The Australian economy has delivered a strong result. Photo / Getty Images
Keeping you up to date with the latest market moves, in association with Investment firm Jarden
New Zealand
The NZX50 finished in the black for the second day in a row, up 1.2 per cent. The sectors leading this rise were consumer staples and utilities which rose 2.9
and 1.7 per cent, respectively. Again, the only sector to fall was financials, down 1.0 per cent.
Synlait Milk and a2 Milk both appears to benefit from the announcement that China is relaxing their two-child policy with a three-child policy. Synlait Milk was the top performer of the NZX50 yesterday, up 8.0 per cent while A2 Milk rose 3.2 per cent.
However, market commentators have noted that the costs associated with having children are high and the change in 2016 from a one-to-two-child policy was unsuccessful in creating a turnaround in declining birthrates in China. This may mean the real impact of the new three-child policy is uncertain in terms of birth rates and subsequently infant formula demand.
Mercury NZ was another outperformer, up 3.7 per cent and making a partial recovery from last week's dip.
The Fonterra Shareholders' Fund was the worst performer, down 2.5 per cent despite the strong performance of its competitor, Synlait Milk. NZX Limited was also in the red, falling 2.3 per cent yesterday.
In macroeconomic news, the Statistics New Zealand Building Consents data was released yesterday. In the year ended April 2021, 42,848 new dwellings were consented (+15% on the previous year). On a month to month basis, seasonally adjusted new dwellings rose 4.8 per cent in April, building further on a significant 19 per cent increase in March.
INTERNATIONAL
US
US markets were mixed this morning as the S&P500 rose 0.2 per cent while the Nasdaq and Dow Jones Industrial Average have fallen a slim 0.1 per cent each.
Sector gains include Energy and Basic Materials each leading the way with 3.6 and 1.3 per cent increases, respectively.
These sector gains were well supported by the outperformers Marathon Oil and Devon Energy, jumping 12.8 and 12.1 per cent at the time of writing. Both companies operate in the oil industry and were direct benefactors of the spike in oil prices overnight.
In contrast, downward pressure on indices was drawn from sector losses in Healthcare (-1.4 per cent) and Utilities (-0.6 per cent).
The worst performer at time of writing was healthcare company Abbott Laboratories, which slumped to an 8.2 per cent loss. Abbott slashed their 2021 profit forecast overnight citing lower testing demand. Joining Abbott was Invesco Ltd, a financial services and ETF provider which fell 5.9 per cent.
Asia
Asian indices were mixed overnight. The Hang Seng was up 1.1 per cent, the Shanghai Composite made a small gain of 0.3 per cent, and the Nikkei fell 0.1 per cent at the close.
Despite scepticism around the impact of the new three-child policy, infant care and other related stocks linked to a Chinese baby boom traded favourably and were large major contributors toward index gains overnight.
Commodities
In commodities this morning, Gold is roughly unchanged at US$1,905.5 per ounce. WTI crude oil has jumped to a two year high, now priced US$67.7 per barrel after OPEC agreed on Tuesday to gradually decrease production cuts, with Secretary General Mohammad Barkindo also easing concerns saying higher Iranian supply would not be an issue.
Yields are trading higher, with the 10 year now priced at 1.61 per cent.
Lastly, cryptocurrencies continued to track downwards with Bitcoin currently trading down 1.4 per cent at US$36,203.0 and Ethereum down 1.5 per cent to US$2,565.6.
Australia
The ASX200 continued its downward trend this week, closing 0.3 per cent lower.
The only two sectors posting gains were Energy (+1.3 per cent), and Materials (+0.3 per cent). The other nine sectors underperformed, with Financials (-0.7 per cent) and Healthcare (-0.7 per cent) hit the hardest.
The top performers of the day were coal mining and exploration company Whitehaven Coal, increasing 5.7 per cent, and hardware merchant Reece Group, rising 3.2 per cent. Rounding out the top gainers, was telecommunications firm Megaport, up 3.1 per cent.
Health and supplements producer Blackmores was the biggest underperformer on Tuesday, decreasing by 5.0 per cent. Rare-earths miner Lynas Rare Earths fell another 4.9 per cent amidst continued concerns of labour shortages in the industry, and medical device developer Polynovo dropped another 4.4 per cent.
With iron ore prices at all time highs, developers are starting to revive dormant plans for undeveloped projects. A subsidiary of Mineral Resources (+3.0 per cent) has struck a deal to buy out rail provider Aurizon of its stake in the long dormant Australian Premium Iron joint venture. The company seeks to increase its total iron ore output from about 21 million tonnes this year to 92 million tonnes over the next five years, partly through this acquisition.
Australia's economic data released on Tuesday was perceived to be positive by market commentators. The country's current account surplus increased by AU$2.3 billion compared to the previous period and totalled AU$18.3 billion for the March quarter. Economists upgraded their GDP growth expectations and are awaiting the release of actual GDP growth numbers later today.
Meanwhile, the Reserve Bank of Australia held the cash rate target at 0.1 per cent. The central bank will make a decision regarding potentially extending the AU$200 billion bond buying program, and revisit the 0.1 per cent three-year yield curve target decision in July.
Coming up Today:
Australia's first quarter GDP print is expected to be released later today, while healthcare company Mesoblast will report its third quarter earnings.
No planned announcements locally.
• 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-disclaimera>
Fruit prices go bananas but vegetable costs plummet.