The US CPI
print for the month of March took centre stage as the index rose 0.1 per cent, slightly below expectations for a 0.2 per cent increase and taking the index to a 5 per cent increase for the year.
The core CPI measure, which the US Federal Reserve watches closely as a key measure for actual inflation, rose 0.4 per cent to a 5.6 per cent yearly total as the Fed looks towards its next policy meeting in May with most commentators expecting another 25 basis point rate hike.
Ahead of the CPI announcement, Fed Minneapolis President Neel Kashkari said he believed US inflation will near the central bank’s target of 2 per cent in 2024.
He also said he was “less optimistic” than markets which are pricing in a faster decline in inflation than his expectations.
Following the merger of Discovery Communications and Warner Media in April 2022, the new merged entity Warner Bros. Discovery has launched a new blended streaming service of HBO Max and Discovery called “Max” to debut in May this year.
The company has more than 96 million global streaming subscribers across the two platforms and traded lower by 3.5 per cent at the time of writing.
Travel and tourism related equities were lower in response to a more pessimistic first quarter outlook statement from American Airlines, which expects to report a small profit for the quarter but one likely below Wall Street expectations.
This prompted fear of a slowdown in global tourism demand across an industry that has benefited from unprecedented levels of consumer travel appetite over the last 12 months.
American Airlines were down 9.6 per cent at the time of writing. Similarly, United Airlines (-7 per cent) and Norwegian Cruise Line Holdings (-7 per cent) were also among the bottom four underperformers.
Rest of the World
Putting a slightly negative tilt on investor sentiment, the International Monetary Fund (IMF) unveiled its global growth report, which contained its lowest medium term growth expectations in more than 30 years.
The organisation highlighted financial stability and tighter lending conditions in the aftermath of the Silicon Valley Bank crisis last month, which, alongside widespread interest rate hikes, is likely to subdue economic growth in at least the short to medium term.
The IMF’s forecast of 2.8 per cent global growth in 2023 also included a downside scenario, with the above factors supressing growth to as low as 1.0 per cent in the next 12 month period.
Commodities
Oil continues to hover around the US$85-$90 per barrel mark with prices reacting on news US crude stockpiles increased by 380,000 barrels in the week ending April 7.
That was in the opposite direction to analysts’ predictions of a 600,000 decline, and despite supply concerns following OPEC+ announcing it would cut its production by 1 million barrels per day last week.
New Zealand
The NZX50 lifted a mild 0.4 per cent on Wednesday, buoyed by the utilities sector (+1.2 per cent) with the likes of Meridian and Genesis Energy both featuring among the top three performers with 3.4 and 2.0 per cent gains, respectively.
Likely encouraging the performance from the utilities sector was confirmation of both Meridian and Genesis’ corporate credit ratings from global rating agency S&P Global Ratings.
Alternatively, single stock laggards were Vector, Oceania Healthcare and Serko, losing 3.2, 2.7 and 2.3 per cent respectively on limited news flow.
Stock-specific news on a quiet day included a half-year announcement for Scott Technology Limited (outside of the NZX50) which landed higher by 8.3 per cent at the close.
Highlights came in the form of group revenue up 11 per cent to $127m, coupled with a healthy increase in margins from 22 to 26 per cent despite the current inflationary operating environment.
Other news included Australian Superannuation fund UniSuper being granted permission by the Crown to acquire more than 10 per cent of New Zealand telecommunications infrastructure company Chorus, if it so desires.
UniSuper’s holding has increased closer to 9 per cent, from around 6 per cent in August 2020, with a spokesperson saying the motion allows flexibility for increasing UniSuper’s holding as it sees fit, but also ruling out any intention to acquire enough shares for a controlling stake.
Australia
Resource-related equities comprise a significant portion of the ASX200, where today 8 out of 10 of the top performers were from this sector and helped lift the index to a 0.5 per cent gain by the close.
Shares in data centre provider NEXTDC jumped 8.1 per cent (its largest jump since April 2020) after the company told the market it had experienced a strong rise in utilisation rates on the back of new customer wins, increasing demand for its Sydney data centre.
Brisbane-based NEXTDC had 11 data centres as at June 2022, with its Syndey S3 data centre now operating at 46 per cent of total planned capacity.
Markets reacted to a raft of confidence surveys released from two of the major banks.
Tuesday saw the NAB Business Confidence Survey improve slightly through March, up 3 points to -1 from -4 in February. And yesterday, ANZ Roy Morgan Consumer Confidence added 1.1 points for the week to April 9, a third consecutive increase after the Reserve Bank of Australia held interest rates flat at the end of March.
Against the run of play, lithium miner Pilbara Minerals fell to a 4.0 per cent loss, likely relating to a broker initiating research coverage on the stock with an “underweight” rating, coupled with weaker overnight lithium prices.
Whitehaven Coal slipped 3.2 per cent on a material production warning and downgrade to its full-year 2023 guidance.
The company downgraded its run-of-mine production guidance to 18.0 - 19.2 million tonnes (from 19.0 - 20.4) citing operational challenges including labour shortages and lower than expected production from its Maules Creek site.
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