Overnight
International markets:
The Chinese markets continue their upward trend, with the Shanghai and Shenzhen markets up 0.17 per cent and 0.73 per cent respectively. The Caixin Services and Composite fell on a month-on-month basis. The momentum of China's bull run continues to push risk assets higher.
At the time of writing the US markets continued to be in the green, Dow Jones was up 1.17 per cent, S&P 500 was up 0.65 per cent and Nasdaq was up 0.5 per cent. Boeing (+4.8 per cent) and Disney (+8.9 per cent) carried the Dow Jones higher, while Apple (-0.5 per cent) had a large pull on the downside because of its high price.
US investors reacted positively to economic data out overnight. The trade deficit fell 7.5 per cent in June to US$50.7 billion. This demonstrates that GDP is being added to the economy as exports grow faster than imports. However, on an annual basis imports (-14 per cent) and exports (-16 per cent) are down significantly. The Services PMI was well above expectations, edging to 58.1 per cent, where 55 per cent was expected because of increasing lockdown measures. However, the questionnaire underlying the figures are based on improvements on last month. Many businesses are still worse off than last year, evidenced by the employment gauge lowering from 43.1 per cent to 42.1 per cent.
Cash payments service Square (+7.4 per cent) smashed expectations, with net revenue jumping 64 per cent compared to the same quarter last year and earnings per share came in at US$0.18 compared to a US$0.05 loss expected. The cash app has benefited from Covid-19 because of the uplift in depositing of government cheques from the stimulus payments provided. If no further stimulus is given then this growth may tail off.
Disney (+8.7 per cent) investors reacted to positive news of streaming growth and ignored the lowering revenue and net loss of US$4.72 billion. Disney was able to increase streaming numbers for Disney+ to 61 million, which is four years ahead of schedule. The rally in stock price demonstrates that investors are secure that Disney will be able to bounce back after Covid-19, therefore choosing to ignore lower revenue and profit, but focus on the positive growth shown in many aspects of their business.
Commodities
WTI Oil started the day jumping 4 per cent with inventory numbers being lowered significantly. At the time of writing it was still up over 1.5 per cent at US$42.25 a barrel.
Gold continues its positive run, up 1.5 per cent to US$2050 per ounce. Analysts continue to upgrade estimates with some now sitting at US$2500 per ounce. The US 10-year treasury yield has its first increase in a week, up 3 basis points to 0.54 per cent.
Australia
ASX Market Wrap: The S&P/ASX200 edged 0.6 per cent lower, to close at 6001.3 points. Materials were the only sector in the green, rising 0.7 per cent while Health Care and Industrials dragged the index down 1.7 and 1.5 per cent respectively. Litigation funders, Omni Bridgeway and shipbuilder Austal were the laggards on the day, falling 4.9 and 3.9 per cent respectively while industrial chemicals firm IPL Limited rose 6.0 per cent and gold miner St Barbara lifted 5.2 per cent as the price of gold reached over US$2020 yesterday.
Of the large cap stocks, Suncorp and Scentre Group performed poorly. Suncorp is currently intertwined in a business interruption case and fell 3.7 per cent to A$8.52. Scentre Group struggles, falling 2.7 per cent to A$196.5, as Victoria lockdowns spell trouble for mall rents.
The RBA intervened in the bond market yesterday, buying A$500million of April 2023 bonds at a weighted average yield of 0.2572 per cent, its first intervention since May 3.
Meanwhile, Centurial Industrial REIT released their financial year 2020 results, largely in line with their revised guidance. They have been placed in a trading halt as they seek to raise A$340.8 million for the acquisition of a large data centre from Telstra.
In other news, wealth management group AMP has a number of investigations ongoing which may result in criminal charges, the stock was down 1.7 per cent yesterday.
Virgin Australia also announced a further 3000 jobs will be lost. Long haul flying will be halted to focus on their domestic competition with Qantas and it is ditching its low-cost brand Tigerair. Plans to return to NZ would depend on the easing of border restrictions and the return of demand. The airline hopes to return to a staffing base of 8000 when the market recovers.
Upcoming events
Australia:
RedMed Q4 Earnings are out today, with no NPAT/EPS guidance having been previously released.
International:
US employment data is out tomorrow morning: Initial jobless claims (state and NSA programmes) and continuing jobless claims (state and NSA programmes).
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
- NZ Herald