Exports are down at Napier Port. Photo / file
Keeping you up to date with the latest market moves, in association with Investment firm Jarden
NZX Market Wrap-up: Healthcare rallies; tech stocks rebound after yesterday's sell-off
The NZX 50 rose 1 per cent. This came following strong performances from international markets overnight, and a strong open from Australia, on the announcement that Moderna's Covid-19 vaccine is in stage-three human trials.
Tech stocks saw a slight rebound after yesterday's sell-off with cinema tech specialist Vista Group (+4.2 per cent), SaaS company Gentrack (+3.6 per cent) and international logistics company QEX Logistics (+3.8 per cent) recovering losses.
Healthcare stocks also rose, with dental operator Abano (+2.6 per cent), aged care operator Oceania Healthcare (+3.1 per cent) and market giant Fisher & Paykel Healthcare (+2.8 per cent) leading the rally.
A2 Milk target Mataura Valley releases financial statements with dismal outlook
Gore-based milk processor Mataura Valley Milk, notable due to its potential as an acquisition for A2 Milk, has again made headlines after confirming it is in breach of its banking covenants.
It expects a $26 million funding deficit by December this year. Yesterday, the company reported a $47m loss for its last financial year after attribution to its shareholders, despite revenues climbing to $114.5m (compared to $18.8m last year).
A2 Milk, seeking vertical integration through entry into the manufacturing industry, is understood to be one of the final contenders to buy Mataura Valley. Should A2 Milk choose to proceed with the transaction there may also be implications on NZX-listed producer Synlait Milk, who is its current supplier and a 19.8 per cent shareholder.
Napier Port Holdings drops after exports sag during their third quarter
The fourth largest port in the country traded down 3.4 per cent after reporting total container volumes down 17.4 per cent, with exports down 15 per cent and imports down 21.4 per cent in its most recent quarter ending June 30. Non-essential exports, unable to enter the port under Alert Level 4, fell by 28.6 per cent as a result.
Log exports were hit especially hard, with 465 kilotonnes exported in the quarter compared to 677 kilotonnes in the same period last year. Produce and meats fared better as they were still able to be exported as essential cargo, and total reefer exports only reduced by 4 per cent.
Investors should consider what this news might indicate for the performance of stocks in related sectors, such as Scales or Seeka, both horticulture companies which derive much of their revenue from exports.
International Market Wrap-Up: Markets rise with news of early success with Covid-19 vaccine
China's Shenzhen index pulls back (-1.8 per cent) amid US-China trade tension. On the other hand, at time of writing, Dow Jones is up 0.7 per cent, S&P 500 is up 0.9 per cent and the Nasdaq is up 0.6 per cent.
Buoyancy has been driven by American Bio-tech company Moderna, being able to successfully create antibodies in all 45 patients in their clinical trial. Moderna's CEO is now aiming to start a Phase 3 30,000 person trial on July 27 to demonstrate to a wider audience how this vaccine will lower the effects of Covid-19. Moderna started the day up 17 per cent now settling to be up 6.5 per cent by the afternoon.
The rotation out of tech stocks continued with Amazon down 1.65 per cent at time of writing, and likely to finish down for the third straight day. The airline, cruise and retail sectors were the winners of the day all posting large gains as people became more optimistic around travel and tourism given positive vaccine news.
Goldman Sach's smashed analyst expectations, generating US$2.42 billion profit, translating into US$6.26 per share vs expectations of US$3.78 per share. Revenue for the company was US$13.3b which is US$3.5b above expectations: Bond revenue (+150 per cent) and equity revenue (+46 per cent). The company was up early in opening at 4.5 per cent, however, at time of writing was only up 1.2 per cent.
The Bank of New York could not match these standards, but in tough conditions, the company was still able to slightly beat market expectations. Revenue was up 2 per cent and earnings at parity whereas markets predicted both would decline.
Commodities
At time of writing, WTI oil is (+2.05 per cent) to just over US$41 a barrel, with gold (+0.1 per cent) also up slightly to US$1813 per ounce. The US 10-year treasury yield is up from yesterday's level to 0.633.
Australia
ASX Market Wrap-up:
The S&P/ASX 200 index rose 119 points or 1.9 per cent in its best day since June 16 on the back of progress in clinical trials for a Covid-19 vaccine. This comes despite Victoria recording 238 new Covid-19 cases, its fourth-highest daily increase.
All sectors were in the green yesterday, as health care, technology, materials and consumer discretionary all ended the day over 2.5 per cent higher. Leading the Index on the day were biopharmaceutical company Clinuvel Pharmaceuticals (+6.8 per cent) and mining and development company NRW Holdings (+6.3 per cent). Breville Group again had a strong day, adding 5.24 per cent.
Travel stocks performed well while Buy Now, Pay Later (BNPL) stocks stumbled recording losses for the day. Proving the exception, and continuing its meteoric rise, Afterpay was up 2.4 per cent on the day.
Afterpay's announcement was the most unambiguously positive of the BNPL stocks which notified the market yesterday: Zip Co. recorded a record quarter however bad debts rose, Openpay recorded an operating cash loss and Afterpay partnered with Apple and Google Pay to expand instore payments capacity.
Australian items of interest:
In other news, Woodside Petroleum experienced record quarterly production, although reported sales revenue fell 29 per cent to A$768 million.
The Westpac-Melbourne Institute Index of Consumer Sentiment fell 6.1 per cent to 87.9 in July, down from June's data of 93.7 points. While still above April's low of 75, this represents a return to May's sentiment levels.
Australia: Australian Employment Data to be released today as well as the Reserve Bank of Australia foreign exchange transactions.
International: Tomorrow in America there will be the initial and continuing jobless claims for June, Retail sales data, Philly Fed Index and NAHB home build index. The data out may send early signals to how the American market is coping with the surge in Covid-19 cases over the June month.
Large companies that are reporting tomorrow include: Johnson & Johnson, Bank of America Corp, Netflix Inc and Domino's Pizza Inc.
For more information on the latest market moves, get in touch with Jarden.
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 here
Meanwhile, the post-election rally cooled in the United States.