Jarden Brief: Cheaper airfares, old cars, rental prices cool US inflation

Domino’s Pizza stock experienced a sharp rise after a big Uber deal was announced. Photo / Getty Images

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

International

US

The consumer price index rose 3 per cent compared to the previous year, which was the smallest 12-month increase since March 2021.

Factors such as lower prices for used cars and airline fares, along with slower rent increases, contributed to the decrease.

The market reacted positively to the news, with stocks rising and bond yields falling.

The Federal Reserve is expected to raise rates at its upcoming meeting in July, but the report raises questions about future rate hikes.

The June inflation report suggests the Fed will closely monitor further trends and economic indicators before making any additional rate decisions. The core inflation rate, which excludes food and energy prices, recorded the smallest monthly gain in over two years.

Federal Reserve officials consider core inflation a better predictor of future inflation. The Fed aims to maintain inflation at around 2 per cent over time.

Domino’s Pizza stock experienced a sharp rise of 11.0 per cent after the pizza chain signed a global agreement with Uber that allows US customers to order Domino’s products through the Uber Eats and Postmates apps.

The delivery responsibilities will still be handled by Domino’s. Initial rollout of the partnership will begin in the US autumn in four pilot markets, with plans to expand nationwide by the end of the year. The exclusive deal is expected to last until at least 2024.

Domino’s stock surged by 11 per cent, marking its largest percentage increase since 2021. The CEO, Russell Weiner, expressed excitement about reaching millions of new customers through the Uber apps and aimed to generate a billion dollars in new sales by listing menus on Uber’s platforms.

Rest of World

BP and TotalEnergies emerged as winners in a German offshore wind site auction worth €12.6 billion (NZ$22.2b), highlighting the growing appeal of renewable assets for European oil majors.

The auction, which aimed to build 7GW of offshore turbine capacity, saw BP securing the rights to develop two projects representing 4 GW, marking its entry into continental Europe’s offshore wind sector.

An offshore wind park in Denmark. Neighbouring Germany held an offshore wind site auction worth more than NZ$20 billion. Photo / Supplied

TotalEnergies won the awards for the other two sites, with a total capacity of 3 GW.

The move signifies the oil giants’ efforts to expand low-carbon businesses and align with the transition to renewable energy. BP and TotalEnergies shares rose 1.6 and 1.1 per cent respectively.

The Japanese yen strengthened against the US dollar, reaching ¥140 and setting the currency on track for its best month since last year’s intervention by Japan’s finance authorities.

This rise in the yen followed expectations the Bank of Japan (BoJ) will soon shift away from its ultra-loose monetary policy.

The yield on 10-year Japanese government bonds also increased to 0.47 per cent, the highest level since April.

Australia

Philip Lowe, Reserve Bank of Australia Governor, introduced a 10-point plan outlining changes to the bank’s operations and communication.

Starting in 2024, the RBA board will meet eight times a year instead of 11, with four meetings scheduled for specific dates and the remaining four held midway between them.

The board meetings will be longer, spanning Monday afternoon and Tuesday morning, with the decision announced at 2.30pm on the second day, followed by a media conference by the governor at 3.30pm.

The post-meeting statement will be issued by the board, and the board will also be the signatory to the Statement on the Conduct of Monetary Policy.

The bank’s research agenda related to monetary policy and financial stability will be overseen by the board, and the RBA will continue its analysis of climate change’s impact on the economy, inflation, and the financial system. The RBA will conduct five-yearly reviews of the monetary policy framework in collaboration with Treasury.

Mining and manufacturing company Incitec Pivot confirmed its fertiliser business received unsolicited interest from potential buyers.

Although the company did not disclose parties involved, it acknowledged receiving several approaches. Following the announcement, Incitec shares rallied 5.4 per cent.

The company said it was considering a potential sale alongside the proposed demerger, which remains a strategic priority.

The fertiliser arm faces challenges due to volatile business and commodity price cycles, which may affect its viability as a standalone company with higher capital costs.

The demerger plan was previously delayed in November, and Incitec sold its Waggaman ammonia factory in Louisiana. In contrast, Dyno Nobel, the explosives business, has reported strong earnings growth. The company aims to create two industry-leading businesses through the demerger.

New Zealand

The Monetary Policy Committee announced that the Official Cash Rate (OCR) would stay at 5.50 per cent.

The current level of interest rates is seen as necessary to restrain spending and control inflationary pressure.

The committee agreed the OCR should remain at a restrictive level in the foreseeable future to ensure consumer price inflation returns to the target range of 1 to 3 per cent per annum, while also supporting maximum sustainable employment.

Outdoor retailer KMD Brands Limited is set to achieve a full-year sales of approximately $1.1 billion for the financial year ending on July 31.

Management attributed this to robust growth in all its brands during the first three quarters.

The gross margin is projected to remain in line with the previous year.

Underlying ebitda is estimated to fall within the range of $105 million to $110 million, noting three weeks of trading remaining.

Kathmandu, however, faced a slower start to the fourth quarter in this winter trading period due to warmer weather in Australia and a softer consumer sentiment. Shares fell 8.7 per cent on close.

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

The Jarden Brief is provided for general information purposes only. It reflects views and research available 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. The Jarden 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 financial advice disclosure statement is available free of charge at https://www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/.

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All market pricing and announcements are sourced from Refinitiv, NZX and ASX.