Jarden Brief: Wall Street kicks off week on a high

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

New Zealand

The S&P NZ50 was up 0.4 per cent yesterday. Small cap stocks outperformed as the S&P NZ Small cap index rose 0.9 per cent.

Financials and Healthcare were the best performing sectors, up 2.1 and 1.5 per cent respectively, while Energy was the worst performing sector, down 0.9 per cent on the day.

Reopening of borders and travel exposed companies, Tourism Holdings and Air New Zealand were the joint top performers on the day, each rising 3.1 per cent. Fisher and Paykel Healthcare also had a good day after recent poor performances, up 2.3 per cent. Casino operator Skycity was the worst performer on the day, down 3.5 per cent. Travel booking company Serko was the next worst performer, down 1.8 per cent.

The fall in Skycity shares was driven by news that three of the company’s top executives will be resigning. Chief Executive Graeme Stephens, Chief Financial Officer Rob Hamilton and Chief Marketing Officer Liza McNally will all depart by early next year. Chief Operating Officer Michael Ahearne has been appointed to be the next CEO.

The company is emphasising Ahearne’s experience in the casino industry and the stability he will bring going forward.The balance sheet should also be in a good state, considering the company raised $230 million in July, with the company potentially benefiting from further reopening of international travel

During the weekend, New Zealand became one of 15 nations to join what has been called the world’s largest free trade deal, as the Regional Comprehensive Economic Partnership was signed by all parties.

Trade and export Growth Minister Damien O’Conner said that the agreement puts in place rules for trade with a third of the world’s population. Investors moving forward should begin to consider which companies stand to benefit from increased trade in the Asia Pacific region. It is hoped that the treaty will be in place by 2022 – the deadline for ratification.

International

Wall Street has begun the week on a high following Moderna’s positive Covid-19 vaccine announcement. At the time of writing the Dow Jones was up 440 points or 1.5 per cent, the SPX 500 was up 1.1 per cent while the Nasdaq continued to lag only rising 0.6 per cent.

Similar to when Pfizer announced their vaccine success, all sectors were in the green, with greater emphasis on Energy (+5.4 per cent), Industrials (+2.5 per cent) and Financials (+2.1 per cent). The underperforming sectors on the day were Health (+0.1 per cent) and Real Estate (+0.3 per cent).

Moderna (+7.2 per cent) have announced that their phase three trial had a 94.5 per cent success rate. Following the lengthy trial only five participants who were given two doses, ended up showing signs of sickness, with the vaccine also showing signs of removing severe cases of the virus. Following on from this, the vaccine is likely to be fast tracked with the safety of the trial one of the only concerns left to tackle. Moderna believe they could have close to 20 million doses by the end of the year

Despite beating estimates on both the bottoms and top lines, following a surge in e-commerce, JD.com was down more than 7.5 per cent, following the announcement from Moderna. Potentially, investors are looking into further rotation of stocks that are cyclical in nature and have a positive skew for the re-opening of borders and travel.

Talks have begun between Uber and Aurora for a deal surrounding Uber’s autonomous driving unit. The report suggest talks are ongoing but there is no clear certainty around if a deal will be met.

Asian markets:

All Asian markets were in the green, following positive news flow out of America. At the time of writing, the Nikkei was the top performer up 2.1 per cent, while Shanghai and Shenzhen also performed well, up 1.1 and 0.7 per cent, respectively.

Chinese Vice President Wang Qishan has called for global solidarity and to move further away from protectionism, on the wake of a new governing body – Joe Biden entering the White House. The Vice President stated countries must rise above exclusive blocs and zero-sum game mentality, wanting an open economy where trade ties can be used effectively.

It will be interesting to see how the US-China trade tension develops in Bidens tenor and if they can move past the tension caused under the Trump government

Commodities:

Despite further positive vaccine news, which last time saw a major sell off, Gold was up 0.4 per cent, trading at US$1894 per ounce. WTI Crude oil continued to benefit from the likely uplift in travel, trading up 3.5 per cent at US$41.5 per barrel. The ten-year treasury yield was unchanged at 0.90 per cent.

Australia

Despite being shut for most of the day, the ASX 200 managed to climb 1.2 per cent before trading was halted at 10:24AM due to issues with a planned update. Performance was driven by large cap stocks CSL (+1.8 per cent), Commonwealth Bank (+1.9 per cent) and BHP Group (+2.0 per cent), as well as Westfield which rose by 9.3 per cent.

Early indications may point to the ASX making up lost time today, with Asian indexes performing strongly throughout the day and US futures up 0.8 per cent at time of writing.

A report from the Australian Securities and Investments Commission (ASIC) investigating the recent proliferation of buy now pay later (BNPL) companies across the world has turned up evidence highlighting the dangers of buying consumer goods on credit.

The report found that one in five users of BNPL services are missing payments, and that half of all users aged between 18 to 29 have sacrificed spending on essential items to meet repayments – with half of this group also taking out an additional loan to help do so. However, while the numbers seemed damning, ASIC did not propose or recommend any new regulations to protect consumers from the industry.

Z1P (-0.8 per cent) and Afterpay (-0.4 per cent) dipped slightly on open, although the short trading session yesterday likely meant the market did not have time to fully digest the report prior to close.

Coming up today:

In America this morning we have the Empire State index out, along with the San Francisco Fed president speaking.

Telstra and Immunomedics will also report earnings after market close.

Australia

Afterpay’s AGM today will be an interesting one to watch, especially in light of the new ASIC report released yesterday morning. Investors and analysts may ask further questions regarding the report. Furthermore, insights from Afterpay’s management team may shed further light on their views into the matter.

Among other companies, online sports betting and racing website Pointsbet will also deliver a presentation from their CEO and CFO. Pointsbet recently launched into Australia in 2017 and have rapidly acquired a 3 per cent market share locally and 6.5 per cent in the US online market.

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-disclaimer

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