Jarden Brief: Clock still ticking on US debt ceiling

US President Joe Biden is facing growing economic pressure. Photo / AP

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

New Zealand

New Zealand equities fell 0.3 per cent on Wednesday, with the S&P/NZX 50 trading lower to 13,166.4 points.
 
The session was influenced by the Reserve Bank of New Zealand's (RBNZ) announcement that the Official Cash Rate (OCR) would be lifted by 25 basis points to 0.50 per cent, in line with market expectations. This is the first time the OCR has been raised in seven years, and puts New Zealand amongst the small handful of developed nations to raise its rates since the start of the pandemic. South Korea, Norway and the Czech Republic have also raised their borrowing costs in the last month.

RBNZ Governor Adrian Orr reinforced that this would not be a one-off measure, implying similar rate increases in November and February. Economists around the country have lifted their OCR targets to between 1.25 and 1.50 per cent, to be reached by around this time next year.
 
Utilities and industrials performed strongly, against the run of the tide, making gains of 0.5 and 0.3 per cent, respectively. The latter was bolstered by a 3.2 per cent rally in Skellerup shares, although on light trading volumes.

On the other hand, non-cyclicals (-2.6 per cent) were dragged down by a 6.3 per cent fall from a2 Milk. News broke after market close yesterday that Australian law firm Slater and Gordon filed a class action law suit against the company on behalf of investors - claiming that a2 Milk engaged in misleading or deceptive conduct and breached continuous disclosure rules. The dairy company said it complied with its disclosure obligations and will defend the legal action.

Synlait Milk, a2's main supplier, traded 1.9 per cent lower on the news.

Sky Network Television, and cinema technology company Vista Group, were both had positive movements of 1.5 per cent each, while Chorus lost 3.0 per cent.

International                                                                                         
US

The major US indices were trading lower this morning, after posting gains in the previous session. The S&P 500 declined by 0.8 per cent, the Dow Jones Industrial Average (DJIA) decreased 0.8 per cent, and the NASDAQ was down 0.6 per cent. US Congress will need to either raise or suspend its debt ceiling by 18 October to avoid a historic default.

All sectors were in the red. Energy was booking the biggest losses, down 1.9 per cent, due to a decline in oil prices from recent highs. Next in line was materials, down 1.8 per cent.
Enphase Energy was the top gainer on the S&P 500 this morning. The energy technology company rose 4.2 per cent, recovering some of its losses made in the previous two sessions. Marketplace infrastructure provider Intercontinental Exchange also performed well, up 2.4 per cent. Rounding out the leader board was Vulcan Materials, increasing 2.2 per cent. The company supplies construction aggregates like crushed stone, sand and gravel.

On the flip side, video game company Electronic Arts was the worst performer, decreasing 6.7 per cent after it announced a delay in the release of its upcoming Battlefield 2042 title.

Hard drive manufacturer Seagate Technology Holdings declined 5.6 per cent, while vaccine producer Moderna was down 5.0 per cent. Sweden and Denmark announced on Wednesday that they are pausing the use of Moderna's vaccine for people born in 1991 and later, as data indicated an increase in rare side effects like myocarditis among youths and young adults.

Payroll processing firm ADP released its latest report about private sector employment on Wednesday. It showed that jobs last month rose more than expected. Private jobs increased by 568,000 in September, led by the hospitality and leisure sector hiring 226,000 employees.

Rest of the world

In Asia, the major indices kept declining, with the Nikkei down a further 1.1 per cent, and the Hang Seng decreasing 0.6 per cent.

Virgin Money UK increased by 3.9 per cent. It announced on Tuesday it would be shutting 31 branches in Scotland and north of England, with growing online banking demand. Janus Henderson Group also rose by 3.2 per cent.

Commodities

Commodities were generally trading lower this morning, however gold increased a slim 0.2 per cent to US$1,764.40 per ounce.

Oil decreased for the first time in a week, down 2.1 per cent to US$77.24 per barrel.
Natural gas saw prices skyrocket this year, leading many firms into distress due to the increased energy costs to run their operations. This morning the November natural gas futures on the New York Mercantile Exchange dropped 10.0 per cent, after hitting an all-time high in the previous session.

Cryptocurrencies were rallying across the board. Bitcoin soared 7.1 per cent and was trading at US$54,620.80 at the time of writing, almost reaching the 5-month high set in May. Ethereum increased 3.0 per cent to US$3,582.70.

The US 10-year treasury rate was yielding 1.519 per cent this morning.

Australia

The ASX 200 fell 0.6 per cent yesterday led downwards by academic and educational services (-1.9 per cent), and consumer cyclicals (-1.0 per cent).

Index heavyweight Commonwealth Bank also eased off its gains from earlier in the week, dropping 2.0 per cent while the other banking sector constituents followed in its wake. The Australian Prudential Regulation Authority, the country's banking watchdog, warned that it may be tightening its lending rules.

Flight Centre Travel Group and Webjet fell by 6.6 and 6.2 per cent, respectively. Both travel stocks eased off recent highs associated with easing Covid-19 restrictions in Australia and the announcement of upcoming international border reopening.

On the flip side, the two sectors to rise were energy, up 0.3 per cent, and industrials, rising 0.1 per cent.

Whitehaven Coal rose 4.1 per cent, up for the fourth consecutive day. It continues a strong year of stock price performance, having more than doubled year to date. With tight international coal supply, prices have been rising recently.

• 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>