Jarden Brief: US market decline continues

The US market has had a rough start to 2022. Photo / Getty Images

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

New Zealand

The S&P/NZX 50 continued its poor start to the week with the index finishing down 0.5 per cent on Tuesday, at 12,128.2 points.

Milk products distributer the a2 Milk Company rose 6.2 per cent, following reports in The Australian that the company could be a potential takeover target for a Canadian Dairy company Saputo. A2 was trading at a market capitalisation of $4.3 billion on Tuesday's close.

Electricity company Contact Energy (+3.3 per cent) and retirement operator Oceania Healthcare (+2.6 per cent) made up the remainder of the winner's podium. Yesterday, Contact published its monthly operating report for December 2021.

In contrast, film technology producer Vista Group plunged 6.5 per cent to lead the underperformers. The company's share price was hindered after an announcement on Friday that it would be expanding with Odean Cinemas into Spain and Portugal. Other notable decliners on Tuesday were electricity technology company Serko (-4.9 per cent) and Synlait Milk (-4.7 per cent). Synlait is an a2 Milk supplier and may have been impacted by yesterday's media reports around a2. Also, the company's director of strategy and business transformation, Chris France, announced he would be resigning.

International                                                                                         
US

The major US indices continued their decline ahead of the Federal Open Market Committee meeting. The S&P 500 declined 1.8 per cent, the Dow Jones Industrial Average was down 1.0 per cent, and the NASDAQ dropped a further 2.4 per cent.

Energy was the only sector in the green at the time of writing, up 2.2 per cent. All other sectors underperformed, with technology and consumer discretionary booking the biggest losses, declining 2.6 and 2.2 per cent, respectively.

The best performer on the S&P 500 this morning was American Express, rising 7.4 per cent. The integrated payment provider reported its fourth quarter earnings results before market open, beating analysts' expectations. The results showed earnings per share of US$2.18 on US$12.15 billion in revenue versus expectations of US$1.87 earnings per share on US$11.5 billion in revenue. The company expects revenue growth of 18 to 20 per cent in 2022.

Energy holding company APA Corporation also performed well, rising 6.6 per cent.
Rounding out the leader board was energy company Occidental Petroleum, up 5.4 per cent, after Morgan Stanley maintained a Buy rating on the stock.

On the other hand, human capital management software provider Paycom Software was the biggest decliner at the time of writing, decreasing 7.1 per cent. The stock had a strong pre-market trading rally but then reverted and declined more than it gained in that rally.

Next in line was programmable devices developer Xilinx dropping 7.0 per cent after a good performance in the previous session.

Joining the bottom movers was General Electric, decreasing 6.8 per cent, after releasing its fourth quarter 2021 earnings results before market open. The industrial conglomerate reported 92 cents in adjusted earnings per share on US$20.3 billion in revenue, which was below analysts' expectations of 85 cents on US21.53 billion of revenue.

Rest of the World

The Asian markets also underperformed overnight. The Shanghai Composite dropped 2.6 per cent, the Nikkei, and the Hang Seng both declined 1.7 per cent, and the Shenzhen was down 2.8 per cent.

Yesterday, Singapore's central bank tightened monetary policy in its first out-of-cycle move in seven years. The decision was made on the back of global supply constraints and inflationary pressures.

South Korea's GDP from 2021 shows the fastest growth in 11 years, as exports and construction activity increased.

Commodities

Gold continued to benefit from the equity selloff, rising 0.4 per cent to US$1,849.30 per ounce.

Oil also performed well, increasing 2.1 per cent to US$85.09 per barrel.

Cryptocurrencies were a mixed bag this morning, although Bitcoin and Ethereum performed well, trading 1.9 and 1.5 per cent higher, respectively.

The US 10-year treasury rate was yielding 1.762 per cent, at the time of writing.

Australia

The ASX 200 fell 2.5 per cent on Tuesday to another 100-day low with the index losing 6.0 per cent in the past five days. All 11 sectors declined across the previous week.
Lithium miner Liontown Resources and gold miner Chalice Mining each declined 9.9 and 9.8 per cent.

Codan increased 16.8 per cent. The manufacturer and supplier of mining technology provided a half year trading update, which was well received by the market. It detailed first half financial year 2022 sales of A$257 million, an increase of 32 per cent on the same period last year. Net profit after tax is expected to rise 21 per cent to A$50 million.

Despite global shortages of electrical components and supply chain problems, supply to customers was maintained and inventory holdings were increased.

In macroeconomic news, the December CPI for Australia had consumer prices rising 3.5 per cent year on year (1.3 per cent quarter on quarter). This annual inflation figure exceeded an expected 3.2 per cent and the September annual rate of 3.0 per cent. The greatest price rises were new dwelling purchases by owner-occupiers (+4.2 per cent) and automotive fuel (+6.6 per cent).

The Australian market is closed today for Australia Day.

• For more information on the latest market moves, get in touch with Jarden.

Disclaimer: The 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. The 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-disclaimer