Jarden Brief: FTX scandal and British inflation whopper have contagious effects

The collapse of Sam Bankman-Fried's FTX has already affected Tom Brady and the Miami Heat. Now it seems to be contaminating the broader crypto scene - but a rival CEO says everything will be fine. Photo / AP, Getty, Herald montage

International

US

Markets were mixed overnight, with the Dow Jones Industrial Index up 0.2 per cent but the S&P 500 down 0.6 per cent.

Futures had previously been in negative territory following reports of a missile explosion in Poland, which the market feared could potentially cause a geopolitical crisis and escalate the war in Ukraine.

These fears were seemingly alleviated following an announcement from Nato’s secretary-general that the explosion in Poland was likely caused by Ukrainian air defences – but said that Ukraine was not to blame given this is a result of the ongoing war.

US 10-year treasury yields rose by 60 basis points after a media interview with San Francisco Fed President Mary Daly, in which she stated the right range for the overnight lending rate was probably from 4.75 per cent to 5.25 per cent.

She further noted that while there would be a point where the Federal Reserve could evaluate the impact of its rate hikes, “pausing [rate hikes] is off the table right now”.

Elon Musk has said in a court hearing that he does not want to be the CEO of any company, and that his current position at Twitter is only temporary.

The Tesla owner has recently been under fire for a controversial takeover and overhaul of social media platform Twitter, in which he has changed core policies at the company and laid off thousands of staff.

Musk appeared in court due to a lawsuit from shareholder Richard J Tornetta, on the grounds that Tesla’s CEO compensation was excessive.

Rest of World

European markets fell slightly following UK reporting an October inflation print of 11.1 per cent, a 41-year record high and above prior expectations of 10.7 per cent.

Despite the UK government putting in controls for household utilities bills through its Energy Price Guarantee scheme, the largest contributor to the high print came from energy prices. Food and non-alcohol beverages also saw significant inflation in line with the rest of the world, up 16.4 per cent year on year.

Commodities

Contagion effects of the FTX collapse continued to drive declines in cryptocurrencies, with Bitcoin down a further 2.5 per cent to US$16,464 per coin.

Binance CEO Changpeng Zhao, who had previously looked at bailing out FTX but pulled out, had said that he is establishing a recovery fund to help people in the industry – saying the sector “will be fine”.

Oil fell 1.5 per cent after Russian oil shipments via the Druzhba pipeline resumed flow, with Brent Crude Oil falling to US$92.50 a barrel.

Australia

The Australian market closed down 0.3 per cent yesterday, with fears of potential geopolitical escalations in Europe weighing down the market.

Aristocrat shares dropped 5.0 per cent following its full year result, which appeared to have been received poorly by the market.

Revenue and profit both came in around market expectations, and North American gaming revenues were a slight beat against expectations, moderating growth in digital earnings, on top of slightly weak Australia and New Zealand margins, weighing on market sentiment.

On the flip side, fertiliser and agri-chemicals producer Nufarm gained 8.9 per cent as the best performer of the ASX 200 after reporting its earnings.

While profit and dividend were mostly in line with market, investors reacted positively to more optimistic outlook statements – which presented the company as on track to meet its five-year targets.

New housing data from CoreLogic saw a pick up in new listings across Australia, with listings for the week to 13 November up 2.2 per cent on the prior week. This increase was driven by a 7.5 per cent uplift in Melbourne, with Sydney listings still declining.

New Zealand

The NZX closed the day flat, despite a relatively busy day of announcements from a number of companies.

KMD Brands surged after releasing a trading update for the first quarter of its financial year, recording total group sales improvement of 61.8 per cent against the first quarter of financial year 2022, and 17.5 per cent above the pre-Covid comparable period.

The parent company of Kathmandu also noted a $30 million improvement in operating profit, with gross margin and profitability holding up well.

Contact Energy held its annual shareholders meeting yesterday, while also releasing its updated operational statistics for October.

The energy generator and retailer saw its monthly retail sales volumes decrease slightly compared to September, but improve against October 2021.

NZ Herald owner NZME and healthcare conglomerate EBOS Group also held investor days but did not provide trading updates.

Coming up today

A brief respite in New Zealand’s reporting season today, with no local companies set to report earnings or hold events.

In Australia, travel agency Webjet will be reporting its first half earnings – which may be watched by the market in light of the recent trend of airline earnings upgrades around the world, as well as Flight Centre’s recent update on Monday.

Healthcare companies Resmed and Sonic Healthcare are also due to hold annual general meetings later in the day.

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

All market pricing and announcements are sourced from Refinitiv, NZX and ASX.

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