Jarden Brief: NZ Mortgage borrowings hit record high

The housing market has been simmering away all year. Photo / File

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

New Zealand

On Thursday, the NZX50 rose 0.6 per cent to 12,715.20 points.
Energy (+3.5 per cent) and consumer non-cyclicals (+1.8 per cent) made the biggest gains, while real estate and Financials (both -0.4 per cent) underperformed.

Z Energy (+3.5 per cent to $2.63) was the top performer of the day. The fuel distributor will release its FY21 results next week Thursday at 8.30am. Also in the green were health care giant EBOS Group (+3.1 per cent to $29.95) and film software provider Vista Group International (+3.0 per cent to $2.37).

The biggest losses were incurred by Tourism Holdings (-2.6 per cent to $2.63) and Mercury NZ (-2.2 per cent to $6.75). Retirement village operator Summerset Group Holdings (-1.94 per cent to $12.15) corrected some gains from Wednesday, which were made on the back of its annual shareholder meeting. The company had announced that consent should be through soon to start the build of its first Australian village. Pre-sales are set to take place in the second half of this year and the first residents are supposed to move in early 2022.

Infratil (+0.7 per cent to $7.05), an NZ-based infrastructure investment company, announced yesterday that it had agreed to acquire between 50.1 and 60 per cent of Pacific Radiology Group from existing doctor shareholders. The deal with the diagnostic imaging service provider is worth $350 million. Infratil is hoping to create synergies with its acquisition from last year, Qscan Group, an Australian diagnostic imaging business. The deal is said to be completed by 31 May.

Yesterday, the Reserve Bank of New Zealand announced that mortgage borrowings had hit a new record, worth $10.49 billion for the month of March. First home buyers were also borrowing at a record high of $1.78 billion and were capturing 16.9 per cent of the market. Investors were borrowing $2.33 billion, which is close to the record high of $2.50 billion set in May 2016. From next month onwards, the new 40 per cent deposit limit will take effect and it will be interesting to see how the market will react, as it is a 10 per cent increase from the current rate.

INTERNATIONAL
US Markets

At the time of writing the US markets had turned green. The S&P 500 was up 0.5 per cent, the Nasdaq had risen 0.1 per cent and the Dow Jones Industrial Average was up 0.5 per cent.

The top-performing sectors of the S&P500 were Communication Services and Financials which rose a strong 2.6 and 1.5 per cent, respectively.

The best performing stock was Dish Network, up 8.1 per cent, reaching a 52-week high. The television streaming company has their results release yesterday. Revenue jumped 39 per cent year-on-year. While subscriber numbers declined, rising net profit saw investors respond favourably to the results release.

Another outperformer was Facebook, which surged after an earnings announcement, up 7.2 per cent. Facebook Q2 results release happened yesterday. Facebook exceeded Q1 earnings and revenue with earnings per share at US$3.30, well exceeding forecasts of US$2.37. Revenue of US$26.17 was reported for the quarter, a significant 48 per cent improvement on the same quarter, a year prior. This strong result is attributed to selling more advertisements at a higher cost, with a 30 per cent increase in year-on-year price paid per advertisement and a 12 per cent increase in the number of advertisements. Facebook's average revenue per user is US$9.27.

The sectors underperforming the most at the time of writing were Healthcare and Technology, the only two sectors to decline, falling a respective 0.7 and 0.2 per cent.
Ebay was down 10.2 per cent, at the time of writing, after disappointing current quarter guidance despite revenue for Q2 2021 being up 42 per cent from last year. PTC, a global software and services company, was another underperformer, down 9.8 per cent.

Apple also released its Q2 2021 results yesterday. Sales rose 54 per cent on last year and Apple has authorised US$90 billion in share buybacks. Apple reported double-digit growth in each of its product categories for the second quarter in a row. Apple's share price is currently 0.6 per cent higher.

Rest of world:

Asian indices were in the green again. The Shanghai Composite rose 0.5 per cent, the Hang Seng was up 0.8 per cent and the Nikkei returned a gain of 0.2 per cent. These come as the Fed has maintained its current level of monetary stimulus in keeping the US interest rate near 0 per cent.

Commodities:

Amongst the commonly tracked commodities, gold was down 0.3 per cent to US$1,768.70 per ounce.

Cryptocurrencies lost some gains made earlier in the week with Bitcoin down 4.0 per cent and Ethereum declining 0.7 per cent. Dogecoin, which was created as a spoof of cryptocurrency mania, has been gaining traction on social media in recent weeks which is driving the price up. Its price has increased by more than 4x in a month, recently reaching a value of US$0.30 per coin.

The US-10 year bond currently yields 1.645 per cent.

Lastly, the oil price rose again, up 1.0 per cent, with WTI Crude Oil trading at US$64.85.

Australia

Australian equities traded up as the S&P/ASX 200 finished the day at 7082.3 points, a gain of 0.3 per cent.

Outperforming sectors included Industrials and Energy which made handsome gains of 1.3 and 0.8 per cent respectively.

Sector gains were buoyed by another impressive performance from two materials-based companies. Nickel Mines finished on top jumping 7.9 per cent following its third-quarter production statistics and a series of broker upgrades. Much the same for Ramelius Resources, moving up 6.8 per cent as investors reacted to a jump in both actual and expected gold production.

In contrast, downward pressure on indices was drawn from sector losses from Consumer non-Cyclicals (down 1.1 per cent) and Academic & Educational Services (down 0.9 per cent).

The day's underperforming stocks consisted of tech company Nuix Ltd and household supermarket brand Woolworths Ltd, which fell 5.6 and 3.9 per cent respectively.
Woolworths slumped after the release of its Q3 earnings. Highlights include Q3 sales being just below market consensus; management adverting a reversion toward pre-covid shopping habits; and Q4 earnings could not be confidently forecast. The reversion in shopping trends is most likely to benefit supermarket rival Coles as shoppers are now likely to make more trips at a smaller basket size. These factors led to Woolworths trading down 3.9 per cent to AU$39.8. Cole's gained 3.4 per cent to close at AU$16.4.

Coming up today:

Investors can expect personal income and spending numbers from the US which could give insight into consumer confidence and the state of the post-covid economy. China will release manufacturing and non-manufacturing PMI numbers.

Closer to home, the ANZ NZ consumer confidence report comes out today. The Australian companies that are releasing quarterly reports include Origin Energy, Beech energy and Cimic.

• 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>