Jarden Brief: Oil price looks set to rise as stockpiles reduce

Oil prices have steadily ticked up over the last 12 months. Photo / Getty Images

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

New Zealand:

The S&P/NZX 50 traded in the green yesterday with the index advancing 0.1 per cent to 12,654.6 points.

Leading sectors comprised of both Energy and Consumer Cyclicals, making gains of 1.9 and 1.5 per cent respectively.

Dairy conglomerate, Fonterra Shareholders Fund (FSF), led the way with a strong performance, jumping 5.1 per cent at yesterday's close. FSF announced ambitions to restructure the business earlier this year after a prolonged period of underperformance, resulting in higher than usual share price volatility since.

Similarly, Kathmandu Holdings rebounded after updating earnings guidance on Tuesday. The retailer expected a NZ$13m EBITDA impact from the recent lockdowns and travel restrictions in New Zealand and Australia, which wasn't well-received by the market.

However, the stock finished Wednesday up 3.2 per cent, to offset some of these losses.
On the flip side, Healthcare (down 0.6 per cent) and Consumer non-Cyclicals (down 0.5 per cent) were the laggard sectors.

Weighing down index performance was underperformance from the single stock loser and agricultural company, Scales Corp, which traded down 2.0 per cent at yesterday's close. Joining Scales was Fisher & Paykel Healthcare, who also finished the day lower, by 2.0 per cent.

INTERNATIONAL MARKETS:
United States:

The US markets were a mixed bag overnight.

The S&P 500 was up 0.1 per cent, the Nasdaq fell 0.2 per cent and the Dow Jones Industrial Average was up 0.5 per cent.

Energy and Industrials led the sector gains at the time of writing, up 1.3 and 0.8 per cent, respectively.

Cabot Oil and Gas was the top performer at the time of writing, up 5.9 per cent. This follows the announcement that Climarex Energy will be acquired by Cabot Oil and Gas for US$6.7 billion.

Another outperformer was global semiconductor company, Advanced Micro Devices (AMD), which had risen 4.4 per cent. It was announced today that AMD has received unconditional approval for its planned acquisition of Xilinx, another US semiconductor company. Globally, a semiconductor shortage is causing manufacturing delays, particularly in the automotive industry.

The most underperforming sectors were utilities and real estate, down 0.5 and 0.4 per cent, respectively.

The worst performing company of the S&P500 at the time of writing was medical company, Hologic, down 3.4 per cent. This price change was likely due to the National Institute of Health saying that antigen tests and PCR molecular tests both have a high sensitivity rate in Covid-19 detection. Antigen tests can be performed at home and are less costly. Hologic, who produce PCR tests, declined following the announcement.

Another underperformer was medical company Teleflex, down 2.3 per cent.

Rest of the World Markets:

Asian markets were also a mixed bag with the Shanghai Composite rising 0.5 per cent, the Hang Seng falling 0.6 per cent and the Nikkei down 0.1 per cent.

Commodities

Gold rose 0.3 per cent to US$1,769.20 per ounce, bitcoin fell 4.8 per cent and Ethereum fell 2.9 per cent.

The US-10 year bond currently yields 1.478 per cent.

The oil price rose 0.8 per cent to US$73.57. This comes following data released in the US today showing US crude oil stock piles are reducing, with an OPEC (Organisation of Petroleum Exporting Countries) predicting demand to be higher than supply. This would logically push prices upwards.

Australian Markets:

The ASX closed up 0.3 per cent today, ending at 7,313.0 points.

Minerals company, Iluka Resources, surged 11.7 per cent as the best performer of the day. Clinuvel Pharmaceuticals (+4.7 per cent) and Chalice Mining (+4.7 per cent) were the next best performers.

At the same time, the recently embattled Nuix fell 13.0 per cent after allegations that a former executive engaged in insider trading. Kogan dropped 9.5 per cent after a volatile trading session, despite no apparent news causing the fall.

The market was busy after the announcement that Telstra would be selling 49 per cent of its Towers business for A$2.8 billion, with the intent to return 50 per cent of the net profits to shareholders. The transaction is expected to close in the first quarter of financial year 2022. Telstra closed up 4.4 per cent at A$3.76.

Meanwhile, constrained supply for second-hand cars has resulted in an expected earnings uplift for vehicle leasing company, Eclipx Group. The company, which sells its rental cars towards the end of their useful lives, has been receiving more than double what it usually does, due to the elevated prices.

Energy generator, AGL (-10.0 per cent), has confirmed its plans to separate its businesses into the retail-focused Accel Energy and the generation-focused AGL Australia. The companies will retain some sort of relationship following the merger, with Accel Energy to own 15-20 per cent of AGL Australia - although the two entities will have different CEOs and Chairs.

Overall borrowing saw slight increases in the month of May, with housing loans up 0.6 per cent month on month, or 4.8 per cent up on last year. Slightly offsetting this was a 6.4 per cent drop in personal loan balances, with the recent rise in 'buy now pay later' services likely to have hurt the sector.

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

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-disclaimera>