Jarden Brief: Why Tesla shares leaped 8.2 per cent

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

New Zealand

The S&P NZ50 was up 0.2 per cent per day. Small cap stocks once again outperformed as the S&P NZ Small cap index rose 0.4 per cent.

Following Americas trend overnight Financials and Energy were the best performing sectors, up 2.9 and 2.8 per cent respectively. Utilities and Technology were the worst performing sectors, each down 0.9 per cent.

The best performing company in the index was Z Energy, up 2.8 per cent, continuing its positive run, with investors rotating into value stocks. Ryman Healthcare was the next best performer, up 2.7 per cent. Meridian Energy was the worst performer on the day, down 3.5 per cent. Chorus was the next worst performer, down 2.8 per cent.

Property management company Investore Property (up 0.9 per cent) released its interim half-year results. The company reported $91.0 million of net profit, up from $80.1 million for the same period last year. This performance has primarily been driven by positive revaluations which is from sustained increases in property prices. IPLs focus on retail property may make it a prime candidate to benefit from a return to normality after the recent announcements of successful Covid-19 vaccine candidates.

Westpac’s chief economist is predicting that a wealth or capital gains tax is becoming increasingly likely in the coming years. Asset price inflation, driven by global stimulus, is steadily widening the gap between those with wealth and those without. A widening gap will increase social tension and will increase the popularity of measures designed to restore a modicum of balance.

International

US Markets:

At time of writing, the SPX500 was down 0.2 per cent, the Dow Jones Industrial was off its record highs down -0.4 per cent and the Nasdaq was performing slightly better, up 0.1 per cent.

All sectors, excluding Real Estate, were in the red today, although Technology and Consumer Cyclicals were the best performing, dipping by just 0.1 per cent each. On the other hand, Utilities and Health Care were the weakest sectors, down 1.0 and 0.6 per cent, respectively.

While most large tech companies saw little price movement, Tesla shares shot up by 8.2 per cent after it was confirmed that they will be joining the S&P 500 as of the December quarterly rebalance. Due to the large market cap of Tesla, the index provider is consulting with investment professionals to determine whether the company would be phased in through two different tranches, or if it could enter in full.

Tesla has had a volatile year to date, rising an effective 309 per cent since the start of the year but with many large price swings. Inclusion into the pre-eminent global index should provide optimism for investors, who had previously sold down the stock following its failure to be included in the last index rebalance, after major speculation.

Asian markets:

The Shanghai (-0.1 per cent) and Hangseng (+0.1 per cent) indices were both flat, while the Nikkei edged slightly higher up 0.4 per cent.

China gave a detailed explanation of why it is punishing Australian imports overnight, accusing Australia of having a ‘cold war mentality’. The statement also alleges that Australia made ‘mistakes’ in its handling of topics such as Hong Kong, Xinjiang and Taiwan, and that moves by the Morrison government – especially since the onset of Covid-19 has accelerated tensions.

China’s Foreign Ministry spokesman Zhao Lijian made it clear that the ball is in Australia’s court when it comes to repairing relations, and that he hopes Australia can ‘do more to enhance mutual trust and cooperation’.

Commodities:

At time of writing, Gold was flat at US $1,887.00 per ounce. WTI Crude was down 0.9 per cent in line with a drop in the DJIA, trading at US$41.00 per barrel. The ten-year treasury yield was down 2.6 per cent to 0.87 per cent.

Australia

The Australia market was able to re-open yesterday following Monday’s outage. The ASX 200 followed US momentum overnight to finish 0.2 per cent higher.

Index gains were driven by an outperforming Energy sector, which climbed by 3.6 per cent after strong gains were seen in Whitehaven Coal (+8.1 per cent), Viva Energy (+6.7 per cent) and Beach Energy (+6.4 per cent).

Meanwhile, Tech (-1.6 per cent) was the worst performing sector with Afterpay dropping -5.4 per cent following the release of ASIC’s scrutinising report of the sector on Monday.

ANZ rose by 3.1 per cent after media speculation that the bank may be looking to sell its credit card operations division, with an estimated value of ~A$1 billion, to French payments company Worldline.

Some analysts have speculated that this is a pre-emptive move by ANZ to exit the credit card business, amidst heavy competition from the market proliferation of BNPL firms such as Afterpay and Zip Co. The transaction may include ANZ’s Eftpos machines, services, and processing infrastructure – potentially indicating a long-term strategy to focus on mortgages for retail customers and outsource other functions.

Coming up

New Zealand

We will see the much anticipated A2 Milk AGM today, which will hopefully touch on Diagou issues. We also have Napier Port full year earnings, along with Serko 1H earnings.
International

In America we will see Building permits, along with Housing starts data, while in Europe we will see CPI data.

Australia

Economic data out today will include New home sales and PPI.

A big day for companies sees a number of earnings and AGMS on, including: ALS 1H earnings, Aristocrat full year earnings, Ardent Leisure AGM, Cromwell Property AGM, Home Consortium AGM, Seven Group AGM and News Corp AGM.

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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