Australian new car sales have accelerated to three consecutive months of growth. January sales are up 11 per cent on January 2020. Photo / file
Keeping you up to date with the latest market moves, in association with Investment firm Jarden
New Zealand
The S&P NZ50 finished the day up 0.4 per cent.
The best performing sector on the day was Materials, up 2.4 per cent, followed by Health Care, which advanced 1.4 per cent.
The best performing company on the day was satellite television provider Sky Network Television, which gained 11.9 per cent. Sky announced that it would be increasing earnings and profit guidance. Financial year 2021 revenue is now expected to be between $695-$715 million, where previously the expected range was $680-$710m.
Net profit after tax is now expected to be between $37.5 - $45.0m (previously $20 - $30m). While some one-off cost savings are partly responsible, ongoing cost control and increased streaming and satellite revenue will continue to serve Sky well going forward.
Investors should consider whether Sky can retain enough flagship sporting content to remain relevant and whether they can capture enough of the streaming market to contribute meaningfully to company growth.
Construction company, Fletcher Building, (up 2.4 per cent) and retirement village operator, Summerset Group, (up 2.2 per cent), rounded out the best performers on the day.
Dairy company, Fonterra, has lifted its farmgate milk price forecast from $6.70 - $7.30 per kilogram of milk solids to $6.90 - $7.50 per kilogram of milk solids. This means that farmers, who are paid based on the midpoint, will receive $7.20 per kg for their output.
This is good news for New Zealand farmers and has been driven by a run of positive Global Dairy Trade Auction performances. Yesterday's auction saw the GDT index (a composite of the main dairy commodities) rise 1.8 per cent.
Retailer generator, Contact Energy, and mobile network operator, Spark New Zealand, were the joint worst performers, down 1.9 per cent apiece. Fast food franchisor and operator, Restaurant Brands, which retreated 1.8 per cent, was not far behind.
INTERNATIONAL
US Markets:
At time of writing, markets were muted overnight with a mixed performance from European bourses and slight gains in the US markets. The S&P 500 was up 0.4 per cent, the DJIA was flat and the NASDAQ was up 0.5 per cent.
Despite a recovery in Reddit stocks, GameStop (+11.4 per cent) and AMC Entertainment (+18.9 per cent), the market seemed to remain calm with the VIX, commonly acknowledged as the 'fear meter' of Wall Street, dropping 2.1 points to 23.42.
Google rose by 8.5 per cent after posting revenue up 23 per cent to US$56.90 billion and earnings of US$22.30 per share – US$6.40 ahead of Wall Street consensus. Advertising revenues continued to recover, up 22 per cent to US$46.20b after a slump in the second quarter of the year.
Meanwhile, Google also revealed the individual performance of its cloud business for the first time – reporting a US$5.6b loss during the full year.
Meanwhile, Amazon stock was flat after announcing that the world's richest person, Jeff Bezos, would resign as CEO and move to the Executive Chairman role. Bezos will continue to be involved in the company, but will defer more responsibility to incoming CEO, Andy Jassy, to work on other projects.
Jassy is currently the CEO of Amazon Web Services, and has been in the company since 1997. The news of Bezos' departure seemed to have a minor negative effect, offsetting an earnings and revenue beat versus consensus.
Asian markets:
Asian markets were mixed yesterday evening with the Shanghai index down 0.5 per cent, the Nikkei up 1.0 per cent, and the Hangseng up 0.2 per cent.
After Jack Ma's Ant Group posted a US$2.3b profit for its most recent quarter, Chinese regulators have agreed on a restructuring plan to turn the fintech company into a financial holding company, and thus subject it to the same capital requirements banks must abide by. The deal will see all of Ant's businesses move into the holding company, including its blockchain and food delivery segments.
Commodities:
At time of writing, Gold recovered 0.2 per cent, trading at US$1,837.10 per ounce. Meanwhile the WTI Crude was up 2.1 per cent, trading at US$54.68 per barrel.
Australia
The S&P ASX200 finished the day up 0.9 per cent, led by a strong performance in the Real Estate (+2.4 per cent) and Health Care (+2.0 per cent) sectors, despite some drag from the Materials (-0.8 per cent), and Information Technology (-0.1 per cent) sectors.
The best performing company on the day was financial services company, Virgin Money, which climbed 14.6 per cent, while business travel management services provider, Corporate Travel, added 6.4 per cent.
The third best performing company was online vehicle retailer, Carsales.com, which gained 6.3 per cent. Having slumped during the onset of the Covid-19 pandemic, Australian new car sales have accelerated to three consecutive months of growth. January sales are up 11 per cent on January 2020. This recent volume reverses a two-and-a-half-year trend of declining growth in new car sales.
It was a bad day for mining companies after a drop in the gold price, with gold-exposed miners, Northern Star Resources (down 4.2 per cent), Saracen Minerals (down 4.1 per cent) and diversified mining company, South 32 (down 2.9 per cent) making up the worst performers on the day.
As with other positive demand shocks noted across the retail sector, demand for new cars is likely a combination of pent-up demand from Covid-19 and increasing consumer confidence.
This growth prompted Eagers Automotive (up 0.6 per cent), Australia's largest car dealer, to post its second profit upgrade in six weeks in late January. Investors may now be looking at which other listed companies may be exposed to surging demand, but which might not have announced as such to the market.
New Zealand domiciled buy-now-pay-later company, Laybuy, (down 3.6 per cent) is saying its business will not be affected by new regulation out of the UK requiring BNPL sector participants to conduct affordability checks before lending to consumers.
Laybuy, one of the first entrants into the British market, says it has already built affordability checks into its business model through credit bureau Experian, whose credit ratings are used to determine lending limits for customers. The company says that, in fact, increased regulation will render it more competitive, as it would force its peers to operate by the same standards.
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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
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