Keeping you up to date with the latest market moves, in association with Investment firm Jarden
NZX Market Wrap
: Oceania healthcare's negative full-year result halted the retirement sector's rally over the past few days and contributed to a mixed performance from index stocks on New Zealand markets. But Z Energy continued to be hot off the shelves. Its share rose a tidy 1.7 per cent and 5.7 million shares changed hands.
Air New Zealand's CEO Greg Foran told a Parliamentary Select Committee meeting that it expects to cut costs by a further $150 million and apologised for his company's struggle in handling refunds over the last few months.
Adding to a dramatic news week, trading platform Tiger Brokers was fined $160,000 plus NZX's costs of enforcement for breaching NZX participant rules.
A tribunal found that Tiger Brokers had deposited client funds into an account it knew was not a client funds account, and failed to promptly comply with direction to rectify the breach.
Blackwell Global Holdings admits significant reporting error
Financial services company Blackwell Global Holdings l was put into halt just after 4pm yesterday after admitting it misquoted its net tangible assets per share to be $0.15 instead of $0.0015 in its earlier June 25 results announcement.
The error meant that Blackwell told shareholders it owned about $75.3 million in assets, compared to the roughly $750,000 assets it actually had.
At the time of the announcement, BGI traded at $0.017, but has since risen to $0.091 - a 12-month gain of 2126.4 per cent, which increased the company's market cap from $2 million to $45.7 million. The gain came despite the company reporting a net loss of $693,000 after tax, and revenue of just $436,000. Multiple directors and senior management had sold shares during the latest rally, and one director sold 5,861,000 shares - more than 1 per cent of the microcap company.
Some news websites have speculated that the stock has been driven purely by casual investors enticed by its gains, given its consistent appearance on the NZX top gainers' board.
Oceania Healthcare dives on a full year loss
Oceania has released their full financial year results to May 31, 2020, reporting increased underlying ebitda, sales and occupancy rates.
However, an after-tax loss of $13.6 million was realised, primarily because of significant devaluations in their properties. The aged-care operator sold and resold 355 units and care suites during the year, more than the 310 they sold in the previous period, and occupancy rates for their care operations was 91.6 per cent.
However, the negative impacts of Covid-19 were also apparent.
Oceania spent an extra $6 million for safety precautions to minimise Covid transmission risk, as well as extra pay for essential staff who worked through lockdown.
An adjustment to the company's asset valuations from $1.01 to $0.95 a share also came out of the bottom line.
The stock fell almost 9 per cent soon after open, but recovered quickly as well – ending at $0.99, a 3.9 per cent loss from yesterday's close. The somewhat modest drop may imply investors had already priced in a poor performance and continue to be optimistic about the long-term prospects of the company.
At the time of writing the Chinese markets were mixed, with Shenzhen slightly up (0.1 per cent) and Shanghai slightly down (0.03 per cent).
The trade tension is weighing on investors' minds with China's Foreign Minister stating the US should think "carefully" about where this relationship is heading, amid the forced closure of the Consulate in Houston.
The US markets took a dive with initial job claims increasing by 109,000 and US leading economic indicators slowing, sending signals of slower economic recovery to investors.
This weighed with the ever-increasing Covid-19 cases, and the ongoing reporting season, has led to a sell off. The tech sector has today led the underperformers, down 2.8 per cent. At the time of writing, the Dow Jones was down 1.5 per cent, the S&P 500 was down 1.52 per cent and the Nasdaq was down 2.7 per cent – its relatively outsized movement because of its heavy weighting in the tech sector.
Microsoft released earnings yesterday. With a mixed set of results, the stock has been down as much as 4.5 per cent. Revenue and earnings beat expectations, revenue came in at US$38 billion against US$36.5b expected, and earnings per share was US$1.46 vs US$1.37 expected.
The main catalysts for the decline was Azure revenue growth and transactional licensing, both being below analyst expectations. On the positive side, many analysts think this could be an opportunity to get into the company with their 12-month target prices increasing.
Tesla beat market expectations yesterday with positive profits of US$2.18 per share vs (US$0.15) expected. Revenue was also well above expectations at US$6.04 billion vs US$5.2 billion expected. In afterhours the stock rose as much as 6 per cent to over US$1700 per share, however, with today's dive the stock has now gone below yesterdays close at US$1499 per share.
The WTI Oil lost some of its gains overnight with prices down 2.7 per cent to US$41 per barrel. The gold price has increased further, now closing in on a record US$1920 per ounce, sitting around US$1880 per ounce at the time of writing. Gold has been supported by a weakening US dollar, safe-haven demand and rising oil prices. The US 10-year treasury yield is slightly down to 0.582.
ASX Market Wrap
The S&P/ASX200 gained 19.4 points yesterday (0.3 per cent) to end at 6094.5 points, appearing relatively unaffected by the announcement of a forecast A$184.5million budget deficit. Insurers and property-related stocks buoyed the market as QBE Insurance rallied 4 per cent and Insurance Australia Group added 1.6 per cent. Mall owner Scentre Group advanced 3.9 per cent to $2.17. Property developer Stockland Group rose 3.7 per cent to $3.35. Commercial property owners Goodman Group closed up 1.6 per cent at $6.29.
Mining company NRW Holdings and Coca-Cola Amatil were the strongest performers on the index, rising 8.7 per cent to $1.825 and 5.4 per cent to $8.97 respectively. Coca-Cola rallied after reporting its volumes were starting to recover as cafes, hotels and food courts reopened in mid-May. The worst performers were aerial imagery and location data firm Nearmap, who fell 3.6 per cent to $2.40, and investment manager Magellan Financial Group, which dipped 2.9 per cent to close at $60.54.
Other Australian News
The July Economic and Fiscal Outlook released yesterday was a significant update, forecasting the unemployment rate to spike from 7.4 per cent to 9.25 per cent by the end of 2020.
The outlook for GDP is also grim with a decrease of 0.25 per cent in the year to June 2020 and a forecast 2.5 per cent fall in the year to June.
The 2.5 per cent drop is expected to be the largest economic contraction since 1946-47 when the economy contracted by 3 per cent.
The government has also extended by 3 months its regime allowing people in hardship to withdraw their retirement savings early.
Eligible citizens will now have until December 31, 2020, to make an application to withdraw up to $10,000 from their superannuation balance.
Stats New Zealand is set to provide updated trade balance figures today, which measures the difference between the value of exports and imports in and out of New Zealand.
The trade balance can be indicative of the value of the NZ dollar in global markets, which is important for our export companies (dairy, agriculture etc). The market currently predicts a trade surplus (more exports than imports) of $438 million, which would be in line with a strengthening NZ dollar.
Mineral Resources Quarterly production report is released today. CBA Australia PMI results are also out.
Economic data out of America tomorrow are Manufacturing PMI's and New home sales.
Many companies will report tomorrow including: Market leader Amazon, Verizon, T-Mobile US and Expedia Group.
For more information on the latest market moves, get in touch with Jarden.
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- NZ Herald