Keeping you up to date with the latest market moves, in association with Investment firm Jarden
NZX Market Wrap
The NZX 50 dropped 2.6 per cent shortly after open, before recovering to close down 1.3 per cent as the government announced an initial three days of lockdown. Only Fonterra, Vector, Vital Healthcare and Skellerup showed green.
Real estate investment trusts fell, with Kiwi Property Group, owner of mixed-use mall properties dropping by 4.7 per cent, and Commercial Bay owner Precinct Properties dropping 3.8 per cent.
Meanwhile, industrial-exposed landlords Goodman Trust and Property for Industry were less affected, falling by 1.7 per cent and 0.4 per cent respectively.
Aged care operators also fell as some analysts expected, with Arvida (-5.7 per cent), Oceania Healthcare (-5.0 per cent) and Ryman Healthcare (-3.1 per cent) falling the most.
The communication sector fared the best with Chorus and Spark remaining flat.
Tourism Holdings announced its Mangere branch will remain open for essential services only - no vehicle pick-ups are permissible. The value of bookings for the Mangere branch is not material to the group's revenue. Although the group's other operations around the country remain open, the stock fell 7.4 per cent among fears around increasing travel restrictions and a fall in domestic tourism.
SkyCity fell 3.6 per cent, announcing all Auckland facilities are closed, although hotels remain open to accommodate existing guests. Other casinos around the country remain open but with social distancing requirements in place.
Tech-marketing specialist Plexure (-4.7 per cent) advised it intends to investigate a possible listing on the ASX, while also providing a quarterly update. First quarter revenue was up 18 per cent to $6.8 million compared to the previous year, but cost of sales was also up by $0.5m because of higher technology costs. A further increase in other expenses by 87 per cent quarter on quarter, primarily because of higher people costs, resulted in a quarterly loss of $1.1 million.
Compensate businesses forced into 'extra time' - Act
Sky TV confirms sale of outside broadcasting
Sky Television made headlines after advising it has sold its outside broadcasting assets to global operator NEP for an undisclosed sum. The deal will transfer six HD outside broadcasting units as well as two warehouse facilities, and mandates NEP becoming Sky's technical prodtechnical production partner for the next 10 years.
Sky Television also advised it has met its 2020 full year revenue, earnings and capital expenditure guidance issued on May 21. This means that investors can reasonably expect a reported profit of $20 million to $25m, and total revenue of $730m to $750m when full year results are released in just under a month.
An amended $200m banking facility with an extended term to July 2023 was also announced, although the company confirmed it holds cash of $118m and has paid off all its current bank debt.
Central bank announcements
Announcements from Finance Minister Grant Robertson as well as the Reserve Bank may have helped stem the sell off in the markets yesterday.
Robertson discussed targeted relief for Auckland businesses, including a possible extension on the wage subsidy, which will be conducted in good faith.
Meanwhile, the Reserve Bank announced it will increase its quantitative easing programme from $60 billion to $100b through large-scale asset purchases, as well as extending its duration from 12 to 22 months. "LSAP's" are considered an unconventional monetary policy by orthodox economic theory and increase money supply in the economy. Although an increase in LSAP's was expected by most analysts, the amount itself was around $10 billion higher than what many bank economists predicted.
The official cash rate was kept constant, but the bank also speculated about the possibility of a negative OCR in future, as well as foreign asset purchases. However, some economists see these options as less likely than quantitative easing.
As a result of the announcement, the Kiwi dollar fell by an initial 50 basis points against the US dollar before recovering to sit around 20 basis points lower.
The Chinese markets had a second day of losses, as Chinese investors' risk appetites fall. The Shanghai and Shenzhen indices were down 0.63 per cent and 1.17 per cent respectively.
This negativity did not flow through to the US, with all indices looking to post large gains at time of writing. Tech is outperforming after taking a hit last week during a rotation to value stocks. At the time of writing the Dow Jones was up 1.16 per cent, the S&P500 was up 1.5 per cent and the Nasdaq was up 2.25 per cent to be above 11,000 once again. The technology and consumer discretionary sectors led the way, up 2.34 per cent and 2.3 per cent respectively. The Consumer Price Index for the US rose 0.6 per cent, above forecasts of 0.4 per cent.
Gas accounts for quarter of the increase, while rent, medical care, vehicles and airline prices also rose. The core CPI, which excludes food and energy, had its largest increase since 1991 from 1.2 per cent to 1.6 per cent.
In other news, Russia reported its first batch of Covid-19 vaccines will be available on a limited basis within two weeks. Many experts are concerned that the process has placed speed above scientific rigour.
Tesla (+14.2 per cent) announced an August 28 5-for-1 stock split, which means each shareholder will receive four additional shares for their one share owned. This split does not change their value, as the price adjusts to ensure market capitalisation remains the same. Tesla have followed Apple's lead which announced a 4 for 1 split in July. The reason behind this is Tesla has a strong retail base, with demand for the stock ever increasing but the high price of more than US$1500 per share is a barrier for some, so they believe this is the time to lower the price per share and allow a greater base of investors to join.
Moderna (+1.5 per cent) surged 10 per cent on open with the US government agreeing to purchase 100 million doses of the company's vaccine, worth more than US$1.53 billion. The initial buoyancy dissipated throughout the day as investors may have looked to lock in a quick gain or adjust their view that this is a theoretical deal that will only eventuate if Moderna's vaccine is approved by the FDA.
WTI Oil surged to new highs last seen before Covid-19, gaining 2.75 per cent to sit at US$42.75 a barrel. The gold price has recovered slightly from yesterday's large sell-off, up 0.1 per cent to US$1945 per ounce. The US 10-year treasury has settled on yesterday's gains, which were caused by the faltering dollar and inflation increasing, to remain at 0.66 per cent.
ASX market wrap:
The ASX200 was relatively flat yesterday, falling 0.1 per cent. Financials were the leading sector, rising 0.96 per cent. Materials were the leading laggard falling 1.6 per cent. Gold has fallen more than 10 per cent from its highs and is likely affecting this decline.
Westpac, National Australia Bank and ANZ led the rise in financials, lifting 2.3, 2.2 and 2 per cent after Commonwealth Bank of Australia reported their full year earnings, with a solid dividend reported of $0.98. Despite their full-year cash profit falling, a robust balance sheet and the bank paying the maximum dividend allowed in this environment, the result is generally a positive sign for the sector.
The flurry of companies reporting June 30 financial year results included: Seek (-8.5 per cent), Transurban Group (-1.1 per cent), Computershare (-3.3 per cent), Magellan Financial Group (+ 2.8 per cent) and Downer EDI (+2.9 per cent).
Mesoblast continues to trade poorly ahead of a decision by the US regulator regarding one of their products, falling 8.6 per cent.
European and US retail landlord Unibail-Rodamco-Westfield had the largest outperformance, up 7.6 per cent.
Large-cap miners, Newcrest Mining and Rio fell 3.2 and 1.4 per cent yesterday.
Another large day of firms reporting their financial year results in Australia. These include, AGL Energy, AMP, BrUpcoming events:
Another large day of firms reporting their financial year results in Australia. These include, AGL Energy, AMP, Breville Group, Charter Hall REIT, Evolution Mining, Goodman Group, QBE, Telstra, Treasury Wine, Woodside, Xero AGM
Initial jobless claims and continuing jobless claims are out tomorrow along with the Import price index. Initial jobless claims are expected to lower significantly from 1.19 million to 1.08 million.
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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.
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