Auckland Airport's share price has fallen slightly as flight volumes plummet because of the Covid-19 pandemic. Photo / Supplied
Keeping you up to date with the latest market moves, in association with Investment firm Jarden
NZX Market Wrap:
Genesis traded down 1.4 per cent after reporting a 2.3 per cent increase in residential electricity sales on the previous quarter, although it experienced a net decline in customers.
Hydro generation was down 28.5 per cent because of low North Island dam inflows as well as maintenance at its Tekapo plant. Genesis increased generation from its gas and coal resources to compensate, resulting in total generation up 4.3 per cent at the cost of higher emissions for the year.
Air New Zealand's June update featured total passenger count down 74.2 per cent, with domestic recovering slowly - still at just 37.4 per cent of last year's levels.
As expected, long-haul international passengers remained low, down 95.9 per cent, because of the continued restrictions on international travel. The shortage of international passengers is likely to continue indefinitely, after Air New Zealand announced it would be extending its international booking freeze for another 10 days.
Although Air New Zealand's stock price remained flat on the announcement, the low domestic passenger numbers and extended booking freeze may have been the cause for Auckland International Airport's drop, with the stock closing down 1.6 per cent.
Auckland Airport derives a large portion of its revenue from charging fees to airlines for processing passengers and landing planes, as well as from concession charged against retail businesses within the airport. All of these are negatively impacted by lower passenger numbers.
ikeGPS raises equity to fuel growth
Wellington-based communications and power infrastructure company ikeGPS is launching a $19.7m equity raise to provide capacity for potential growth opportunities and take on new support staff.
The offer will be raised through a $9.8m placement, where new shares are issued to institutional investors, as well as a $9.9m entitlement offer in which existing shareholders can subscribe for one share for every seven they own. New shares will be issued at a price of $0.68 a share, which represents a 11.7 per cent discount to the last closing price of $0.77.
The offer, like others this year, has the potential for significant upside to interested investors who are eligible to participate.
As with all investments, there is an element of risk - and with smaller companies such as ikeGPS with an inconsistent track record, this risk is higher.
However, recent capital raisings by medium to large cap firms on the NZX in 2020 have to date, been beneficial to participants.
Out of the 11 entitlement offers, all have gone up except for Sky Television, which has dropped back to its offer price. On an unweighted average, these raisings have generated a return on investment of 29.7 per cent with Kathmandu rising the most (+128.0 per cent).
International markets:
Consumer confidence falters in July; Gold continues rally
The Shenzhen and Shanghai markets were up 0.71 per cent and 1.31 per cent respectively at the time of writing.
These positive signals, however, were not enough to sway all the US markets - the Dow Jones was down 0.35 per cent, the S&P 500 was down 0.2 per cent and the Nasdaq was down 0.85 per cent.
The US markets all started the day lower; poor company earnings and decreasing consumer confidence outweighed the Federal Reserve's signal they will continue lending until the end of the year.
The consumer confidence index decreased significantly to 92.6 from 98.3 in May, amid a glut of new Covid-19 cases throughout the June month. The dramatic drop in confidence, below analyst forecasts, sends signals that the economic recovery may be a lot rockier and slower than previously imagined.
A busy earnings season continued today. McDonalds is down more than 2.2 per cent, with sales falling over 30 per cent, well below the 22.5 per cent estimated. Large industrial 3M also struggled, with net profit for the quarter faltering and earnings per share US$0.02 below estimates at US$1.78 per share. Sales also were down from US$8.2 billion to US$7.2billion. At the time of writing the share price was down more than 4.75 per cent, however, they still offer long term value.
WTI Oil is down over 1.65 per cent to US$40.96 a barrel. Gold prices continue to exceed record highs, now sitting at US$1956 per ounce. With the trade tension between US and China, increasing Covid-19 cases and a faltering US dollar, it is believed the price will continue to rise as investors continue to look for less risky assets. Some analysts believe the price could go as high as US$2300 per ounce, with further momentum pushing the price up. The US 10-year treasury yield is down to 0.58.
ASX Market Wrap:
The S&P/ASX200 dipped 0.4 per cent yesterday to 6020.5 points, after a strong start saw the index up 1 per cent. The leading sector was Materials, rising 0.9 per cent, while Technology lead the losses, down 1.5 per cent. Investment manager Perpetual Limited, was lifted out of trading halt following the completion of its placement at an offer price of A$30.30. It closed the day at A$31.91, dropping 5.1 per cent following the well-supported raise. Funds will be allocated to the acquisition of Barrow Hanley and to provide Perpetual with greater financial flexibility. Resolute Mining followed closely behind trading 4.9 per cent down at A$4.86. The leading stocks were Credit Corp group, spiking 8.7 per cent to A$18.37, and agricultural chemical company Nufarm, which rose 8.1 per cent to A$4.29.
The Australian Office of Financial Management yesterday set the 1.75 per cent 2051 Treasury Bond, with a yield to maturity of 1.94 per cent. The total issue size is A$15 billion. Total bids for the bonds exceeded A$36 million.
>h2>Upcoming events
Australia:
Owners of New Zealand's Tiwai smelter Rio Tinto had a solid operating performance in their June quarter which are likely to reflect on a strong full year result. Gold firm St Barbara and mining firm IGO release June quarterly production today also.
Australia's CPI data is released today with Australia expected to record rare deflation as the Covid-19 pandemic has clearly restricted people's demand for everyday products such as petrol and limited travel.
What to Look out for
Economic data out in the US tomorrow: advanced trade in goods, pending home sales and the open market committee announcement by the Fed.
Visa is set to update their second quarter earnings after market close today; transactional revenue and net income are likely to be key drivers. Visa is susceptible to large movements after price earnings, with history showing large upward or downward movements depending on whether they exceed or miss expectations. Expectations are that revenue will decline by 25 per cent to US$4.825 billion, with transactional revenue being hit strongly by Covid-19. Net income is expected to fall by 27 per cent to US$2.5 billion, with earnings per share expected to be US$1.03. Therefore, keep an eye on these numbers along with growth prospects for the company as the price in after markets may become very volatile depending on the numbers announced.
For more information on the latest market moves, get in touch with Jarden.
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
BGH's tilt at Tourism Holdings has sparked more merger and acquisition speculation.