Jarden Brief: Markets fall as reporting season dominates

The S&P/NZX 50 Index was down 0.9 per cent yesterday. Photo / File

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

New Zealand

New Zealand's stocks fell sharply with the S&P/NZX 50 trading 0.9 per cent lower at 13,051.6 points.

The only sectors in the green were energy and real estate, each making gains of 2 per cent and 0.5 per cent.

The August reporting season continued to dominate news and trading flow this week. Sky Network Television rebounded 3.2 per cent to recover from a post-result decrease on Wednesday – after which it closed 2.5 per cent down. Joining Sky TV was retirement village operator Oceania Healthcare, which pushed forward 2.7 per cent.

Consumer non-cyclicals finished lower by 4.7 per cent as it was weighed down by milk products exporter the a2 Milk Company.

The industrials sector also made a loss of 1.7 per cent, weighed down by Air New Zealand after the embattled flag carrier reported a full year loss of $441 million – just under the maximum $450 million loss they guided the market towards.

Revenue fell by just under half to $2.52 billion, although continued cost cutting measures helped to stem the bleeding. The airline retains a $1.3b debt headroom.

After posting a seemingly challenging set of full year results, a2 Milk was punished throughout Thursday's trading. The results appear to have done little to give investors' confidence, with margins continuing to decline whilst the company continues to navigate through sales channel disruptions brought about in 2020. A2 finished the day down 11.3 per cent.

Synlait Milk, a2 Milk's supplier, also saw its share price fall by 6 per cent.

Meanwhile, honey exporter Comvita climbed 4.4 per cent following a positively-viewed full year result. Operating earnings increased by 27 per cent compared to last year, while underlying profit grew 252 per cent to $9.5 million.

International
US

All three major US indices were trading lower this morning, moderating a strong start to the week. The S&P 500 decreased by 0.5 per cent, and the DJIA and NASDAQ were both down 0.4 per cent.

Real estate was the only sector posting gains, up 0.2 per cent. On the flipside, the energy and consumer discretionary sectors underperformed, decreasing by 1.3 and 0.6 per cent, respectively.

Online marketplace Etsy was the best performing stock on the S&P 500 this morning, rising 6.3 per cent.

Next in line was data-centric software company, NetApp, hitting a new 52-week high, up 5.2 per cent. The company reported first quarter results that were significantly better than analysts' expectations.

Earnings per share came in at US$1.15, a 57.5 per cent improvement compared to the same period last year, and US$0.20 per share above expectations. Net revenue grew by 12 per cent year-on-year to US$1.46 billion.

Rounding out the leader board was cloud-based software maker, Salesforce, increasing 4.7 per cent. The company outperformed Wall Street expectations for its quarter two results. Earnings per share were reported at US$1.48, well above the expected US$0.92, and revenue increased by 23 per cent versus the same period last year to US$6.34 billion. The company noted it is already seeing benefits from its purchase of messaging platform Slack late last year.

Discount store operator Dollar Tree posted the biggest losses, down 11.8 per cent, after a disappointing quarter two earnings report yesterday. Rising freight costs due to supply chain disruptions made the company fall short of analysts' expectations.

Design software and services company Autodesk also underperformed, falling 8.2 per cent, despite seeming to beat consensus estimates. Apparel company PVH Corporation, which holds brands like Tommy Hilfiger and Calvin Klein, decreased by 4.6 per cent.

Rest of the world

In Asia, the Nikkei edged slightly higher overnight, up 0.1 per cent. However, all the other major indices underperformed. The Shanghai Composite and the Hang Seng fell 1.1 per cent, while the Shenzhen decreased by 1.9 per cent.

Commodities

Gold slightly increased to US$1,792.80 per ounce.

Oil decreased by 0.9 per cent to US$67.72 per barrel.

Cryptocurrencies were underperforming across the board, with Bitcoin falling 4.2 per cent and Ethereum decreasing by 4 per cent.

The US 10-year treasury rate was yielding 1.342 per cent at the time of writing.

Australia

The ASX 200 lost most of Wednesday's gain, falling 0.5 per cent yesterday.

Nine out of 11 sectors declined. Utilities and materials took the biggest hits, down 2.1 and 1.5 per cent, respectively.

The only two sectors to improve were telecommunications and consumer discretionary, which each rose 0.7 and 0.3 per cent.

It was another day of result releases for the top and bottom performers yesterday.

Blackmores was the standout performer of yesterday's session, up 14.9 per cent. The health supplements company rose on the back of the full year 2021 results release. Revenue rose 3.2 per cent to A$575.9 million, and underlying EBIT rose 51.7 per cent to A$47.6 million.

Meanwhile, Whitehaven (-5.0 per cent) had an annual net loss after tax of A$543.9 million for the 2021 financial year (down from an AUS$30 million profit in financial year 2020). This was a result of asset impairment expenses.

Artificial intelligence company Appen fell 20.1 per cent on its results release after a share price build up earlier in the week in anticipation of a strong half year earnings release. Revenue fell 2 per cent on the same period last year (to A$196.6 million), and underlying EBITDA fell 14.3 per cent (to A$27.7 million).

IT company Link Administration declined by 12.2 per cent. Full financial year 2021 revenue fell 6 per cent (to A$1.23 billion) and operating EBIT fell 21 per cent (to A$141 million).

The latest Australian Private Capital Expenditure was released yesterday. Overall capital expenditure rose 4.4 per cent in the April to June quarter, exceeding a 2.6 per cent expectation and surprising on the upside in an uncertain Covid-19 riddled environment.

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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-disclaimera>