Jarden Brief: General Electric to split into three separate companies

General Electric is changing its corporate structure. Photo / Getty Images

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

New Zealand:

New Zealand equities traded in the green on Tuesday as the NZX 50 moved 0.4 per cent, to 13,090.6 points.

Healthcare and non-cyclicals pushed the index higher, each with 1.4 and 0.9 per cent increases, respectively.

Casino and hotel operator Skycity led the market with a gain of 3.2 per cent, potentially on the back of increased optimism that Auckland may move to the new Covid-19 traffic light system by November 29. Auckland is home to one of the company's casinos, and its largest revenue generator. Freight and logistics company Mainfreight was up 2.3 per cent to $90. Similarly, Fisher and Paykel rose 2.2 per cent to offset some of yesterday's losses, rounding out the single stock winner's podium.

Financials and utilities were host to Tuesday's largest sector losses, down 1.6 and 0.6 per cent.

TV box set and broadband provider Sky TV dropped 4.3 per cent. Companies seeing declines on Tuesday included dairy company, and supplier to a2 Milk, Synlait Milk (-2.6 per cent), and Napier Port (-2.3 per cent).

In other news, outdoor apparel company Kathmandu released its first quarter trading update for 2022, with the company's EBITDA $35m below last year, coinciding with recent lockdown conditions across all key markets in Auckland, New South Wales, and Victoria. The company fell 0.6 per cent, finishing the day at $1.56 per share.

International Markets:
US:

At the time of writing, the major US indices were generally down. The S&P 500 was down 0.5 per cent, the NASDAQ was down 0.6 per cent, and the Dow Jones close to flat.

Utilities (up 0.5 per cent) and real estate (up 0.3 per cent) were the sectors most responsible for lifting the S&P 500 during the session's trading.

The sectors lagging the index were financials (down 1.0 per cent) and consumer discretionary (down 0.8 per cent.)

The best performing equities on the day included homebuilding company D.R. Horton Inc (+4.6 per cent), multinational conglomerate General Electric (+3.5 per cent), and flavour, fragrance and cosmetic manufacturer International Flavors & Fragrances Inc (+3.1 per cent).

D.R. Horton released a fourth quarter result that appeared to impress the market. The company reported adjusted earnings of US$3.70 per share for the quarter, surpassing the Zacks Consensus Estimate of US$3.40 by 8.8 per cent and increasing 65 per cent from the year-ago period. Total revenues (homebuilding, forestar, rental and financial services) came in at US$8.11 billion, up 26.7 per cent year on year. Also, the reported figure surpassed the consensus mark of US$7.89 billion.

General Electric has announced that it will split into three stand-alone companies focused on healthcare, energy and aviation. The transformation of the conglomerate comes after years of shedding assets to ease its debt load and as it attempts to redefine itself in a business landscape dominated by tech titans. GE Healthcare is slated to be spun off in early 2023, the company announced Tuesday, while the renewables and power units will be formed into a new energy business in early 2024. The remaining business, GE, will focus on aviation and be led by chairman and chief executive Larry Culp.

International Flavors and Fragrances also reported a bumper third quarter. The company reported earnings per share of 76 cents compared with 75 cents for the same quarter last year. International Flavors' net sales came in at US$3,071 million in the September-end quarter, reflecting a year-on-year surge of 142 per cent. This was driven by the additional sales related to the merger with DuPont de Nemours Inc.'s DD Nutrition & Biosciences business.

The largest decliners on the day include payments solutions provider PayPal Holdings Inc (down 11.2 per cent), followed by energy industry servicer TechnipFMC PLC (down 3.7 per cent), and single-use medical device manufacturer Teleflex Inc (down 3.2 per cent).
Paypal fell despite reporting non-GAAP earnings of US$1.11 per share in third-quarter 2021, which surpassed the Zacks Consensus Estimate by 3.7 per cent. The fall was driven by a lowering of target prices from three research institutions – Citigroup, JP Morgan and Susquehanna.

Rest of the World Markets

The popular Asian indices were generally up at time of writing. The Shanghai index (China) was up 0.2 per cent; the Shenzhen index (China) was up 0.8 per cent; the Nikkei 225 (Japan) was down 0.8 per cent; and the Hang Seng (Hong Kong) index was up 0.2 per cent.

Commodities:

It was a relatively quiet session for precious metals. Gold was trading at US$1,828.72 per ounce (up 0.2 per cent); while silver was trading at US$24.2 per ounce (down 1.0 per cent). For the industrial metals, the closest dated iron ore future was trading at US$94.36 per MT (no change); the closest dated copper future was trading at US$9647.44 per KG (down 0.7 per cent). The closest dated WTI crude oil future was trading at US$83.69 per MT (up 2.2 per cent).

It has been a relatively quiet session for crypto with Bitcoin trading at US$66765.56 (up 1.0 per cent) and Ethereum trading at US$4768.19 (down 0.1 per cent). The US 10-year treasury bond yield was trading at 1.4967 per cent (down 0.0 basis points).

Australian Markets:

The ASX 200 fell 0.2 per cent yesterday.

Energy and financials both declined 1.0 per cent.

On the flipside, basic materials rose 0.8 per cent and healthcare increased 0.7 per cent.
Chalice Mining surged 28.5 per cent after it released a maiden mineral resource estimate for the Gonneville deposit in Western Australia. According to the company, the 300-million-tonne resource includes the largest nickel sulphide discovery globally in more than 20 years.

Lynas Rare Earths increased 7.6 per cent. While there was no news from the company, the Australian Government released its Future Fuels Strategy yesterday. This Strategy, among other things, is expected to boost Australia's uptake of electric vehicles. Rare earth elements are a critical component in electric vehicles and as such, Lynas Rare Earths was seen as a beneficiary of this announcement.

Pointsbet Holdings gained 6.3 per cent. It was announced that a subsidiary of the company has been recommended, along with eight other operators, for a licence to operate mobile sports betting in New York by the New York State Gaming Commission. While official procedures are yet to come, Pointsbet said this was a major milestone.
Inghams Group fell 4.5 per cent. The poultry producer declined after Aware Super ceased to be a substantial shareholder.

CSR declined 4.1 per cent, going ex-dividend yesterday.

Finally, AGL Energy fell 2.9 per cent.

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Disclaimer: This 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. This 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-disclaimera>