Jarden Brief: Why NZX surged amid the lockdown

A string of good financial results boosted the market. Photo / File

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

New Zealand:

The NZX 50 surged forward yesterday with the index making a gain of 1.9 per cent to finish at 12,957.0 points.

Markets reacted to Thursday's public announcement of 11 new Covid-19 cases in the community, potentially less than what investors had been expecting.

Outperforming sectors included energy and technology which made gains of 3.1 and 3.0 per cent respectively.

The overall index gain was buoyed by impressive performances from many of the large cap NZX stocks. Chorus shares skyrocketed by 12.4 per cent to finish as the days single stock winner. Chorus traded favourably on the back of the Commerce Commission release valuing the companies regulated asset base (RAB) at 5.4bn, a modest reduction from the first draft and likely higher than investor expectations. Investors may have appreciated some incremental certainty around the relatively opaque ongoing regulatory process.

Joining Chorus was agricultural products manufacturer Skellerup Holdings. The company traded up 4.8 per cent after producing a record FY21 NPAT of $40.2m, up six per cent versus consensus forecasts.

Some of the other larger cap stock movers included Pushpay (+4.4 per cent) Mainfreight (+4.0 per cent) Infratil (+4.0 per cent) and Restaurant Brands (+4.0 per cent)
On the other hand, markets were weighed down by the financials sector, which lost 0.2 per cent

Film software company Vista Group underperformed, slumping to a 2.3 per cent loss. Similarly, Skycity Entertainment Group lost 1.3 per cent. Skycity staff and facilities have been linked to the early spread of the current delta strain of Covid-19 in Auckland, creating uncertainty around operations in the short term.

International Markets:
US:

The major US indices traded slightly lower this morning. The S&P 500 decreased 0.1 per cent, the DJIA declined 0.5 per cent, and the NASDAQ was down 0.1 per cent.

Energy and materials were dragging the markets down, falling 3.9 and 1.4 per cent, respectively. Technology and consumer staples fared better, increasing 0.5 and 0.4 per cent, respectively.

Synopsis was the best performing stock on the S&P 500, at the time of writing. The software provider hit a new 52-week high, rising 8.5 per cent. Next in line was Netflix rising 4.1 per cent, followed by networking hardware company Cisco, up 3.5 per cent.

This morning, Illumina was the biggest loser, falling 9.2 per cent. The biotech firm completed a US$8.0 billion purchase of cancer-screening company GRAIL earlier this year and was sued by the Federal Trade Commission, which argued that it would reduce innovation for test that detect cancer early. The trial is set to start next week. The deal is also being investigated by the European Commission for potentially violating its anti-competition rules.

The oil and gas explorer, Occidental Petroleum, also underperformed, decreasing 6.6 per cent. Rounding out the top decliners was energy technology company Baker Hughes, down 6.1 per cent.

Rest of the World Markets:

Asian markets were mainly underperforming overnight. The Nikkei decreased 1.1 per cent, the Shanghai composite was down 0.6 per cent, and the Hang Seng traded 2.1 per cent lower. Solely the Shenzhen posted some gains, increasing 0.2 per cent.

Toyota (-4.4 per cent) said it will cut its September output by 40.0 per cent, which is about 360,000 cars, due to the global chip shortage. However, the company maintained its annual sales and production targets. The world's largest automaker by sales volume said it would produce 9.3 million vehicles for the year ending in March and sell 8.7 million cars in the same period.

Commodities:

Gold decreased slightly, by 0.2 per cent to US$1,781.40 per ounce.

Oil continued its downward trend, decreasing a further 3.1 per cent to US$63.43 per barrel. The lowest level it has traded at since May 2021.

Cryptocurrencies were all in the green, with Bitcoin increasing 2.2 per cent end Ethereum nudging slightly higher, by 0.9 per cent. Japanese cryptocurrency exchange Liquid reported on Thursday that it has been hit by a cyberattack. The hackers are said to have gotten away with US$97 million worth of digital coins with a large proportion being converted to Ethereum through decentralised exchanges, which will prevent those assets to be frozen.

The US 10-year treasury rate continued to decrease and was yielding 1.238 per cent, at the time of writing.

Australian Markets:

The ASX 200 dropped 0.5 per cent yesterday.

Australia's unemployment data was also released on Thursday. Unemployment dropped by 0.3 percentage points to 4.6 per cent in July. Hours worked fell by 0.2 per cent, largely due to Covid-19 enforced lockdowns in many states. The fall in unemployment is not necessarily a positive sign, with many giving up the search to find work and therefore no longer being classified as unemployed. This was evidenced by the labour force falling by 64,000.

Materials and energy were the worst performing sectors, down 3.7 and 2.7 per cent, respectively. Healthcare rose 2.0 per cent and consumer discretionary rose 1.5 per cent.
Full year result releases continued yesterday.

Print-on-demand marketplace operator Redbubble surged 19.0 per cent. In the full year 2021 results, Redbubble reported a 58 per cent increase in revenue (to AUS$553 million). A AUS$9 million 2020 loss was turned to a AUS$31 million profit in financial year 2021.

Mining contractor NRW Holdings rose 17.4 per cent. NRW reported a 11.5 per cent increase in revenue (to AUS$2.3 billion) and a 6.7 per cent EBITDA increase (to AUS$266.7 million). The forecasting of future financial year 2022 growth by management and a strong set of 2021 results saw investors respond favourably to the release.

Codan fell 8.3 per cent. While total revenue rose 25.6 per cent (to AUS$437 million) and EBITDA rose 34.8 per cent (to AUS$139.8 million) in a solid set of results, the announced upcoming retirement ifits managing director, within the next 9-12 months, saw the stock decline.

SIMS fell 7.6 per cent after a 5.8 per cent decline on Wednesday. The full year 2021 results were released this week for SIMS.

• 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>