Jarden Brief: Why NZX ended the day in the red

Wednesday was a tough day for large-cap stocks on the NZX. Photo / File

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

New Zealand

The NZX50 was in the red again yesterday with a 1.1 per cent decline. It was a particularly bad trading day for large cap stocks, with the NZX10 falling 1.5 per cent.

The fall in the NZX50 was led by the consumer non-cyclicals and financials sectors, down 3.1 and 2.3 per cent, respectively. The only sector to rise was energy, up 1.0 per cent.
Logistics software company, Eroad, was the top performing stock yesterday after investors digested a mixed third quarter report which was released on Monday. Eroad reported some progress in making deals with large enterprises in the US – while sales for its new dashcam product seemed to be tracking well.

Listed property vehicles traded well in yesterday's session, with Argosy Property up 3.4 per cent and recovering most of Tuesday's drop. Precinct Properties New Zealand was another outperformer, rising 1.8 per cent. The gain came despite CFO, Richard Hilder, disclosing that he sold 24% of his shares - reducing his holdings from 383,233 to 291,924 ordinary shares.

Retirement village operator, Ryman Healthcare, was the biggest underperformer of the NZX50 yesterday, down 3.7 per cent and losing all of Tuesday's 2 per cent gain.
A2 Milk also underperformed, falling 3.6 per cent and now down to $8.31.

Mercury NZ became the third gentailer to release their third quarter update yesterday. Despite the dry conditions affecting spot prices around the country, Mercury restated their generation goal of 3,800 GWh for the year. Hydroelectric generation rose by 71GWh to 910GWh, even though inflows were lower – suggesting the generation was likely fuelled by depletion of stored water in Mercury's dam. The stock price fell by 1.3 per cent following the announcement.

In macro-economic news, New Zealand Consumer Price Index (CPI) data was released yesterday. This is used to measure inflation. The CPI rose 0.8 per cent in the three months ended in March, making the annual increase 1.5 per cent. These price increases have largely been driven by higher house, car and fuel prices. Transport prices rose 3.9 per cent, the largest quarterly rise in over a decade. Rent prices were up 1 per cent for the quarter, the largest increase for a year.

INTERNATIONAL
US:

US markets have rebounded after yesterday's dip, with the S&P 500, Nasdaq and Dow Jones Industrial Average all currently trading stronger up 0.7 per cent, 0.8 per cent, and 0.8 per cent respectively at time of writing.

Positive sector movements include Basic Materials and Energy, each leading the way with 1.7 and 1.3 per cent increases.

Broadcasting company, Dish Network Group (+12.1 per cent), traded favourably as investors reacted to news of the company partnering with tech giant, Amazon, to help build its 5G network and cloud platform. Meanwhile, medical equipment manufacturer, Intuitive Surgical Inc (+9.9 per cent), jumped after the release of its first quarterly earnings yesterday.

Netflix Inc slumped to a 7.5 per cent loss, currently trading at US$510.10. The streaming provider has been in headlines over the last 24 hours after investors reacted to a disappointing increase in subscriber numbers in their first quarterly earnings release yesterday.

Netflix was a beneficiary through the COVID-19 period as lockdowns caused a massive increase in demand for streaming services. These latest results suggest a potential reversion for Netflix, which expects subscriber numbers to normalise over the foreseeable future as economies re-open and people spend less time at home.

Oil services company, Halliburton Co, also fell significantly (4.3 per cent) after the release of its own first quarterly earnings.

Rest of the world:

Asian indices underperformed overnight. All three of the Hang Seng, Shanghai Composite and Nikkei returning losses of 1.7 per cent, 0.1 per cent, and 2.0 per cent at the days' close.

Commodities:

In commodities this morning, Gold is trading stronger by 0.7 per cent, at US$1,791.60 per ounce. WTI crude oil was down 2.4 per cent, now priced at US$61.17 per barrel. Yields clawed back gains from last week's fall, with the 10 US year Treasury bond now priced at 1.57 per cent.

Amongst the two largest crypto currencies, Bitcoin is trading down 2.2 per cent at US$55,288.40 while surprisingly, Ethereum moved in the opposite direction this morning - up 4.4 per cent to US$2,410.20.

Australia

The ASX200 faced another day of selloffs, closing 0.3 per cent lower, dropping below the 7,000 points mark.

Sector performance was a mixed bag. Information Technology (-1.9 per cent) was the biggest loser for a second day, followed by Energy, dropping 1.5 per cent. On the flip side, Health Care and Industrials rose 1.1 and 0.5 per cent, respectively.

Top performer of Wednesday's session was international education organiser, IDP Education, rising 5.1 per cent to A$24.45.

Travel agency, Corporate Travel Management, gained 3.5 per cent after a positive market update, indicating the firm was returning to profitability. The firm is expecting to generate a positive underlying EBITDA in the fourth quarter of its financial year, due to successful vaccine rollouts and the number of essential travel clients. Rounding off the top performers was Nufarm, an agricultural chemical company, which increased 3.3 per cent to A$5.35.

Software developer Nuix's share price took a 15.4 per cent blow due to its downgraded outlook. Pro forma revenue guidance was reduced to A$180 million - A$185 million, compared to A$193.5 million in its IPO Prospectus. The firm's CEO, Rod Vawdrey, contributes this drop to the shift in consumer behaviour, with customers seeming to prefer more flexible, consumer-based licensing models instead of the module-based subscription.

Coal miner, Whitehaven Coal, dropped 5.9 per cent as the biggest loser of the day, while financial services provider, Challenger (-5.6 per cent), was still facing selloffs after its negative earnings revision from Tuesday.

Preliminary retail trade data, released yesterday by the Australian Bureau of Statistics, showed a 1.4 per cent increase (seasonally adjusted) in retail turnover between February and March 2021. Year-on-year it rose 2.3 per cent.

Coming up Today:

No scheduled releases for the NZ market today, although the NAB Business Confidence report is expected to be published. Several Australian companies including AMP, pallets manufacturer, Brambles, and oil producer, Santos, will also be issuing updates to the market on how their respective quarters have tracked.

Overnight, the US will release its Initial Jobless Claims number, while in the Eurozone the ECB Refinancing rate is set to be confirmed. Jobless Claims are an indicator of unemployment levels in the US, with less claims seen as positive for the economy. The market is looking for a print of 617,000, vs last week's count of 576,000.

• 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