Microsoft and Google owner Alphabet have given better-than-expected quarterly reports. Photo/ Krisztian Bocsi / Bloomberg via Getty Images
Keeping you up to date with the latest market moves, in association with investment firm Jarden.
International
US
In the US, investors digested better-than-expected quarterly reports from Microsoft and Alphabet which began the rollout of big tech earnings this week. The tech-heavy Nasdaq index was up 0.6 per cent, while the S&P 500 and Dow Jones Industrial Average fell 0.3 and 0.6 per cent respectively.
Front running the market movers was Chipotle Mexican Grill. Shares of the Mexican fast-food chain jumped around 14 per cent, reaching an all-time high after the company reported first-quarter net income of US$291.6 million, up from US$158.3 million a year prior. Chipotle outlined that traffic to its restaurants grew despite higher menu prices.
On the back of first-quarter earnings results, which showed positive aircraft demand, Boeing revealed its plan to increase the output of 737 Max planes from 31 per month to 38 later this year. The company narrowed its net loss and reported a 28 per cent jump in sales year-over-year, as air travel continues to rebound.
The UK Competition and Markets Authority moved to block Microsoft’s US$69 billion acquisition of tech and gaming company Activision Blizzard, in a move that sent Activision stock tumbling close to 10 per cent in pre-market trading (down 12 per cent at the time of writing).
In what may have come as a surprise to some, the regulator said it opposed the deal after raising concerns around competition in the cloud gaming market, a development after it had previously ruled out concerns in the gaming console market, in which Activision also operates. In response, Microsoft will be appealing the decision, with a statement from one of its executives saying that the company is still “fully committed to this acquisition and will appeal”.
Joining Activision among the bottom performers were Enphase Energy and First Republic Bank which fell 25.2 and 24.7 per cent, respectively. Enphase was a casualty of a poorer earnings guidance for the second quarter after posting roughly in-line first-quarter results, while First Republic continues to trade with significant volatility in the aftermath of the US Silicon Valley Bank and liquidity crisis.
Rest of the World
In its global EV outlook, the International Energy Agency (IEA) reported that electric car sales jumped to in excess of 10 million vehicles last year, led by China which accounted for approximately 60 per cent of the market. An estimate of close to 26 million EV’s were said to be on the roads by the end of 2022, more than doubling 2020′s total but still only a fraction of EV’s forecast to be on world roads by 2050 (over 300 million).
New Zealand
New Zealand equities slipped 0.8 per cent to finish on 11,935 points.
News in the market was led by two announcements from milk processing and distribution companies a2 Milk and Synlait Milk. After entering a trading halt on Friday, Synlait (a2′s supplier) updated the market on Wednesday with an approximate $20m profit downgrade, forecasting a FY23 NPAT loss of $5m vs the previously guided $15-20m gain.
Of the $20m, $16.5m was said to be attributable to a demand reduction from one of SML’s customers, with the remainder derived from higher financing and supply chain costs. Upon going into a trading halt, fears were that the announcement may have included a potential delay to the onboarding of a highly anticipated multinational customer. This was not the case, with the company re-affirming an expected timeline for its financial year 2024.
A read-through from lower demand for Synlait milk products raises suspicion that The a2 Milk Company may have had a slower-than-expected sales period. In response, a2 put out its own market release just hours after SML, reiterating that there is currently no material change to the FY23 outlook from the time of its original announcement in February.
By the close, Synlait had traded down a substantial 27 per cent with a2 experiencing a more modest 5.5 per cent fall.
Other news included the release of an IRD report which found that on average, wealthy New Zealanders pay a 9.4 per cent median tax rate, compared to a 20.2 per cent tax rate for those classified as middle wealth.
Obvious implications of the finding would be an attempt to bridge this gap by the incumbent political party. As things stand, New Zealanders benefit from an environment of zero capital gains, wealth, or inheritance taxes – with capital gain (gain on sales of assets including equities) being the likely contributor to the differential in the aforementioned tax rates. Revenue Minister David Parker said there would be no change to our current taxation system as things stand.
Australia
The ASX 200 shed 0.1 per cent during Wednesday’s trading session amid the latest inflation data from the Australian Bureau of Statistics, which showed a lower-than-expected core inflation rate for the first three months of 2023.
The biggest drags on the market were utilities and materials sectors, as iron ore prices continued to fall – reaching their lowest level since early December.
Mineral Resources was among the bottom performers, closing 9.7 per cent lower. Management downgraded full-year production guidance for its core mining services and announced delays in the expansion of its Mt Marion lithium mine.
Australian CPI was released for the March quarter, coming in at 1.4 per cent for the period and 7 per cent for the last 12 months.
Despite these measures coming slightly above consensus, most will see comfort in the reading for the “trimmed mean” falling to just 6.6 per cent year-on-year, below expectations and providing reassurance to the Reserve Bank of Australia which held rates flat at its meeting earlier this month.
Highlights included inflation costs of building a new dwelling, the CPI measures highest weighted component, slowing to 13 per cent vs 21 per cent this time last year.
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All market pricing and announcements are sourced from Refinitiv, NZX and ASX.
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