Jarden Brief: US market in the red this morning

It's been a tough day on the US market. Photo / Getty Images

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

New Zealand:

New Zealand equities tumbled amidst fresh concerns of another Covid-19 outbreak, prompting the New Zealand government to put the whole country into an initial lockdown for at least three days, with Auckland and the Coromandel Peninsula for seven days.

The NZX 50 finished the day down 0.7 per cent on 12,635.3 points. Equities more exposed to adverse effects from a New Zealand lockdown traded down sharply following several Covid-19 announcements before market close.

Markets were weighed down by both the energy and real estate sectors which fell 2.3 and 2.2 per cent, respectively.

The a2 Milk company finished Tuesday's session as the largest underperformer, down 4.7 per cent. The milk processor and distributor shaved off some of yesterday's gains after growing market conversation around rumours, which have been reported by Australian media, that global giant Nestlé is considering a potential takeover.

Agribusiness Scales Corp was also subject to negative flows late in the day, finishing Tuesday down 4.6 per cent.

Sector gains included healthcare and technology, each leading the way with 1.8 and 0.6 per cent increases against the run of the tide late in the day.

Overall index movements were well supported by the single stock winner – Fisher & Paykel Healthcare which traded up 4.6 per cent. Fisher & Paykel likely appealed to investors as a potential Covid-19 play to go with near term uncertainty.

Similarly, Fonterra Shareholders' Funds traded favourably, finishing Tuesday up 1.9 per cent.

All eyes will be on Wednesday's Reserve Bank of New Zealand (RBNZ) policy announcement. The market had priced in a raise in the Official Cash Rate (OCR) to at least 0.50 per cent before Tuesday's developments. With a potential Covid-19 outbreak on the horizon, many are expecting a more cautious approach form the RBNZ Governor Adrian Orr.

International Markets:
US:

This morning the US indices were facing selloffs across the board. The S&P 500 was trading 1.0 per cent lower, the NASDAQ decreased 1.2 per cent, and the DJIA declined by 1.1 per cent.

The health sector was the only sector posting gains, increasing 0.7 per cent, while all other sectors underperformed. The biggest laggards were consumer discretionary (-2.6 per cent) as the Commerce Department reported lower US retail sales for the month of July, down 1.1 per cent compared to June, which saw a revised 0.7 per cent uptake. The slip in retail sales was worse than analysts' projections of a 0.3 per cent decrease, driven by auto dealerships that fell a further 3.9 per cent.

The top gainer, at the time of writing, was Moderna rising 5.2 per cent. With an uptake in active cases and President Biden backing booster shots eight months after the second dose of the Covid-19 vaccine, all vaccine producers were posting gains. Pfizer was up 1.6 per cent, BioNTech increased 4.7 per cent, and Johnson & Johnson rose 0.3 per cent.

Food manufacturer and processor Kroger also performed well, rising 4.5 per cent, hitting a new 52-week high. Rounding out the leader board was biotech company Vertex Pharmaceuticals, increasing by 3.7 per cent.

DXC Technology was the worst performer this morning. The digital IT services provider fell 10.1 per cent. Mining company Freeport-McMoRan also underperformed, decreasing 6.5 per cent, followed by Under Armour, down 6.2 per cent. The performance apparel company may get more competition as Allbirds launches an activewear line ahead of its planned IPO, and Levi was to buy apparel Brand Yoga earlier this month, which would provide a steppingstone into the activewear segment.

Rest of the World Markets:

Asian stocks also all underperformed overnight. The Shenzhen dropped 2.3 per cent, the Shanghai Composite was down 2.0 per cent, The Hang Seng traded 1.7 per cent lower, and the Nikkei decreased 0.4 per cent.

Yesterday in China, the State Administration for Market Regulation published draft regulations which were aimed at stopping unfair competition on the internet. This caused the stock prices of Chinese tech giants like Tencent and Alibaba to drop. The rules are meant to restrict companies in the way they can use data, as well as eliminating the possibility to create fake product reviews.

Tencent's (-13.2 per cent) share price dropped further after the company reported its second quarter results. The online music entertainment platform missed the revenue expectations of 8.13 billion Chinese yuan as it reported revenue of 8.01 billion Chinese yuan.

Commodities:

Gold traded 0.2 per cent lower to US$1,786.20 per ounce

A dampened economic outlook regarding global fuel demand due to the continued impact of Covid-19 led the oil price to decrease further, down 0.9 per cent to US$66.72 per barrel.

Cryptocurrencies were trading in the red, with Bitcoin and Ethereum seeing slight decreases, down 0.6 and 0.9 per cent, respectively.

The US 10-year treasury rate edged slightly lower, yielding 1.253 per cent.

Australian Markets:

The ASX 200 fell 0.9 per cent yesterday. The path into the red was led by the financials and materials sectors, falling 1.7 and 1.3 per cent, respectively.

In contrast, healthcare and telecommunications services rose 0.4 and 0.2 per cent, respectively.

It was a day of earnings announcements for the top and bottom performers.
The top performer of yesterday's session was advertising agency Domain Holdings Australia which rose 4.7 per cent. In its full-year 2021 financial results release net profit rose 66 per cent (to AUS$37.9 million) on the previous year and the unique digital audience record of more than 9 million.

Steadfast Group rose 3.8 per cent. The insurance broker's full-year 2021 results had underlying net profit after tax up more than 20 per cent (to AUS$130 million).

Magellan Financial Group slumped 10.2 per cent. In the full year 2021 results release yesterday, a 33 per cent fall in net profit was announced (to AUS$265.2 million). Investors appear to have responded unfavourably to this result, putting downward pressure on the stock price.

Breville Group declined by 9.0 per cent. It also announced a full-year 2021 results release. Gross profit rose 29 per cent (to AUS$413.7 million) and net profit after tax rose 42.3 per cent (to AUS$91 million). Despite beating earnings guidance, Covid-19 and other supply chain hiccups were cited by the company such as transport delays caused by the Suez Canal issue and the Yantian port in China being partially shutdown.

• 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>