If Russia defaults on the Eurobond interest payments it would be the first time since 1918.
Keeping you up to date with the latest market moves, in association with Investment firm Jarden
New Zealand
The NZX 50 rose 1.1 per cent to 11,998.96 points.
Film technology business Vista Group International climbed 8.2 per cent. Engineered product manufacturer Skellerup Holdings improved 5.5 per cent while logistics company Freightways rounded out the podium of outperformers with a 4.1 per cent gain.
The electricity generation/retailers were among yesterday's largest bottom movers. Meridian Energy slid 2.6 per cent. Contact Energy was not far behind, posting a 2.5 per cent reduction, while Trustpower closed 2.2 per cent lower. Genesis booked a moderate loss of 1.8 per cent. On the flip side, Mercury NZ gained 1.9 per cent to finish in the green.
Despite a 10 per cent lift in revenue, cost hikes have seen Fonterra deliver lower half-year profits than the year prior. Chief executive Miles Hurrell pointed to a high average cost of milk, almost 30 per cent greater than the same time last year. Net profit for the six months ended January 2022 was $364 million, a 7.4 per cent reduction. The co-op maintained a 5 cent per share interim dividend and reaffirmed its 25 to 35 cent per share full-year guidance.
The Commerce Commission's 2021 annual telecommunications monitoring report showed a significant increase in the number of consumers picking uncapped mobile plans in 2021 compared to 2020, increasing 143 and 165 per cent for residential and business customers respectively. The commission also found wireless broadband connections rose 25 per cent while copper connections reduced 30 per cent compared to 2020. Landline connections were also down 24 per cent to 526,000 households. Growth rates of fixed-line broadband data usage have softened to 16 per cent (37 per cent in 2020).
Spark made up the majority of the fixed broadband market (39 per cent), down 1 per cent from 2020. Vodafone maintained a 21 per cent market share while Vocus remained in third at 12 per cent. Spark and Vodafone continued to hold a sizeable portion of the mobile market - 41 and 38 per cent, respectively. 2degrees followed with a 19 per cent share.
New Zealand's economy grew 3 per cent in the December quarter. GDP growth was driven by increases in the service and goods-producing industries, up 2.5 and 6.5 per cent respectively.
Of the service industries, business services (+7.8 per cent) and retail, accommodation, and restaurants (+6.7 per cent) were large contributors to economic growth.
Manufacturing (+6.5 per cent) and construction (+8.7 per cent) led the growth among goods-producing industries. Primary industries declined 2.2 per cent as agriculture slid 3.8 per cent due to falls in beef and dairy farming.
International
US
All major US indices were in the green at the time of writing, with the Nasdaq, S&P 500, and Dow Jones Industrial Average having risen 1, 0.9 and 0.8 per cent, respectively.
Sector performance was positive across nearly every corner of the market. The energy sector performed best, up 3 per cent. Materials, real estate and health also gained 1.5, 1.2 and 1.1 per cent, respectively. The sole decrease was seen in the technology sector, down 0.6 per cent.
Occidental Petroleum gained 7.6 per cent, the best performing stock in the market at the time of writing. The company specialises in oil and gas exploration in the US, Middle East and Africa. Over the past six months, the share price has increased by 110.6 per cent.
Furthering the strong performance in oil and gas companies, Devon Energy and APA were up 7.3 and 5.9 per cent as oil companies continue to trade with significant volatility.
SolarEdge Technologies, a photovoltaic solutions provider, fell 7.1 per cent after announcing plans to offer two million shares of its common stock to the public.
Despite releasing new software updates for the gaming industry, Semiconducter company Advanced Micro Devices (AMD) lost 4.8 per cent. Speculation surrounding the capabilities of Apple's M1 Ultra processor may be contributing to this movement.
Personal computing company HP was down 4.6 per cent, following no news.
Technology giant Amazon announced the successful acquisition of Metro-Goldwyn-Mayer Studios (MGM) for US$8.5 billion, after the deadline for it to be challenged by the Federal Trade Commission passed. At the time of writing, Amazon's share price was up 2.2 per cent.
