Keeping you up to date with the latest market moves, in association with Investment firm Jarden
New Zealand
NZX Market Wrap
Most index stocks rose today, with only a handful ending in the red. Fisher and Paykel Healthcare buoyed the index after a positive update, and Summerset continued to rise after its strong first-half report on Monday, adding another 6.4 per cent.
Mercury also rose by 2.7 per cent after its earnings highlighted ebitda of $494 million which, although $12m less than last year, was above analyst expectations as well as its own guidance of $480m. A dividend of $0.158 per share was also announced, marking the 12th year in a row in which the company has increased payout to shareholders. Next year's ebitda is forecast to clock in at $515m, and its dividend at $0.17 a share.
SkyCity was the most popular stock of the day with 4.1 million shares changing hands, although the share price remained flat.
Fisher and Paykel Healthcare continues to beat growth expectations
The largest NZX company by market cap lifted 4.3 per cent yesterday, after upgrading its guidance ahead of its AGM this Friday. The company upgraded the guidance it provided a month and a half ago of $325m to $340m - expecting to now make a profit of $365m to $385m, with revenue of $1.61 billion.
In addition, Fisher & Paykel reported that since its balance date of March 31, hospital group revenue has increased by 91 per cent compared to the same four months last year.
The almost doubled revenue was caused by a surge in hospital hardware sales (+390 per cent) as well as an increase in consumables sales (+48 per cent).
Fisher & Paykel Healthcare has had a strong performance this year, with hospital products growing in demand since the outbreak of Covid-19. One component it manufactures is used in up to 80 per cent of ventilators, which are used to help with respiratory conditions such as those caused by the virus.
Despite briefly breaking a new record high yesterday, it closed at $36.50 - lower than its highest close of $37.20 last month.
Earnings season continues
A2 Milk, Fletcher Building and Michael Hill are to provide results today.
Although the unofficial "market superstar" A2 Milk has lost some of its limelight amid the strong performance of Fisher and Paykel Healthcare in recent times, its stock price has still performed well since Covid-19 - returning shareholders more than 45 per cent since the start of the year.
A2 Milk has previously provided revenue guidance of $1.7b to $1.75b, and analysts have almost unanimously posted that they expect the final figure to be towards the top end of this range.
On the other hand, the other large-cap stock to report official earnings today has had a somewhat different narrative. Fletcher Building has dropped by 34.6 per cent since the start of the year, and already indicated that it expects to report a net loss of $196m for the full year. Given many of its numbers have already been reported, release of results today should be fairly uniform - unless there are any unexpected changes.
International
International market wrap: Chinese markets continue to edge higher with the Yuan recovering to its strongest position in nearly seven months on the back of the US-China trade deal remaining intact.
The Shanghai and Shenzhen were up 0.36 per cent and 0.2 per cent, respectively. At the time of writing, US markets continue to reach record highs, consumer discretionary (+1.43 per cent) and consumer staples (+0.4 per cent) outperforming but energy (-1.8 per cent) was the laggard.
The Dow Jones was down 0.23 per cent, and the S&P500 was up 0.3 per cent reaching 3390 points. Meanwhile, the Nasdaq reached 11,200 points for the first time as it rose 0.8 per cent. Positive housing data released showed US homebuilding starts increasing by 22.6 per cent, beating expectations by 270,000 houses. Furthermore, building permits (+17 per cent) also surpassed expectations by 160,000. The building sector continues to defy expectations, holding up against Covid-19 and showing signs of a strong recovery, which is buoyed by the low mortgage rates on offer and the work from home sentiment.
Arizona, Colorado, Iowa, Louisiana, Missouri, New Mexico and Utah are the first states approved for the US$300 federal unemployment benefit. Although many states have decided not to apply because of costs, these seven are likely to start paying within the next few weeks, likely to help steady the economy.
Walmart (-0.51 per cent) shares surged as much as 7 per cent in pre-market before pairing losses and were down at the time of writing. Walmart had adjusted earnings per share of US$1.56, which was US$0.31 above the expectations, as well as revenue of US$137.74b which was US$2b above expectations.
This was spurred by a 97 per cent increase in e-Commerce sales along with 9.3 per cent in same-store sales. The positive result was overlooked by the company failing to provide full year guidance and stating that sales in July immediately started to decline upon the unemployment benefit expiring. Investors, even with the positive outcome, will be considering the future and believing that without an unemployment settlement agreement this growth may not be maintained and therefore gains were paired off throughout the day.
Home Depot (-1.03 per cent) was up more than 2.5 per cent in pre-trading before gains were wiped during the trading day. The company had positive news for investors with DIY sales increasing during Covid-19. Earnings were above US$4.3b or US$4.02 per share which beat expectations of US$3.68 per share. Revenue also rose by 23 per cent to sit above US$38b for the second quarter, as same store sales rose by 23.4 per cent. Like Walmart, it appears investors may be weighing this result with its future sustainability, in an environment buoyed by stimulus.
Commodities
WTI Oil remains relatively flat on yesterday, down slightly, to US$42.60 per barrel. Gold flies through the US$2000 mark once again, up 1 per cent today, sitting at US$2010 per ounce, at the time of writing. The US 10-year treasury yield continues to decline after last week's short recovery, now back to 0.665 per cent.
Australia
ASX market wrap-up:
The ASX200 ended the day up 0.8 per cent. Healthcare and tech were the most impressive sectors on the day, respectively up 4.5 and 2.7 per cent. Consumer non-cyclicals and financials underperformed, falling 1.0 and 0.3 per cent, respectively. Construction company Monadelphous was the best individual performer, spiking 18.9 per cent. A wave of mining companies performed well, with Silverlake (+6.3 per cent), Resolute Mining (+5.9 per cent), North Star Resources (+5.1 per cent) and Regis Resources (+5 per cent) all rising. Premium wine exporter Treasury wines was the worst performer on the day, down 14.3 per cent. Retailer JB HI-FI was down 3.1 per cent after yesterday's positive reaction to the company's result.
Unethical trade practices in China?
In the latest round of the spat brewing between Australia and China, China's Ministry of Commerce is investigating allegations, brought by its wine industry, that Australian wine exporters are dumping product in China. The Australian government is even implicated in the conspiracy and are said to be subsidising local wineries to dump large amounts of product at low prices.
But the Australian industry argues Australian wines are priced at a premium, with margins in Asia three times as large as anywhere else. Chinese investigations are poised to take a year, and with some beef exports, tellingly, banned already, investors are understandably worried about the prospects of wine exporters. Treasury Wines, as mentioned, was down 14.3 per cent on the news and Australian Vintage was down 3.3 per cent.
Gold stocks set to capitalise on the commodity's golden price
Gold exploration in new (greenfield) and old (brownfield) tenements is racing as cyclical mining companies look to cash in on high gold prices. Yesterday, five companies announced completed or intended raisings, worth AU$5.6m. And 20 other companies made announcements on the commencement, or results, of exploration programmes. Since April, approximately $1.7b has been raised by gold stocks.
Upcoming events
Australia:
Companies scheduled to report today include: Altium, Bapcor, Brambles, carsales.com.au, Corporate Travel, Crown, CSL, Dexus, Domino's Pizza, EML Payments, McMillan Shakespeare, Omni Bridgeway, OZ Minerals, SmartGroup, Tabcorp, Vicinity Centres, Vocus and Webjet.
International:
Companies that will report tomorrow include Nvidia Corp, L Brands Inc and Lowes Companies Inc. Expectations for earnings are US$1.97, US$-0.42 and US$2.95 respectively.
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