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New Zealand
The S&P NZ50 was up 1.8 per cent on the day. Larger stocks outperformed with the S&P NZ10 up 2.4 per cent while the S&P NZ Small-cap index only rose 0.6 per cent.
Consumer Non-Cyclicals was the best-performing industry on the day, up 3.4 per cent, followed by Utilities, up 2.7 per cent. Financials was the only industry in the red today, down 0.7 per cent.
A2 Milk outperformed yesterday up 4.3 per cent after lagging the market since their earnings update. Dairy market participant Fonterra Shareholders Fund was the worst performer on the day, down 2.3 per cent.
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The Labour Government's small business loan scheme has been extended so that applications, which opened in May, can now be submitted through until the 31st of December. The scheme provides one-off loans to small business which have been adversely impacted by Covid-19. Eligible businesses can receive between $1800 and $10000 per full-time equivalent employee.
International
Overnight markets responded giddily to the announcement from Pfizer that the first interim results of large-scale trials indicate that their vaccine is 90 per cent effective. The developers say there have been no serious side effects. Regulators have previously said they would approve a vaccine with just a 50 per cent effectiveness rate. Investors should think about which sectors will be positively affected by a reopening. Tourism, oil and airlines are expected to do well immediately upon the reopening of international travel.
US Markets:
At time of writing, the SPX500 was up 3.1 per cent, the Dow Jones Industrial was up 4.7 per cent and the Nasdaq was up 0.7 per cent. Small stocks outperformed, with the SPX Midcap 400 up 4.2 per cent.
Energy and Financials were the best performing sectors, up 15.0 and 9.5 per cent respectively. Consumer Cyclicals was the worst-performing sector on the day, up 0.6 per cent.
Cruise companies were the big winner of Pfizers news. Carnival Corp was up 35.6 per cent and Royal Caribbean Cruises was up 27 per cent. Investors are anticipating a reopening of international borders, a resumption of holidaymaking and a glut of demand after people have been cooped up by lockdowns and border restrictions over the months since March.
Oil companies were also big winners. Valero Energy was up 30.1 per cent and HollyFrontier Corp was up 27.5 per cent. An increase in air, sea and land travel will see spiking demand for fuel, with investors forecasting this will likely lead to increasing profits and a return to pre Covid-19 levels.
Biopharmaceutical company Biogen was the poorest performing stock in the index, down 28.4 per cent. The US FDA panel voted against permitting the company's Alzheimer's drug to proceed to market.
Asian markets:
At time of writing, the Shanghai Index was up 1.9 per cent while the Shenzhen index rose 2.2 per cent. The Nikkei 225 was also up 2.1 per cent.
Against the prevailing flow of good Covid-19 related news, Shanghai's city government has announced it has found a single domestic case after months of no local transmissions. All 26 close contacts have been placed under quarantine. The case is a reminder of the resiliency of the virus.
Commodities:
At time of writing, Gold was down 5.0 per cent, trading at US$1856.4 per ounce. WTI Crude was up 9 per cent, trading at US$40.50 per barrel. The ten-year treasury yield was up to 0.96 per cent.
Australia
The ASX market continued last weeks' gains, closing another 1.8 per cent higher to end at its highest levels since March.
As alluded to in prior commentary, stocks which are exposed to the US market climbed higher - with James Hardie finishing 3.7 per cent higher, and Boral climbing 3.2 per cent. Tech, communications, and materials all did well, while mineral-exposed stocks such as Rio Tinto (+3.5 per cent), BHP (+3.5 per cent) and Fortesque Metals (+6.4 per cent) underpinned the index's positive performance.
Casino operator Crown Resorts gained 3.6 per cent after it was cleared to reopen its Melbourne casino from Thursday, despite regulators putting significant pressure on the gambling giant. The reopening will be caveated by significant limitations - every other game machine or table must be deactivated, and clients must spend no more than 90 minutes a day in the casino. Meanwhile in the VIP sections, only 100 VIP gamblers will be allowed in the facility at once.
Village Roadshow, the theme park operator who operates Warner Bros. Movie World, Sea World and other parks on the Gold Coast had its takeover offer price increased to A$2.32 after BGH Capital agreed to the uplift yesterday morning.
US investment bank JPMorgan raised its target price on real estate company REA Group, which climbed by 9.1 per cent after a better than expected first quarter result. The optimism was in response to a significant cut in operating costs, coupled with increased listings in Sydney and Melbourne, which rose 23 and 44 per cent, respectively.
Coming up
Australia
During trading on Tuesday, Global construction firm James Hardie will be reporting second quarter results, while industrial chemicals company Incitec Pivot will release its earnings for the full financial year.
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
