Jarden Brief: Global rally catch-up after Fed talks turkey on interest rates

A worker sits in front of unfinished apartment buildings at the construction site of a China Evergrande Group development in Beijing, China, during the debt crisis. Photo / Andrea Verdelli,Bloomberg via Getty Images

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

US

The United States stock and bond markets were closed on Thursday, with the Thanksgiving Day holiday.

Rest of World

Global markets played catch up after the rally the United States markets saw on their Wednesday, following the Federal Reserve communicating their intention to slow interest rates.

Japan’s Nikkei 225 and Hong Kong’s Hang Seng rose 1.0 per cent and 0.8 per cent respectively, while the Stoxx Europe 600 gained 0.5 per cent.

China’s largest lender, the Industrial and Commercial Bank of China, announced it was increasing credit lines of up to US$92 billion, illustrating the Xi Jinping government’s easing of controls exercised on China’s real estate sector.

Since the Evergrande default seen in September 2021 (which currently has approximately US$300 billion liabilities), land and property sales have slowed down across the nation for most of 2022.

This comes after China’s government last week issued a 16-point property relief plan, signaling a step-change for the industry, supported by easing deadlines for bank debt maturing and bond issuance.

The largest online classified advertisements company Adevinta rose 7.2 per cent on release of their third quarter results. Acceleration of core market revenue growth of 12.0 per cent was shown over the corresponding quarter in 2021.

Total consolidated revenue came in at 408.0 million euros, up 11.0 per cent over the previous year with benefits of strict cost management flowing through to an earnings before interest, tax, depreciation and amortisation result of 132 million euros (representing a 32.4 per cent margin).

This full year figure is expected to be between 575 to 600 million euros and double-digit core market revenue growth despite the soft macro environment.

Commodities

Natural gas prices fell 1.3 per cent as the European Union were divided on a proposal to cap gas prices.

The primary outcomes of the energy package to be passed is to fostering joint gas purchases, reduce price volatility throughout the day and allow renewable energy projects to be enabled quickly.

Gold and silver prices saw a rise of 0.6 per cent and 0.7 per cent respectively, in response to The Federal Reserve’s slightly dovish commentary on U.S. monetary policy.

This comes as the United States Dollar index weakened by 0.24 per cent, as investors in the short term search for alternatives to preserve value.

Australia

Furniture retailer Nick Scali hosted its AGM while providing a trading update, implying a large beat to consensus market expectations.

Year-to-date October sales are up 74.0 per cent over the previous consecutive period and gross margin improvement of 180 basis points while still expecting gross margins to improve next year.

Written order sales are up 55.0 per cent in this same period. Net profit after tax guidance for 1H23 was given of A$56m to A$59m, 57 per cent to 66 per cent above 1H22 and ahead of the Bloomberg consensus average estimate by 23 per cent.

Retailer and business services company Kogan also provided a trading update with their AGM, showing gross sales down 38.0 per cent for the four months ending October of A$267.6m, tracking below the Visible Alpha consensus average by 23.0 per cent.

The company is in an ongoing process of clearing a bloat in its inventory that is expected to clear in early 2023, which saw gross profit decline by 41.0 per cent to A$41.1m.

The scale of inventory turnover has left them with a net cash position of A$20.1m.

Adjusted loss before interest and tax for these four months came in at A$0.5m, well below the run rate for the 1H23 consensus estimate of A$8.4m as management highlight their focus on the key sales period of Black Friday and the month of December.

New Zealand

Stride Property Group recorded a net devaluation to its property portfolio of NZ$51.8m for 1H23, compared to the NZ$13.4m loss in the prior corresponding half.

Despite a 16.0 per cent increase in recurring management fee income, this figure for the half came in at NZ$12.0m and net rental income of NZ$34.1m was up 11.2 per cent over the corresponding half due to the impact of Covid abatements on earnings.

Management stated it would prioritise cost reduction due to lower business activity and look to dispose NZ$30m to NZ$60m of selected properties and lower the full year dividend guidance to 8.0 cents per share, down from the 9.91 cents per share guidance given in May.

AFT Pharmaceuticals posted its 1H23 results, revealing NZ$65.8m operating revenue thanks to a 30.0 per cent rise in product sales.

Lower licensing income and increased investment resulted in operating profit falling to NZ$3.5m operating profit from NZ$3.5m the prior year and net profit after tax down NZ$1.5m from NZ$4.2m.

Management lowered full year earnings guidance as FDA approval for Maxigesic IV is expected in the fourth quarter of 2023 and increased investment in growth.

Coming up today

ANZ will publish their consumer confidence press release, along with retail sales figures for the quarter ending September giving us an indication of underlying consumer demand in New Zealand compared to the rest of the world.

Technology company Eroad and aged care provider Radius Healthcare are also set to publish their 1H23 earnings today. The Warehouse Group will host their AGM at 10:00am.

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

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