US Federal Reserve Chairman Jerome Powell announced an increase in the federal interest rate of 0.25 per cent yesterday. A more delayed response than many expected, with Powell reacting to persistently high inflation (currently 7.9 per cent), far above the Federal Open Market Committee's aim of 2 per cent.
Committee votes for the 0.25 per cent increase were eight to one in favour; the singular vote instead advocating for a 0.5 per cent raise. Another six rate hikes are expected this year, which would bring the interest rate to approximately 1.75 per cent by year end. The Committees' projections from December last year were for three rate hikes total in 2022, with only three members expecting the interest rate to be above 1.0 per cent this year.
Rest of the World
The major Asian indices were in the green at the time of writing. The Nikkei and Shanghai Composite gained 3.5 and 1.4 per cent, respectively. The Hang Seng Index continued rallying following news of support from China's Financial Stability and Development Committee of the State Council, up 7 per cent.
European indices were mixed, the FTSE and the CAC each rose 1.3 and 0.4 per cent. The DAX fell 0.4 per cent.
Russia owed payment of US$117 million in interest on two sovereign Eurobonds yesterday. There is speculation that payment has tried to be made using frozen assets, with warnings that Russia would pay in rubles or Chinese yuan if the sanctions are stopping payment.
If Russia were to not pay the due interest in US dollars after a 30-day grace period, it would constitute a technical default, Russia's first sovereign default on foreign currency debt since 1918. Failure to pay would likely cut their credit rating even further and, even if the conflict with Ukraine was halted soon after and sanctions lifted, could lead to slow future economic development in the country due to higher interest rates.
Commodities
Energy and metal futures are in the green today. Oil increased 7.6 per cent to US$102.3 per barrel while natural gas rose 3.8 per cent. Gold and silver were up 1.8 and 3.5 per cent, respectively.
Cryptocurrencies nudged ahead. Ethereum gained 3.0 per cent while Bitcoin remained relatively stable, falling just 0.1 per cent.
The US 10-Year Treasury rate fell 2 basis points to 2.163 per cent.
Australia
The ASX 200 continued its rise on Thursday, closing 1.1 per cent higher at 7,250.8.
Nine of 11 sectors closed with a gain, led by information technology (+3.8 per cent) and industrials (+1.5 per cent). Utilities and consumer staples were the underperforming sectors, falling 0.4 per cent and 0.3 per cent respectively.
Buy now pay later company Zip Co increased by 10.1 per cent to be the day's highest performer. Other companies experiencing increases included online bookmaker Pointsbet Holdings (+8.6 per cent) and medical devices company Polynovo (+8.3 per cent).
Conversely, Gold Road Resources dropped 3.6 per cent, Graincorp fell 2.9 per cent and telecommunications company Chorus (which is listed on both the NZX and ASX) declined 2.1 per cent.
The Australian labour force survey was released on Thursday, revealing a decrease in the unemployment rate to 4 per cent in February, markets were not expecting this decrease until June.
The February unemployment rate was 1.2 points below March 2020 and the lowest since 2008. The female participation rate also saw record highs, increasing to 62.4 per cent. Hours worked recovered a further 8.9 per cent from the large drop in January due to Covid-19 restrictions. Wage growth increased, however not as fast as inflation, leaving real wages to fall.
Meanwhile, the BA.2 strain of Omicron is overtaking the original strain in many states. In Victoria, over half the cases have been reported as the new strain and all other states have seen spikes in infections. On Wednesday, case numbers rose to the highest daily count since mid-January, of 58,483 for the country.
A report from Mastercard SpendingPulse revealed February retail sales increased by 8.1 per cent in comparison to February last year. The results were up 3 per cent from January and 14 per cent on pre-pandemic levels.
• For more information on the latest market moves, get in touch with Jarden.
Disclaimer: The Jarden Brief is provided for general information purposes only. It reflects views and research available 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. The Jarden 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 financial advice disclosure statement is available free of charge at https://www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/ Full disclaimer available at: https://www.jarden.co.nz/wealth-sales-and-research-disclaimer
BGH's tilt at Tourism Holdings has sparked more merger and acquisition speculation.