Jarden Brief: US stocks surge to biggest gain in nine months

The S&P 500 surged to its biggest gain in nine months. Photo / AP

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

The NZX 50 rose 0.6 per cent on Monday's session.

The Technology sector was up 1.9 per cent, led by payments company Pushpay (+3.5 per cent). The next best performing sector was Health Care, increasing 1.4 per cent.

Yesterday was the first trading session since alert levels were raised for New Zealand on Saturday. Auckland has been placed at Alert Level 3 and the rest of the country in Alert Level 2. This did not appear to affect travel-related stocks greatly with Auckland International Airport up 0.4 per cent and Air New Zealand up 0.3 per cent yesterday.

New Zealand King Salmon rallied 3.5, recovering a portion of its losses following a post-result sell-off . NZ Herald parent NZ Media and Entertainment also performed well, up 3.6 per cent following a positive first half.

Film industry technology solutions provider Vista Group International Limited announced its 2020 full year result yesterday. They reported revenue of $88 million, down 39 per cent on last year's result and a net loss after tax of $57 million. The loss can be partially explained by $70 million in write-downs and, ex extraordinary items, operating loss came in at -$11m. Positive operating cash flow was maintained, although down 81 per cent on 2019 at $3.0 million. Vista Group maintained a market share of 51 per cent among the 20+ screens segment (excluding China) and continued to add new customers during a tough year for the film industry internationally. This relative positivity, combined with a result that may not have been as bad as expected, drove the stock price up 2.4 per cent rise yesterday.

Meanwhile, dairy stocks continued to trend down with Synlait Milk falling 3.0 per cent yesterday as the worst performer of the day while its minority owner A2 Milk dropped 2.0 per cent. Property company Investore Property rounded out the bottom performers, down 2.3 per cent.

International Markets:
US:

Stocks rallied on Wall Street, pushing the S&P 500 to its biggest gain in nine months. The 2.4% jump in the benchmark index Monday followed back-to-back weekly losses and came as investors were relieved to see long-term interest rates easing lower in the bond market. Higher interest rates can slow down economic growth and discourage borrowing.
Investors were also watching Washington as a big economic stimulus bill advanced to the Senate. The yield on the 10-year Treasury fell to 1.43% after reaching its highest level in more than a year last week. Technology stocks and smaller companies led the way higher.

The Energy and Utility sectors lead the way as both recorded gains of 3.0 per cent. The worst performing sectors, Real Estate and Health Care, both posted gains of around 1 per cent respectively.

For the second day running, American e-commerce provider ETSY was amongst the single stock leaders in Nasdaq, climbing 11.6 per cent. The company continues to trade favourably after releasing its earnings results yesterday. Nuclear power provider Energy Inc was also up 14.7 per cent to lead US equities.

A flow of capital into risky assets was a theme for the day as investors began to picture the economy post re-opening and the US Congress delivered a US$1.9 billion stimulus package for approval by the Senate. Bitcoin surged 6.6 per cent on this risk-on attitude and a recent Citigroup Inc. report, which laid out a case for the crypto currency playing a more major role in international markets. The banking group has suggested that bitcoin could become the "currency of choice" for international trade, touting its decentralised design, lack of foreign exchange exposure and traceability as advantages over the current global payments system.

Cruise Companies Royal Caribbean Cruises and Carnival Corp were among the worst performers, down 2.6 and 0.3 per cent respectively. Both stocks have experienced support with the most recent wave of vaccine optimism and may have been overbought.

Asia:

At time of writing, the Shenzhen index was up 2.4 per cent, the Shanghai index was up 1.2 per cent and the Hang Seng index was up 1.6 per cent.

The Hang Seng index, which tracks the performance of the Hong Kong stock exchange, is altering its constituency rules. The number of constituents is rising from 52 to 80 and a single stock will now represent at maximum 8 per cent of the index. The listing history required for inclusion has also been loosened. It is hoped that the changes will decrease the volatility of the index which, for this reason and others, has lagged peer index performance for decades.

Last week's trading saw an exodus of funds from safe government bonds into higher yielding assets. However, one safe-haven asset stood against the tide, with funds flowing into ETFs that tracked yuan denominated bonds. Yields have held steady while yields on US treasury bonds rose 20 basis points last week. ANZ senior strategist Xing Zhaopeng has said that China's stable policy and growth make the country's bonds less volatile compared to those of its peers.

Commodities:

At time of writing, gold was flat at US$1,734.7 per ounce. Bitcoin was up 7.6 per cent to US$49,125, while Ethereum was up 8.0 per cent to US$1,542. WTI Crude oil was flat at US$61.4 per barrel. US 10-year treasury yields were up 1 basis point to 1.426 per cent.

Australian Markets:

The S&P ASX200 gained 1.7 per cent yesterday, closing at 6,789.6 points.

The Reserve Bank of Australia announced bond purchases of AU$4 billion, which is double the current daily bond buying. Economists are now questioning whether the Bank is planning on increasing the full quantitative easing program or if this is a step to bring the existing program forward. There should be more clarity after the scheduled monthly board meeting later today.

The best performing stock was Austal with an 8.4 per cent gain at market close, after the company announced it had successfully delivered the largest high-speed ferry constructed in the Philippines, as well as securing a AU$295 million contract to build the 15th Expeditionary Fast Transport vessel for the United States Navy.

Other top market gainers were plumbing and bathroom supplier Reece Group up 7.0 per cent and dermatological pharmaceuticals producer Clinuvel Pharmaceuticals up 6.5 per cent.

Real estate was the best performing sector with a 3.2 per cent gain. This is correlating with the fastest rise in property values in almost 17 years, which suggests increased confidence due to vaccine roll outs in combination with low interest rates.

Iron ore miner Fortescue Metals was the worst performer of the day with a 5.9 per cent decline to A$22.7 since the shares traded without the right to the latest dividend pay-out. The AU$1.47 dividend represents a 6.1 per cent dividend yield, accounting for the entirety of yesterday's price movement.

• 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-disclaimer