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

New Zealand:

The NZX 50 fell 1.1 per cent yesterday.

This fall was led by the utilities sector down 1.8 per cent and healthcare down 1.6 per cent. The top-performing sectors of the day were financials up 1.7 per cent and consumer cyclicals up 0.9 per cent. 
 
Australia and New Zealand Banking Group (ANZ) was the top performer up 2.8 per cent. Tourism, leisure and entertainment company, Skycity Entertainment Group, rose 2.6 per cent for the second day in a row.

Dairy company Synlait was the worst performer of yesterday’s session, falling 10.1 per cent after the release of a financial year 2021 (FY21) guidance update. It announced it is withdrawing its full-year 2021 guidance as it is “…continuing to experience significant uncertainty and volatility within its business”.

Synlait outlined four key points which are negatively impacting FY21 earnings. These were: the uncertainty of majority owner and major customer A2 Milk’s demand for their product; the impact of this on production of infant formula powder; international shipping delays; and commodity price volatility.

Previous guidance had profit down 50 per cent year-on-year. This announcement will be disappointing to shareholders who could now expect Synlait’s profit to drop from its 2020 number more than 50 per cent.

Auckland International Airport fell 4 per cent yesterday. This drop is likely driven by Auckland’s current alert level 3 status.

Data released this week shows engagement with the NZ Herald and NZME’s regional publications has reached 2.1 million New Zealanders weekly. Rising reader numbers and greater engagement across their platforms is good news for the print, radio and digital media and entertainment business, NZME.

My Food Bag lists today on the NZX and ASX. The IPO of this home food delivery provider involves the issue of 185 million ordinary shares comprised of 155.3 million existing shares and 29.6 million new shares.

Jarden is the joint lead manager and underwriter of the MyFoodBag initial public offering.

INTERNATIONAL MARKETS:
US:

It was a mixed bag for US equities this morning as investors await Federal Reserve Chair Jerome Powell’s speech this afternoon. At the time of writing, the Dow Jones Industrial Average was down 0.4 per cent, the Nasdaq was up 0.3 per cent and the S&P500 was up around 0.5 per cent.

Sector movements include Energy (up 4.1 per cent) and Communication services (up 2.2 per cent). Contributing to a strong day for the Energy sector was oil and gas producer Diamondback Inc. retaining its spot as the top gainers two days in a row (up roughly 10 per cent at the time of writing) Second and third best performers were also energy and oil related stocks as they continue to trade favourably on the back of increasing oil prices.

On the other hand, Consumer Discretionary and Materials were the worst performing sectors down 0.3 and 0.2 per cent respectively. Computer parts manufacturer Western Digital Group (WDG) was todays worst performing stock down 5.4 per cent reflecting investors opinions on their earnings results announced this morning. Following WDG, Tyler Technologies Group was down 5.1 per cent on the back of a debt issuance announcement yesterday morning.

A flow of macro-economic data has also come in today. US weekly jobs claims rose slightly higher than last week’s figure (which was expected after last week’s record freezing temperatures and business closures). However, monthly job cuts (from US based companies) fell 57% in February as some experts assume the US$900 billion additional pandemic relief from December is beginning to have its desired effect on the labour market.

Asia:

Overnight, the Shenzhen index was down 2.9 per cent, the Shanghai Index was down 2.1 per cent, the Nikkei 225 was down 2.1 per cent and the Hang Seng index was down 2.15 per cent.

The Chinese Governments largest annual political gathering will occur this Friday. Investors will be paying close attention for any clues on stimulus or moves to cut reliance on the US. Chinese lawmakers will also have an opportunity to comment on how implementation of its new five-year-plan (covering 2021 to 2025) is going. As previously announced the plan will rebalance the economy towards consumer demand and hi-tech industries.

A proposal to overhaul Hong Kong’s electoral system will proceed this week, with limits imposed on the opposition’s ability to win public office. The Chinese government is concerned to ensure “patriots” govern Hong Kong. A policy to limit the number of seats able to be held by opposition groups and local tycoons on the election committee is being considered. The committee is responsible for appointing someone to the powerful Chief executive position. Such steps to further erode Hong Kong’s limited democracy are likely to draw a reaction, in the form of sanctions, condemnation or congressional action, from the US.

Commodities:

At time of writing, gold was up 0.2 per cent at US$1714.50 per ounce. Cryptocurrencies were down with Bitcoin falling 2.3 per cent to US$49,795, while Ethereum followed was down only 0.1 per cent, now trading at US$1,593.40. WTI Crude oil jumped 4.9 per cent to US$64.31 per barrel. US 10-year treasury yields were down 1.3 basis points, now at 1.472 per cent.

Australian Markets:

The S&P ASX200 closed its latest trading session down 0.8 per cent.
On Thursday, the worst performers were mining and exploration company IGO, down 7.9 per cent to A$6.52, and wagering services operator Pointsbet Holdings, down 6.3 per cent to A$13.75.

One of the top gainers yesterday was Cleanaway Waste Management, up 4.0 per cent to A$2.33. News of the company’s talks to buy French water and waste management firm Suez’s Australian operations was responsible for the rise. This potential acquisition is said to cost more than A$2 billion and would have the capacity to add up to 50 per cent to Cleanaway’s A$2.4 billion revenue and A$506 million EBITDA.

However, the Australian Competition and Consumer Commission may object, given the deal would award Cleanaway 41 per cent of Australia’s waste treatment and disposal services market (up from 23.7 per cent). Additionally, Cleanaway faces competition from Veolia, which is attempting to acquire the corporate structure that contains Suez.

Xero announced that it would purchase the Danish workforce management platform Planday for up to $300 million. The upfront payment will be $260 million with the balance as an earnout payment based on performance. Planday will give Xero exposure to new markets in Europe and add valuable tools to compliment Xero’s current offering. It is forecast to add three percentage points of revenue growth in the 2022 financial year once the acquisition is complete. However, acquisition costs are expected to produce a modest negative impact on 2021 EBITDA. Despite this expansion announcement, Xero’s share price fell 2.6 per cent to A$115.90, with investors still wary of high bond yields.

Yesterday, the Australian Bureau of Statistics released the January retail trade turnover, up 0.5 per cent month-on-month and up 10.6 per cent compared to the beginning of 2020. It also published that there was a A$10,142 million surplus from imports and exports of goods and services in January, representing a net inflow of domestic currency from foreign markets.

Earlier this week, the Australian Bureau of Agricultural and Resource Economics and Sciences predicted that fruit and vegetable prices would jump up to 29 per cent this year due to the lack of seasonal workers and working holiday visa holders who are unable to enter Australia. Government efforts to attract domestic workers have not filled the thousands of vacancies, resulting in produce going to waste before leaving the orchard.

• For more information on the latest market moves, get in touch with Jarden.

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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