Jarden Brief: US markets bouncing back after January dip

US markets have started to recover after struggling in January. Photo / Getty Images

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

New Zealand

The NZX 50 was well into the green yesterday, rising 1.9 per cent.

Mainfreight was the top performer, up 6.1 per cent on the back of a strong trading update for the financial year to the end of January (43 weeks). Total revenue rose 45 per cent year-on-year to $4,132.9 million and profit before tax increased 85 per cent year-on-year to $372.0 million. The full financial year 2022 results are to be released on 26 May.
Auckland International Airport gained 5.5 per cent on no apparent news. This could be in the lead up to the Government's announcement today around plans to reopen the New Zealand border.

Genesis Energy increased 4.0 per cent, further recovering from its January declines.
On the flip side, ANZ declined 1.9 per cent, NZX (operator of New Zealand's stock exchange) fell 1.7 per cent and travel management company Serko lost 1.1 per cent.
A Māori Spectrum Entity will receive an ongoing allocation of 20 per cent of future national commercial spectrum allocations, which removes a barrier that has been delaying the auction of 5G spectrum. This will be used by Vodafone, Spark and 2degrees in their mobile networks.

In macroeconomic news, the New Zealand labour market continues to tighten. The unemployment rate fell to a record low of 3.2 per cent in the December quarter. The cost of labour increased, with the Labour Cost Index up 2.6 per cent to December year-on-year. However, real wages declined considering annual headline inflation was 5.9 per cent for the same quarter.

International                                                                                         
US

Main US indices were trading higher at the time of writing, with investors seemingly happy to 'buy the dip', helping to kickstart the 2022 trading year. The S&P 500, Nasdaq, and Dow Jones Industrial Average were up 0.5, 0.2, and 0.4 per cent respectively.

Outperforming sectors included technology and real estate, which made gains of 1.9 and 1.6 per cent each.

Earnings were again the key factor, with the technology sector buoyed by an impressive performance from Alphabet (Google) as it beat earnings expectations, with sales jumping 32 per cent to US$75.3 billion in the fourth quarter, significantly higher than market consensus at US$72 billion. This led to a full year revenue figure of US$258 billion. The company also announced it would be undertaking a 20-to-one stock split. It was trading higher by 8.1 per cent at the time of writing.

Medical equipment company PerkinElmer continued a solid run (+5.6 per cent) after announcing fourth quarter earnings on Tuesday (UST) and updating first quarter earnings guidance on Wednesday.

Consumer non-cyclicals and energy were the laggard sectors of the morning's trading - they were down 0.7 and 0.5 per cent, respectively.

Stock of the payment services provider PayPal plummeted (-26.4 per cent) after the company reported both weak fourth quarter earnings and near-term guidance. The company cited the threat of sustained inflation and slower than expected user growth as reasons for reporting a headline earnings figure of US$1.11 per share, missing the expected US$1.12. More of a shock to investors was the company guiding to first quarter earnings per share of 87 cents, well below the anticipated US$1.16.

Another notable declining stock was logistics company CH Robinson Worldwide, which fell 9.6 per cent on underwhelming fourth quarter earnings.

Rest of the World

The Japanese Nikkei index jumped 1.7 per cent overnight, as one of the few Asian markets to remain open for trading throughout the Chinese New Year holiday period. There were large movements in the materials sector (+3.2 per cent) with Pacific Metals Co Ltd leading the market to close 7.7 per cent higher.

Commodities

Gold is trading higher by 0.5 per cent at US$1,810.7 per ounce. WTI crude oil slipped after yesterday's OPEC (Organisation of Petroleum Exporting Countries) meeting, where the group agreed on another gradual oil-output hike for the month of March, now priced at US$87.9 per barrel.

Yields are trading slightly lower with the US 10-year bond prices at 1.8 per cent.

Cryptocurrencies reacted in part to news that FTX, a crypto exchange owned by American billionaire Sam Bankman-Fried, will be acquiring rival Japanese exchange Liquid, with the deal set to be closed by March this year. Both the main currencies were lower this morning, with Bitcoin and Ethereum down 3.7 and 3.3 per cent each to finish at $US37,449.2 and US$2,677.3.

Australia

The ASX 200 rallied 1.2 per cent yesterday, driven by gains in the energy (+2.9 per cent) and materials (+2.1 per cent) sectors.

Queensland was on track to record its highest ever power demand due to extreme heat, which caused the Australian energy market operator to prepare for a power shortfall.
The only two sectors underperforming on the day were utilities (-0.5 per cent) and information technology (-0.1 per cent).

The top mover on Wednesday was iron ore miner and mineral explorer Champion Iron, rising 6.0 per cent.

Next in line was engineering services provider Worley, up 5.0 per cent.

Computershare also performed well, increasing 4.8 per cent. The stock transfer company continued this week's upward rally.

Leading the index lower was Credit Corp Group, declining 6.0 per cent. This was despite the debt buyer releasing its first half 2022 results on Tuesday, reporting an 8.0 per cent increase in net profit after tax to A$45.7 million and 9.0 per cent growth in the consumer loan book to A$200 million.

Amcor also underperformed, trading 3.4 per cent lower. The packaging producer also reported its half year results for the financial year 2022, to which the market seemed to react negatively.

Rounding out the bottom movers was Codan Limited, down 3.3 per cent. The communications technology supplier faced a volatile past week after its trading update to the market on 25 January 2022.

Yesterday, the Governor of the RBA (Reserve Bank of Australia), Phil Lowe, said in a speech at the National Press Club that interest rate hikes would be plausible towards the end of 2022. He emphasised that inflation in Australia was not as high as in the US, which possibly indicates that not as many rate hikes may be required.

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

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