare reversed gains from two days ago. These moves made them the worst performing sectors, down 2.8 and 1.6 per cent respectively.

A trio of Mining, Exploration, and Resource companies were yesterday's single stock winners on the ASX. Silver Lake Resources Ltd, Ramelius Resources Ltd, and Gold Road Resources Ltd climbed 8.0, 7.9, and 7.3 per cent respectively on the back a continued rise in commodity prices. To no surprise, Energy was the only sector to make gains today, increasing 0.1 per cent

Telecommunications company Spark NZ Ltd and Media Company Nine Entertainment Co Holdings Ltd were yesterday's largest underperformers dropping 3.5 and 3.4 per cent respectively. Spark was trading ex-dividend yesterday while Nine had a major shareholder sell-off.

Spark NZ Ltd is dual listed on both the ASX and NZX.

Things are heating up between the Commonwealth Bank of Australia (CBA) and payment provider Afterpay as both look to gain traction in the other's market. CBA recently introduced its own version of 'buy now, pay later' as customers can now 'pay in four' instalments as an extension of their usual mobile banking app. In response, Afterpay are in the early stages of launching their own money app which looks to revolutionise the standard mobile banking experience. Both acts are clear attempts to engage with their competitors target market and it will be interesting to follow the developments of both platforms into the near future.

• 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-disclaimer