Jarden Brief: Some big tech stocks have allergic reaction to US inflation news but Tesla buoyant

Tesla cars in the Las Vegas Convention Center Loop, an underground transportation system. The company defied an inflation-induced tech downturn thanks to a car and driver software developer. Photo / Getty Images

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

International

US

Stocks moved lower this morning following a higher than expected US consumer price inflation (CPI) reading for the month of January.

The CPI headline print included a 0.5 per cent increase for the month, up on December’s reading of -0.1 per cent, leading to an annualised number of 6.4 per cent.

Increases in the price of shelter, food, and energy were the main drivers of the higher reading, while “super core” inflation, excluding those three specific items, lifted 0.2 per cent for the month.

Tech stocks with longer-dated cash flows reacted negatively to the higher reading.

At the time of writing, market laggards were led by tech companies Lumen Technologies (-5.4 per cent) and Leidos Holdings (-4.1 per cent).

Similarly, Alphabet, Meta Platforms, Microsoft and Netflix had all fallen 1.8, 0.3, 0.2 and 0.5 per cent, respectively.

Against the run of play, automobile and driver software developer Aptiv PLC made 7.5 per cent as the company announced it expects to see a significant revenue jump by almost a third and operating earnings to be more than double by 2025 from current 2022 levels as automakers, especially EV producers, invest heavily into the production of automobiles.

Tesla (+3.5 per cent) was also buoyed by this bullish statement from Aptiv.

Rest of the World

Asian indices were again mixed overnight with news from Japanese conglomerate Toshiba having published a disappointing third quarter result, featuring a record loss of 16.6bn Yen (roughly US$120 million) down from a net profit of 95 million yen in the same period in the previous year.

Adding fuel to the fire, the company cut full year operating income estimates while Chief Operating Officer Goro Yanase was forced to resign over what has been deemed as inappropriate behaviour.

Despite the plethora of negative news, Toshiba’s share price held up to just a -0.4 per cent loss.

Other news included speculation that Japan will announce the nomination of Kazuo Ueda as the new governor for the Bank of Japan.

Commodities

Oil moved downward this morning as the US Government said it would release more crude from its strategic petroleum reserve, easing supply concerns for now.

Yields were higher following the CPI announcement the with the US 10-year now trading at 3.79 per cent while gold moved lower by 0.3 per cent.

New Zealand

New Zealand equities moved sideways to remain mostly unchanged at the end of the day.

The NZX50 closed on 12,074.4 points.

Vulcan delivered close to expectations but had challenges from lower steel and other metals volumes.

Headlining the New Zealand market was Vulcan Steel (-10.6 per cent) which posted its maiden result as a member of the NZX50.

Vulcan’s first half 2023 result delivered close to expectations with ebitda of NZ$115 but earnings were driven by the performance of recently acquired Ullrich Aluminum with a poor underlying result from the core business.

The company talked to lower steel and other metals volumes (down 16 and 11 per cent, respectively) as a reason for the underwhelming core business performance.

Other notable underperformers included Napier Port (-6.8 per cent) and Scales Corporation (-4.8 per cent).

Conversely, the market was buoyed by positive moves from Serko Ltd (+2.9 per cent) and large cap Ebos Group (+2.3 per cent)

Apparel company Kathmandu Brands delivered a solid first half 2023 trading update, pushing the share price 1.9 per cent higher to NZ$1.09.

Highlights included revenue of NZ$546m up 34 per cent year-on-year, with key brands Oboz and Rip Curl posting 124 and 18 per cent revenue increases year-on-year.

Despite revenue momentum, the company experienced lower than expected operating margins. Kathmandu’s next event occurs on March 22 with the official release of its first half result.

The RBNZ’s inflation expectation survey showed inflation expectations for the year ahead up slightly to 5.11 per cent from 5.08 per cent, with expectations for five year’s ahead inflation also moving slightly upward.

Importantly, two year ahead expectations fell from 3.6 per cent to 3.3 per cent, a key indicator of business pricing intentions.

Australia

The ASX200 petered to a 0.2 per cent gain by the end of Tuesday’s trading to finish at 7,430.9 points.

Casino and resort operator Star Entertainment Group landed 13.5 per cent lower to back up Monday’s -20.8 per cent slump.

On Monday, Star reported a trading update which included a A$400-A$1.6bn non-cash provision for potential compliance and operational losses on the back of the NSW state government crackdown of the group’s Sydney casino operations.

The market seemed to dwell on this bad news during Tuesday’s trading, prompting concerns the company may need to raise equity to continue operating into 2024, putting further pressure on the share price.

Joining Star in the red was personal protective equipment manufacturer Ansell, losing 8.7 per cent after cutting its full year profit guidance as management talked to global supply chain difficulties, including up to six months of oversupply for some key customers, as reason for the downgrade.

Lithium miner Sayona Mining was the third worst underperformer, down 6.2 per cent.

Large cap building materials supplier James Hardie also had a rough day on the index, slipping 4.3 per cent amidst its third full-year 2023 earnings downgrade.

In light of the above movements, key contributions from Sims Limited (+7.1 per cent) Domain Holdings (+5.5 per cent) and Coronado Global Resources (+4.5 per cent) helped move the market to the aforementioned 0.2 per cent gain.

Coming up today

Earnings from Fletcher Building, SkyCity, and Steel & Tube.

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

The Jarden Brief is provided for general information purposes only. It reflects views and research available 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. The Jarden 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 financial advice disclosure statement is available free of charge at https://www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/.

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