Jarden Brief: Oil giant up after Warren Buffett’s Berkshire Hathaway increases stake again

Warren Buffett's Berkshire Hathaway conglomerate has acquired millions more shares in a large oil company. Photo / AP

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

International

US

US stock indexes climbed higher on Thursday as big bank names gained after passing the Federal Reserve’s annual stress test.

The Dow Jones Industrial Average was up 0.6 per cent at the time of writing, as shares of Bank of America, JPMorgan Chase, Goldman Sachs and Wells Fargo all rose after proving they have enough capital to weather a severe economic slump in the Fed’s scenario test.

Strong economic data also came out of the US, with first-quarter GDP revised higher, fuelling anticipation of further interest rate hikes from the central bank.

The US economy grew at a 2.0 per cent annualised pace in the first quarter, according to the final revision from the Commerce Department. The change was driven from both consumer expenditures and exports being stronger than previously thought. The unexpected results serve to undermine prevalent forecasts of an imminent recession in the United States.

The S&P 500 was trading in the green, up 0.3 per cent, while the Nasdaq traded 0.1 per cent lower at the time of writing.

Shares of oil giant Occidental Petroleum rose 1.4 per cent after news Warren Buffett’s Berkshire Hathaway increased its stake again.

Over the course of Monday, Tuesday and Wednesday, the conglomerate acquired an extra 2.1 million shares of Occidental, elevating its ownership in the energy company to 25.1 per cent.

Aircraft company Joby Aviation gained another 10.9 per cent after announcing an equity investment of US$100 million from SK Telecom, South Korea’s leading telecommunications company, expanding an existing partnership.

The company has gained 50.0 per cent in the past five trading days, after stating earlier this week it was granted a permit to begin flight testing its first electrical vertical take-off and landing aircraft.

In other news, the number of Americans filing initial claims for unemployment benefits fell by 26,000 to a seasonally adjusted 239,000, the biggest weekly drop since October 2021. Data reported by the Department of Labor on Thursday also showed continuing claims fell to 19,000.

New Zealand

At home, the local share market saw further gains on more positive economic data. The NZX 50 closed in the green yesterday, up 0.6 per cent.

Latest figures from the ANZ Business Outlook showed business confidence surged 13 points in June (net -18), reaching the highest level recorded since November 2021.

Firms’ expectations for their own activity jumped 8 points to positive results (net +3). Inflation and pricing indicators continued to ease, providing a sense of relief to the market.

While sentiment has improved, businesses seem uncertain given the pressure on profitability stemming from high costs.

The housing market showed signs of stabilisation, offering a glimmer of hope for the residential construction sector, but optimism hinges on the reduction of inflation indicators.

In terms of single stock news, Vital Healthcare Property Trust fell 0.2 per cent after informing the market of its indicative valuation changes.

Management said it expects Vital to report a property revaluation loss of circa $160 million for the six months ending June – a 4.6 per cent decrease since the end of December. Most of Vital Healthcare’s portfolio is in Australia, which saw a 2.8 per cent decrease, cushioning local portfolio performance which experienced a 7.4 per cent decline.

Stride property finished the trading session flat following its annual shareholder meeting which reiterated the mixed year for the commercial property sector. Strong growth in rentals, outweighed by the rapid increase in interest rates, has resulted in lower valuations and less transactional activity. The company is expecting to pay a dividend of 8.0 cents per share for fiscal year 2024.

Australia

The ASX 200 closed relatively flat yesterday, with seven out of 11 sectors in the green. Front running the market was the technology sector, up 1.8 per cent, with WiseTech and Xero rallying 2.2 per cent and 2.3 per cent, respectively.

These positive gains were offset by losses in utilities, real estate and mining industries.

Continuing losses from the previous day, Bega Cheese was the biggest laggard of the single stock movers.

Labour shortages on dairy farms and rising milk prices, along with management’s recent projected profits for 2022-23 being at the lower end of guidance, saw Bega Cheese’s share price tumble another 6.1 per cent yesterday.

In other macroeconomic news, a total of 431,600 job vacancies in Australia were reported by the Australian Bureau of Statistics (ABS) on Thursday, representing a 2.0 per cent fall from February 2023.

Despite falling for the fourth straight quarter, job vacancies were still far above pre-pandemic levels. Private sector vacancies were down 2.3 per cent, while public sector vacancies fell 0.3 per cent in the three months to May.

These results indicate a persistently tight labour market, with only 1.2 people looking for a job per vacancy.

Additional information out of the ABS revealed higher than expected retail sales. The May 2023 seasonally adjusted estimates of turnover and volumes for retail businesses rose 0.7 per cent month-on-month.

Consumers reacted to online sales and promotional discounting, driving sales of A$35.52 billion, up 4.2 per cent from a year prior.

Despite the unexpected positive economic figures in May, the impact on sentiment toward the Reserve Bank of Australia’s upcoming interest rate decision is likely to be limited. The decision is scheduled to be announced early next week.

Coming up today

US: Personal Income/Spending, PCE Deflator, Chicago PMI.

Eurozone: CPI, Unemployment Rate.

UK: Q1 GDP.

China: Composite PMI.

Japan: Tokyo CPI.

Australia: Private Sector Credit

NZ: ANZ Roy Morgan Consumer Confidence.

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/.

Full disclaimer available at: https://www.jarden.co.nz/wealth-sales-and-research-disclaimer

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