Jarden Brief: Covid outbreak dampens Australian economic activity

Australian Prime Minister Scott Morrison. Photo / George Heard

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

New Zealand

New Zealand markets traded higher on Monday as the NZX 50 increased 0.6 per cent to 12,763.4 points.

The leading sectors at the close were energy and financials, making gains of 1.8 and 1.2 per cent, respectively.

Electricity generator and retailer Meridian Energy led the way with a strong performance to close yesterday's trading up 3.5 per cent.

Similarly, both corporate travel booking software company Serko and donations software provider Pushpay Holdings extended gains by 2.7 and 2.4 per cent, respectively, to round off Monday's winners.

On the flip side, consumer non-cyclicals (down 0.5 per cent) and real estate (down 0.3 per cent) were the laggard sectors of the day.

Weighing down index performance was Tourism Holdings, which fell 4.1 per cent. The campervan rental company traded unfavourably after increased Covid-19 cases in Sydney (over 100 on Monday) are likely extend the current lockdown, restricting tourism inflow from Australia.

The second worst performer was Fonterra, which slid another 1.8 per cent pending its ongoing capital structure review.

Milk products distributor, the a2 Milk Company, conquered headlines after announcing a re-structure of its Asia-Pacific business segments, along with the appointment of two executive roles in the aftermath of CEO Peter Nathan's resignation earlier this year.

The re-structuring involved separating its Asia-Pacific operations into three separate units, with both internal and external hires used to fill these roles. A2 hopes the re-shuffle can help the company focus on solving its distribution channel woes, which proved problematic in the second half of its financial year 2020.

INTERNATIONAL
US

The major US indices continued their positive momentum from Friday, setting new record highs ahead of bulge bracket banks JPMorgan and Goldman Sachs reporting their earnings this week. The S&P 500 increased 0.3 per cent, the NASDAQ was 0.1 per cent higher, and the DJIA rose 0.3 per cent.

Financials (+0.9 per cent) and communication services (+0.7 per cent) were leading the market higher, while consumer staples (-0.3 per cent) and energy (-0.2 per cent) underperformed.

Albemarle Corp was the top gainer of the day, hitting a new 52-week high. The specialty chemical manufacturer rallied 7.0 per cent. Next in line was specialty retail company, L Brands, increasing 4.2 per cent, also reaching a 52-week high.

Rounding out the best performers was electric car manufacturer Tesla, up 3.9 per cent. CEO Elon Musk was defending the company's US$2.6 billion acquisition of SolarCity in a shareholder lawsuit. The trial will determine whether Musk acted in the best interest of Tesla's shareholders.

He emphasized that he did not see a financial gain from the acquisition during the early stages of his testimony on Monday. If Musk loses the case, he might have to pay upwards of US$2 billion to Tesla shareholders.

Computer hardware producer HP was the worst performer, falling 2.6 per cent, followed by cable operator Charter Communications, down 2.5 per cent, and Biogen decreasing 2.4 per cent.

The biopharmaceutical company continued its downward trend from Friday, after the head of the Food and Drug Administration (FDA) submitted a letter asking for the approval of the company's Alzheimer's drug to be investigated.

He suggests that communications between the FDA review staff, and Biogen might be inconsistent with FDA policies and procedures.

Asia

All the major Asian indices were performing well. The Nikkei climbed 2.3 per cent, the Shanghai composite was up 0.7 per cent and the Shenzhen increased by 2.1 per cent.

Commodities

Gold decreased by 0.2 per cent to US$1,806.40 per ounce.

Oil also fared poorly, sliding 1.1 per cent to US$73.78.

Cryptocurrencies were all down at the time of writing, with Bitcoin decreasing 2.5 per cent and Ethereum trading 5.3 per cent lower.

The US 10-year treasury yield increased slightly to 1.359 per cent.

Australia

The ASX 200 was in the green yesterday up, up 0.8 per cent. This rise was led by the basic materials and real estate sectors, up 2.2 per cent and 1.3 per cent respectively.
On the other hand, consumer staples fell 0.4 per cent.

New South Wales Covid-19 cases rose by 112 yesterday, with the outbreak spreading despite the lockdown restrictions currently in place. The prolonged restrictions in Sydney are a setback to the overall Australian Covid-19 recovery and reopening, with extended restrictions dampening Australian economic activity. Only 8.5 per cent of Australians are fully vaccinated for Covid-19.

Mining company NRW Holdings was the top performer of the session yesterday, surging 12.0 per cent. This followed the exercise of an option of Boggabri Coal Operations to purchase the majority of the mining equipment of Golding Contractors, a subsidiary of NRW Holdings.

This will see 38 major mobile mining assets sold. This, according to the CEO, will "reduce debt and increase return on capital employed". The market responded favourably, pushing the stock price upwards.

The news also seemed to have a positive impact on the rest of the sector, with Mineral Resources rising 4.2 per cent and Nickel Mines growing 3.8 per cent shortly afterwards.

Redbubble, an online marketplace for products, fell 2.9 per cent. Rounding out the worst performing three companies of the ASX 200 yesterday was The Star Entertainment Group, down 2.2 per cent, and Omni Bridgeway, down 1.7 per cent.

Coming up today

A quiet week ahead of us in New Zealand, with reporting season set to begin over the next couple of months.

In Australia later today, National Australia Bank will be releasing its business conditions/confidence survey.

Meanwhile, the latest Consumer Price Index print in the US is expected to be announced overnight.

• 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>