Jarden Brief: Facebook backtrack gives Aussie media companies a market boost

Facebook's battle with news companies took another unexpected turn. Photo / Getty Images

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

New Zealand:

The NZX 50 fell 0.9 per cent yesterday tracking a late afternoon dip in Australian markets.

Leading the market up was wine producer Delegats, rallying 5.9 per cent after reporting a strong first half operating earnings of $76.1 million, up 19 per cent year on year. A 17 per cent increase in North American sales offset soft results on both sides of the Tasman. Profit came in at $67 million, up 10 per cent compared to first half 2020 and improved against consensus estimate of $64 million.

Meanwhile, SkyCity moved up 3.1 per cent after a sell-off last week - appointing current deputy CFO, Richard Smyth, to the permanent job after markets closed.

Spark's first-half result seemed largely in line with market expectations, with the stock price remaining flat after the announcement. Revenue fell 1.5 per cent to $1.8 billion, with operating expenses down $30m (-2.3 per cent) year on year, helping to offset the revenue decline. Profits were down $19.0 million because of non-cash items, although a 12.5 cent per share dividend may have kept investors satisfied.

NZ Media & Entertainment, the parent company for NZ Herald, OneRoof and Newstalk ZB, reported a positive result yesterday. Earnings before interest, tax and depreciation was up to $67.3 million, higher than the $63 - $66 million range the company previously provided as guidance in November last year. The $40.8 million reduction in net debt to $33.8 million may also have been pleasing to investors, given shareholders had historically found company debt to be an issue. Underlying profits were up 11.8 per cent to $22.0 million, held up by wage subsidy support and cost outs given a 10.9 per cent fall in revenue.

New Zealand King Salmon on the other hand reported a soft result. The company reported $10.5 million of ebitda, down 22 per cent on last year's first half. Sales volumes were flat, while margins decreased, with the impacts of Covid-19 continuing to hurt the business's bottom line.

Methanol producer, Methanex, has shut down production at a plant in Taranaki, stating that they cannot get enough gas to keep it operational. Methanex consumes around 40 per cent of domestic gas supply in NZ and has noted that without continued exploration and development, it may seek to change the nature of its operations further.

International Markets:

US:

At the time of writing the S&P 500 was up 0.8 per cent. The Dow Jones was flat, and the Nasdaq was up 0.6 per cent as tech companies regained some of the ground lost over the last week.

Energy was the best performing sector on the day, up 3.3 per cent. Oil explorers and producers Occidental Petroleum (up 9.1 per cent), Marathon Oil (up 8.7 per cent), EOG Resources (up 6.1 per cent), Haliburton (up 5.8 per cent), were all among the top ten performing stocks.

The latest round of vaccine optimism appears also to be powering travel exposed stocks. United airlines (up 9.5 per cent), Norwegian Cruise Line Holdings (up 8.8 per cent), Boeing (up 6.0 per cent), Royal Caribbean Cruises (up 5.7 per cent) and Carnival Corp (up 5.0 per cent), all performed well.

Risk assessment firm Verisk Analytics was the worst performer on the day, down 8.7 per cent. The company released fourth quarter earnings which disclosed earnings per share of US$1.27 – up 12.4 per cent on last year but missing consensus estimates of US$1.30 per share. Revenue of US$713.3 million was up 5.4 per cent – though falling short of its estimated US$716.8 million target.

Asia:

At time of writing, the Shenzhen index was down 3.0 per cent and the Shanghai index was down 2.0 per cent.

A second vaccine developed by the Wuhan based subsidiary of Sinopharm Group is 72.5 per cent effective at preventing Covid-19. This is less effective than the company's first effort (79.3 per cent effective), but still sufficient for approval for general use.

Chinese ride sharing company Didi, already active in Auckland, is planning entry into the UK, Germany and France. The company, which has a dominant market share in China, is seeking entry into global markets before its long-awaited initial public offering. Uber slumped 2.7 per cent in pre-market trading and is now down a further 1.8 per cent on the back of the news.

Commodities:

At time of writing, gold was down 0.25 per cent to US$1,799.6 per ounce. Bitcoin was up 4.0 per cent to US$49,860, while Ethereum was up 8.1 per cent to US$1,661.1. WTI Crude oil was up 2.5 per cent to US$63.2 per barrel. US 10-year treasury yields were up 3.8 basis points to 1.387 per cent.

Australian Markets:

The ASX 200 fell 0.9 per cent yesterday, following a continued rotation out of Covid winners and into stocks with attractive fundamentals.

Nine Entertainment surged 9.7 per cent to top the market after Facebook seemingly caved to pressure. The tech giant signed a commercial deal to pay Seven West Media's content that might appear on its site. This comes despite previously shutting out all Australian news providers and readers in reaction to Australia's incoming media bargaining law. Treasurer Josh Frydenberg has noted he expects deals with Nine Entertainment and News Corp to follow.

Meanwhile, tech stocks Afterpay (-3.0 per cent), Xero (-3.2 per cent) and Nearmap (-3.3 per cent), beneficiaries of the Covid-19 driven low interest rate environment, fell as investors continued to rotate towards relatively cheaper "value" stocks.

Appen (-12.1 per cent) led the market down, tumbling after unveiling disappointing full year results, despite downgrading guidance weeks ago. Revenue was up 12 per cent, and profit was down 1 per cent to $64.4 million - with the market clearly pricing in more aggressive growth.

• 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-disclaimer